What exactly happened with Kroger?

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retailfanmitchell019
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Re: What exactly happened with Kroger?

Post by retailfanmitchell019 »

buckguy wrote: July 22nd, 2021, 10:39 am Kroger fell into the latter group back in the 70s and 80s and they were lucky in some places like Atlanta where their competition imploded or Nashville where their main competition (HG Hill) stopped investing in their grocery business.
As you have explained, Kroger has done well in certain areas due to the collapse of rivals like Big Bear in Columbus, Food Town in Toledo, Farmer Jack in Detroit, Marsh in Indy, Thompson Food Basket in Peoria, Sessel's/Schnucks in Memphis, Minyard in D/FW, and Albertsons in Wichita, Houston, Denver, etc.
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Re: What exactly happened with Kroger?

Post by veteran+ »

buckguy wrote: July 22nd, 2021, 10:39 am Walmart's business has been stagnant since the early 2000s and grocery helped them mostly in the short-run. They've either saturated markets or face high costs for entry (more expensive real estate, insurance, etc. and less willingness to subsidize them). Their model has been based on volume and low labor costs to generate profit and that is no longer viable. I could see them closing stores mostly in metro areas--high costs, more competition. Grocery is expensive in terms of equipment, stock rotation, etc--I could see them strategically scaling back some of their offerings. Target has a different model that's more based on markups and limiting low margin merchandise. I could see them scaling back food to a limited, mostly high margin, low maintenance selection---food was really forced on them by Wall Street and I'm sure they'd happily reduce its footprint.

Brick and mortar stores will stick around because people like to pick out their own perishables and fill-in shopping often happens at the last minute. From an operator perspective, there probably are more impulse buys in a brick and mortar than online environment. The private operators definitely thrive because they don't have to deal with Wall Street. But it's more than that. historically, chains stumble when they get too big---a lot of large regional or semi-national chains imploded (A&P the original First National, Colonial, Grand Union, National Tea, Food Fair) or drastically shrank (Acme--pre-Skaggs, Winn-Dixie) because they couldn't compete effectively in a lot of their markets, esp. when faced with market saturation or macroeconomic conditions like inflation. Kroger fell into the latter group back in the 70s and 80s and they were lucky in some places like Atlanta where their competition imploded or Nashville where their main competition (HG Hill) stopped investing in their grocery business.
If I may expand on Food Fair:

This often forgotten company failed mainly from deeply destructive nepotism and cronyism. This egregiously and quickly destroyed their "ahead of their time" diversification and innovations. After their founding father passed away, the remaining family and friends displayed a level of incompetance that was beyond description.

Their relationships with financial institutions, competitiors, real estate companies, city and state govenments, trade unions, employees, independant contractors, merchandise suppliers, etc. were insidiously infected with hubris and arrogance.

Malefeasance and ego destroyed them. At the end of the day, when they needed to be rescued, NO one cared enough or wanted to help (except the corporate raider, Ron Perelman who discovered a treasure trove of hidden assets).
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Re: What exactly happened with Kroger?

Post by TW-Upstate NY »

buckguy wrote: July 22nd, 2021, 10:39 am Walmart's business has been stagnant since the early 2000s and grocery helped them mostly in the short-run. They've either saturated markets or face high costs for entry (more expensive real estate, insurance, etc. and less willingness to subsidize them). Their model has been based on volume and low labor costs to generate profit and that is no longer viable. I could see them closing stores mostly in metro areas--high costs, more competition. Grocery is expensive in terms of equipment, stock rotation, etc--I could see them strategically scaling back some of their offerings. Target has a different model that's more based on markups and limiting low margin merchandise. I could see them scaling back food to a limited, mostly high margin, low maintenance selection---food was really forced on them by Wall Street and I'm sure they'd happily reduce its footprint.
Look at Neighborhood Markets for example. Not exactly a total failure but certainly not a stunning success either.
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Re: What exactly happened with Kroger?

Post by BatteryMill »

retailfanmitchell019 wrote: July 22nd, 2021, 11:56 pm
buckguy wrote: July 22nd, 2021, 10:39 am Kroger fell into the latter group back in the 70s and 80s and they were lucky in some places like Atlanta where their competition imploded or Nashville where their main competition (HG Hill) stopped investing in their grocery business.
As you have explained, Kroger has done well in certain areas due to the collapse of rivals like Big Bear in Columbus, Food Town in Toledo, Farmer Jack in Detroit, Marsh in Indy, Thompson Food Basket in Peoria, Sessel's/Schnucks in Memphis, Minyard in D/FW, and Albertsons in Wichita, Houston, Denver, etc.
Marsh has only recently gone down, so it is hard to tell. Or were they already on a downwards spiral?
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Re: What exactly happened with Kroger?

Post by Romr123 »

Marsh was circling the drain for a long time---they've been gone 3 years now...
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Re: What exactly happened with Kroger?

Post by buckguy »

Marsh was in trouble in the early '00s when the family still owned it. They weren't investing in their stores and weren't keeping their small edge in fresh foods, as I recall. Food Town sold out around then and the stores were sold off by Spartan. They had a lot of very low volume stores in small Ohio towns, growing competition in Toledo (including a big Kroger expansion) and had had a misguided expansion into Columbus. The son of the primary founder (it started as a co-op) was running it and seemed to feel squeezed all these forces. OTOH, he also was an eccentric--he dressed up as a Nazi for WWII re-enactments and ran a spectacularly unsuccessful campaign for Congress. I knew one of his siblings, who had pursued a very different life in international health and hated to hear about Food Town or his brother.

Big Bear's parent Penn Traffic had quicker death spirals at about the same time as Food Town. Penn Traffic was just a long-term stumbler, with multiple bankruptcies--sort of a small A&P.
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