"Disco Kroger" in Houston Closing

Arizona, Hawaii, Nevada, New Mexico, Oklahoma, and Texas. No non-grocery posts.
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

"Disco Kroger" in Houston Closing

Post by storewanderer »

Tough to tell with Kroger's messed up Google listings showing photos of random stores but it looks like this was previously flagged as a "Fresh Fare" store.

3300 Montrose
Houston, TX

But it looks like it got in about 2011 a typical Kroger remodel for the period which was a complete job re-tiling perimeter department walls, new cases/refrigeration, along with the cement floors. It also appears they built an eating area above the deli (maybe that was there before?).

Also it doesn't look like this store has self checkouts but instead has a bunch of small express lanes?
pseudo3d
Posts: 3851
Joined: November 12th, 2015, 7:01 pm
Has thanked: 5 times
Been thanked: 77 times
Status: Offline

Re: "Disco Kroger" in Houston Closing

Post by pseudo3d »

I've been to this store before. From my notes, it was a "Superstore" and renovated twice prior to 2012. The first one presumably made it a mock greenhouse, second one branded it as a Kroger Signature for a while (but it lacked most of the "Signature" features).

According to Swamplot, which covered the renovation, the eating area above the deli was added in 2012. I wasn't too impressed with this store when I visited it (sometime between 2013 and 2015), the tile outlines were still visible on the concrete floor, and whole categories were simply missing. Frozen fruit, for instance, I heard was missing...and indeed it was.

They cite the reasons it closed, including competition from a Whole Foods Market about 3/4 of a mile away, which opened about a year ago (but mostly displaced a Fiesta), and an H-E-B in the opposite direction, which opened nearly 10 years ago. There's another Whole Foods Market to the north (about a mile) that's been open for about a decade too.

Still, something doesn't sit quite right. The area is continuing to densify, literally a block away an upscale tower/residential tower is being built, and there's no other grocery store in the "heart" of the Montrose neighborhood. Until around 2015/the whole "Restock" thing, Kroger was on top of its game in Houston, trying to defend its market share against H-E-B. They had upgraded the interiors of almost of their stores, even old Greenhouse stores. They were building huge Marketplace stores in the suburbs. Now they just seem to be giving up as H-E-B continues to move into the "Inner Loop" area.

From reading the Yelp reviews, new management installed last November seemed to help the store as the perishable departments had major issues with customers a few years ago, but I have a hard time believing that this store was an unprofitable store unless they had major issues with shoplifting, and even then, there's something "off" about this closure for a store in a good location and a company that (was) in good shape five years ago.

The closure of the bars that provided the nightlife that the store thrived on probably didn't help, but the COVID-19 stuff has been beneficial to grocery store sales as a whole.
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: "Disco Kroger" in Houston Closing

Post by storewanderer »

This is rather interesting. It looks to me like this store got squeezed out by Whole Foods on the upper end and by HEB in the other directions.

I guess it is possible it had theft issues but this seems like an odd closure. Given the store had ongoing capex over the years and is a modern facility it would not appear it had a tract record of poor performance. Also from looking at photos on Google, Yelp, etc. it appears to have foot traffic and seems to have well stocked fresh departments...

I guess we will see what happens to the building.
rwsandiego
Store Manager
Store Manager
Posts: 1242
Joined: April 3rd, 2016, 10:57 pm
Has thanked: 23 times
Been thanked: 55 times
Status: Offline

Re: "Disco Kroger" in Houston Closing

Post by rwsandiego »

I wonder if a developer bought the land and intends to build a high-rise.
pseudo3d
Posts: 3851
Joined: November 12th, 2015, 7:01 pm
Has thanked: 5 times
Been thanked: 77 times
Status: Offline

Re: "Disco Kroger" in Houston Closing

Post by pseudo3d »

rwsandiego wrote: November 14th, 2020, 4:27 pm I wonder if a developer bought the land and intends to build a high-rise.
Usually that involves lease-back and an announcement that they would rent space on the bottom, and they wouldn't need to talk about it being unprofitable.

When Randalls closes, it usually makes sense. Those stores aren't crowded, the division has been suffering since I've been in elementary school, the product mix has been pretty mediocre for years, and I've even come across numbers in the case of the Westheimer/Shepherd store.

When Kroger closes, especially in an area that's growing and getting more expensive (other stores that have dropped off over the years usually can be seen from the neighborhood), it raises a red flag.
"Over the years, we have made investments and attempts to increase sales, profitability and conditions by better tailoring our product selection and offerings to suit shoppers’ preferences," Kroger said a media statement. "Despite our best efforts, we have not been able to operate at margins that will allow us to remain open."
Just from that, I see 3 possibilities that aren't mutually exclusive.
1. Kroger has really screwed the pooch as far as Restock went and casualties are beginning to mount.
2. The shoplifting/shrink has gone through the roof.
3. Kroger is lying.
Bagels
Assistant Store Manager
Assistant Store Manager
Posts: 823
Joined: August 20th, 2018, 11:54 pm
Has thanked: 1 time
Been thanked: 12 times
Status: Offline

Re: "Disco Kroger" in Houston Closing

Post by Bagels »

Per this article, the store had been unprofitable for quite some time. Kroger attributed it to the intense local competition:

www.bizjournals.com/houston/news/2020/1 ... 1.amp.html
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: "Disco Kroger" in Houston Closing

