The thing is when you look at that 100 stores Kroger has in the Houston market, how many low volume (under $500k per week by Kroger standards) stores are there? I suspect very few. My guess is multiple former Albertsons locations fit that profile, along with a handfull of still open old stores like the former Family Center in Baytown. Those are the stores sometimes with closed or scaled back perimeter departments.grocerywatcher wrote: ↑March 10th, 2025, 7:55 amA couple other things to note, to counter some of the doom & gloom about Kroger's future in Houston:storewanderer wrote: ↑March 9th, 2025, 11:54 pmI don't want to go into speculation but wouldn't it be somewhat humorous if Randalls took over this space Kroger is closing to return to the area? How is the store positioned in comparison to the stores they closed? I mean, Randalls is doing those (cheap repaint of Lifestyle fixtures) remodels there... they aren't zeroed out on capex...pseudo3d wrote: ↑March 9th, 2025, 5:29 pm
Since 2015? About 10-12 I'd say, though a few of those were replacement stores, at least +9 in net total.
Since 2018? About 8 (this includes replacement stores). Add the two Joe V's stores, and you've still got a solid +5 lead where Kroger has done NOTHING.
If Kroger kept building stores at a pace to H-E-B, they'd likely still hold #1 (or #2 behind Walmart) today. While I've stated that the divestment plan looked like it was clearly aimed for C&S to flip the two Houston-area stores they would've gotten to H-E-B (the only two areas where H-E-B had pulled out previously), the rest of the stores would've gone to Kroger unscathed. How effective would this be is unknown since all but a few of the divested stores are close to Kroger stores, and these Kroger stores are (generally) better locations (larger, better locations, etc.), and they don't go where H-E-B went, to the suburbs.
With Albertsons as a whole having issues, it's not hard to see that Randalls wasn't giving their best when they closed those stores, there just isn't enough grocers to fill the void, and the barrier of entry to new businesses these days (especially large ones) is way too high.
If you look at retail bankruptcies that lead to "too much retail space" stories, there were almost no stores that were just victims of circumstance, all of them had major issues that drove away customers over time. It's not that there's no market for 200k+ square feet department stores and "category killer" boxes but these won't come to life in a vacuum.
Without derailing the topic further, the reason THIS Kroger is closing is indicative of two reasons:
1) Kroger has soft-given up on the Houston area as Safeway did YEARS earlier and is letting leases expire.
2) The landlord has a better idea for the space.
3) Kroger had the same idea that Randalls did back five years ago, that stores in The Woodlands for whatever reason were more trouble than they were worth and throwing them under the bus was vital to the market's survival.
I do think it is harsh to say Kroger has soft given up on the market. I don't really see that. There are so many markets Kroger hasn't built a new store in 20 years at this point out west... I hate to think they've soft given up on all of those markets (one being mine).
What it kind of looks like is both parties Kroger and HEB may have built too many new stores around the same time period and these stores need time to mature and turn more profitable. But that should be a 3-5 year time period.
Back to this closing Kroger in The Woodlands it is evident they are not interested in this store and have not been for some time. The store interior decor is a cheap application of that package and is greater than 10 years old. The flooring throughout the store appears to be the original flooring. Refrigeration mostly looks original. While these are quite nice stores, for whatever reason, this one seems like one they just didn't have much interest in and never gave it much capex.
1. Kroger is still comfortably in 1st place terms of store count (100+ stores). Houston is also Kroger's largest division.
Even H-E-B and Walmart only have ~80 to
~70 stores each in the region. So realistically, how many more stores does Kroger *NEED* to have?
Yes, Kroger is building new stores in DFW, but that region currently has a somewhat lower store count and a bit more slack with 800K more people plus a somewhat faster growth rate (per US Census CSA numbers).
2. Kroger recently selected the Houston market to pilot new concepts such as Hispanic-type format as well as an in-store ghost kitchen.
EDIT: I also don't buy into the theory that it was the landlord's decision to boot Kroger with this Woodlands store that's set to close. Chain grocers such as Kroger are reliable long-term tenants that consistently drive a ton of traffic for other businesses in these low-profile shopping centers. And as implied in an earlier post, if anything, landlords tend to struggle when it comes to backfilling these abandoned grocery stores with quality tenants in neighborhood strip malls. You see this when driving around older suburban areas across the country where these spaces are now occupied by flea markets, government offices, or subdivided to serve smaller tenants (if not vacant).
HEB is obviously going to be more productive in most if not all cases from a volume perspective, but as far as chain conventional stores go, Kroger still pulls well above average volumes and I suspect comes close to them in multiple locations in volume.
So I don't think it is all doom and gloom for Kroger around Houston. I was not overly impressed with what I saw of the stores there, I am not used to seeing things like scaled back perimeters in Kroger chains, so some of that was somewhat of a shock for me. However overall their pricing seemed okay and execution seemed okay, and all stores I visited had moderate traffic at the worst.
They are lucky in Houston all they deal with is HEB and those smaller chains like Food Town. Ignoring Wal Mart. Up in Dallas they are dealing with significantly more competition.