Post by storewanderer »

Bagels wrote: November 15th, 2020, 11:13 am Per this article, the store had been unprofitable for quite some time. Kroger attributed it to the intense local competition:

www.bizjournals.com/houston/news/2020/1 ... 1.amp.html
That is the standard quote and language Kroger uses for any store closure. It is the exact wording we've seen on various news articles announcing closures in the Midwest. For the decade or so that Kroger only closed a couple stores a year it sounded genuine. Now that they are closing a few more stores than that in the past few years, it is sounding like a canned response.
Bagels
Assistant Store Manager
Assistant Store Manager
Posts: 823
Joined: August 20th, 2018, 11:54 pm
Has thanked: 1 time
Been thanked: 12 times
Status: Offline

Re: "Disco Kroger" in Houston Closing

Post by Bagels »

storewanderer wrote: November 15th, 2020, 12:47 pm That is the standard quote and language Kroger uses for any store closure. It is the exact wording we've seen on various news articles announcing closures in the Midwest. For the decade or so that Kroger only closed a couple stores a year it sounded genuine. Now that they are closing a few more stores than that in the past few years, it is sounding like a canned response.
It's certainly believable -- in recent years, the growth in square footage dedicated to groceries has far outpaced that of growth in sales. Ultimately, there's going to be some losers and unfortunately, it's generally traditional grocers.

Consider this particular store -- it's in an area with relatively modest population growth, but several new stores. And the reviews are pretty consistent: the store is rarely crowded, people come here because the nearby Whole Foods and HEB are too crowded, this store isn't as nice as the nearby Kroger, etc. It's certainly credible that the store was underperforming.

One thing to remember... grocery stores have huge product margins, but overall margins are slim due to (basically) overhead. Even if you retain a fraction of the sales, closing a store can have a positive impact on the bottom line. Especially in a location where it's not likely to successfully compete (with WH and HEB), and is facing a multimillion dollar face lift.
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: "Disco Kroger" in Houston Closing

Post by storewanderer »

Bagels wrote: November 15th, 2020, 3:19 pm
It's certainly believable -- in recent years, the growth in square footage dedicated to groceries has far outpaced that of growth in sales. Ultimately, there's going to be some losers and unfortunately, it's generally traditional grocers.

Consider this particular store -- it's in an area with relatively modest population growth, but several new stores. And the reviews are pretty consistent: the store is rarely crowded, people come here because the nearby Whole Foods and HEB are too crowded, this store isn't as nice as the nearby Kroger, etc. It's certainly credible that the store was underperforming.

One thing to remember... grocery stores have huge product margins, but overall margins are slim due to (basically) overhead. Even if you retain a fraction of the sales, closing a store can have a positive impact on the bottom line. Especially in a location where it's not likely to successfully compete (with WH and HEB), and is facing a multimillion dollar face lift.
I think the Kroger of 10 years ago would have figured out how to make this store work among all that competition... this current Kroger seems to behave differently. Maybe the land is spoken for at this point and a medium volume grocery store was simply no longer the highest and best use.
pseudo3d
Posts: 3851
Joined: November 12th, 2015, 7:01 pm
Has thanked: 5 times
Been thanked: 77 times
Status: Offline

Re: "Disco Kroger" in Houston Closing

Post by pseudo3d »

storewanderer wrote: November 15th, 2020, 10:17 pm
Bagels wrote: November 15th, 2020, 3:19 pm
It's certainly believable -- in recent years, the growth in square footage dedicated to groceries has far outpaced that of growth in sales. Ultimately, there's going to be some losers and unfortunately, it's generally traditional grocers.

Consider this particular store -- it's in an area with relatively modest population growth, but several new stores. And the reviews are pretty consistent: the store is rarely crowded, people come here because the nearby Whole Foods and HEB are too crowded, this store isn't as nice as the nearby Kroger, etc. It's certainly credible that the store was underperforming.

One thing to remember... grocery stores have huge product margins, but overall margins are slim due to (basically) overhead. Even if you retain a fraction of the sales, closing a store can have a positive impact on the bottom line. Especially in a location where it's not likely to successfully compete (with WH and HEB), and is facing a multimillion dollar face lift.
I think the Kroger of 10 years ago would have figured out how to make this store work among all that competition... this current Kroger seems to behave differently. Maybe the land is spoken for at this point and a medium volume grocery store was simply no longer the highest and best use.
Well, assuming that the land has been sold (big if) and Kroger was evicted, it still means that #3 is true. The Midtown Whole Foods doing the Kroger in is a little less believable since the Whole Foods would put the hurt more on the downtown Randalls store, and that probably would've been the first to go. The other plausible reason that the store is hurting NOW is a new H-E-B over two miles away in the Third Ward, but close enough to the Museum District and Rice University (south of Montrose) to sap business.

From what I can tell, there are eight Kroger stores in the Inner Loop (not counting the one closing) in various states of (dis)repair, including a Greenhouse store, a former Weingarten, a former Albertsons, and a 2012 new build, all of which have been pretty stable, except for a former Safeway/AppleTree that closed a few years back. They still have more than H-E-B in the Inner Loop at this point, but only by two stores, and all but two of H-E-B's six Inner Loop stores are new builds from the last decade.
Post Reply