Could Kroger be preparing for a Florida move-in?

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Re: Could Kroger be preparing for a Florida move-in?

Post by klkla »

jamcool wrote: February 4th, 2021, 8:47 am Didn’t Farmer Jack buy the Safeway stores in Utah in the 80s? That didn’t work out well
Yes. That was their ultimate downfall and why the ended up selling out to A&P.
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Re: Could Kroger be preparing for a Florida move-in?

Post by Romr123 »

Farmer Jack (Borman's) tried a little geographic diversification which failed, leaving A&P to scrape up the pieces. FJ was well-loved in SE Michigan but was starting to get pressured from Meijer's expansion.
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Re: Could Kroger be preparing for a Florida move-in?

Post by buckguy »

I wouldn't entirely characterize Publix as a low volume operation--rather than they are able to accommodate relatively small locations (35-40K) and big variances in store volume. Outside Florida, they also don't feel compelled to do 24 hour operations even if there is a 24 hour Kroger nearby. Their stores are enough more labor intensive that it wouldn't work and their clientele skews in a direction that is fine with closing at 9 or 10.

Kroger had stores in Florida in the 70s and 80s when population growth should have enabled them to build and sustain a footprint in it at least one area of the state, but for whatever reason it didn't. These stores were a little different (family centers and built out drug stores) from their norm and Kroger has never been a real innovator--more of a defense player, so they may not have had the will or market savvy to really build on this novel base.

Over the last 20 years they've gone from leaving operations alone and treating them as prototypes which they've introduced elsewhere (often with little success) to now getting more homogenized while stumbling their way into tech. That's not going to give them a truly novel way in to Florida (or the DC-Baltimore area where they're also building an automated facility). It's probably just going to be history repeating itself (in DC, too---they failed there in the 60s with a small operation they acquired and tried to expand w/o success).

Nitpick here--Shop-Rite is a co-op and probably much more locally agile than a lot of chains. Not necessarily the best comparator.
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Re: Could Kroger be preparing for a Florida move-in?

Post by storewanderer »

buckguy wrote: February 5th, 2021, 5:55 am I wouldn't entirely characterize Publix as a low volume operation--rather than they are able to accommodate relatively small locations (35-40K) and big variances in store volume. Outside Florida, they also don't feel compelled to do 24 hour operations even if there is a 24 hour Kroger nearby. Their stores are enough more labor intensive that it wouldn't work and their clientele skews in a direction that is fine with closing at 9 or 10.
I don't know- how many $1 million a week sales volume stores does Publix have? Relatively few. Kroger has hundreds of stores (and I'm not talking Fred Meyer Stores or just Marketplace Stores) doing that volume.

The only 24 Hour Publix Stores I've seen were outside Florida and they were in Atlanta. That was a number of years ago- I think the store also had self checkout. It was one of the first Publix Stores I was ever in. Other Publix locations I've visited have 10 PM or 11 PM closing times outside Florida.

I think part of how Publix keeps its service levels up is by not having extremely busy large high volume stores. They appear as if they would rather have more stores, smaller stores, with fewer customers. They have a definite formula to what they are doing. And it is clearly working very well for them. With over 1,200 stores operating under the Publix banner, I believe it is actually the largest single banner grocer in the US based on number of stores under that single banner. 15 years ago Albertsons, Safeway, and Kroger all had a higher store count under those 3 respective banners but all of them have shrunk while Publix keeps growing. I'm not a huge fan of Publix but you cannot argue with their success- I think the chain is over-hyped. It is a good operator sure, but there are a lot of operators out there who run much better stores.
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Re: Could Kroger be preparing for a Florida move-in?

Post by veteran+ »

buckguy wrote: February 5th, 2021, 5:55 am I wouldn't entirely characterize Publix as a low volume operation--rather than they are able to accommodate relatively small locations (35-40K) and big variances in store volume. Outside Florida, they also don't feel compelled to do 24 hour operations even if there is a 24 hour Kroger nearby. Their stores are enough more labor intensive that it wouldn't work and their clientele skews in a direction that is fine with closing at 9 or 10.

Kroger had stores in Florida in the 70s and 80s when population growth should have enabled them to build and sustain a footprint in it at least one area of the state, but for whatever reason it didn't. These stores were a little different (family centers and built out drug stores) from their norm and Kroger has never been a real innovator--more of a defense player, so they may not have had the will or market savvy to really build on this novel base.

Over the last 20 years they've gone from leaving operations alone and treating them as prototypes which they've introduced elsewhere (often with little success) to now getting more homogenized while stumbling their way into tech. That's not going to give them a truly novel way in to Florida (or the DC-Baltimore area where they're also building an automated facility). It's probably just going to be history repeating itself (in DC, too---they failed there in the 60s with a small operation they acquired and tried to expand w/o success).

Nitpick here--Shop-Rite is a co-op and probably much more locally agile than a lot of chains. Not necessarily the best comparator.

Yup, they have quite a few uber high volume stores, 2 of which I managed in Miami.

One in Dadeland shopping area on Kendall Drive that did 1.2 million a week and on certain holidays over 2 million.
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Re: Could Kroger be preparing for a Florida move-in?

Post by storewanderer »

Kroger FL Ocado Warehouse is open.

They will have Kroger delivery vans run by Kroger employees with refrigeration to do deliveries... first I knew of that this was part of their plan.

https://www.winsightgrocerybusiness.com ... s-zip-life
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Re: Could Kroger be preparing for a Florida move-in?

Post by pseudo3d »

This still seems like an expensive distraction. I'm not sure what percentage of delivery grocery shopping regular stores operate from, but for the most part it's probably not much.

If Kroger wanted to invest in Florida, then they can expand Harris Teeter beyond their one store in the state (which they DID expand), not by offering a half-baked novelty delivery service. They could knock off some business from Publix and Walmart, but even then, "but it's not Publix" didn't save Albertsons' last gasp in the state, and probably won't pave the way for Kroger to open full stores in the state.

More importantly, the whole project (assuming it doesn't turn out to be a money-losing failure) just robs capex from other divisions.
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Re: Could Kroger be preparing for a Florida move-in?

Post by storewanderer »

pseudo3d wrote: April 14th, 2021, 8:36 pm This still seems like an expensive distraction. I'm not sure what percentage of delivery grocery shopping regular stores operate from, but for the most part it's probably not much.

If Kroger wanted to invest in Florida, then they can expand Harris Teeter beyond their one store in the state (which they DID expand), not by offering a half-baked novelty delivery service. They could knock off some business from Publix and Walmart, but even then, "but it's not Publix" didn't save Albertsons' last gasp in the state, and probably won't pave the way for Kroger to open full stores in the state.

More importantly, the whole project (assuming it doesn't turn out to be a money-losing failure) just robs capex from other divisions.
Yes, but I am impressed they are actually running delivery trucks, etc. I have my opinions on how this money pit project will turn out, but let's see.

Actually I think they should have tried it in a few very dense markets first- New York, San Francisco, to see if it would even work in those places. Maybe not under the name Kroger either.

What I want to know- which they likely do know- is if it is so much cheaper to fulfill via these warehouses, that they could just tell customers who currently use the in-store pick up that they will deliver their orders to their home at the same price as the in-store pick up (since this automated warehouse should use a lot less labor than the in-store pick up) but I am thinking whatever labor savings comes from not picking the order a big chunk will be lost in driving it to someone's home. But in real dense areas where the delivery truck did not have to drive far, it could pan out.
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Re: Could Kroger be preparing for a Florida move-in?

Post by Romr123 »

not knowing how they're doing their financial allocations, though, I wonder if pulling fulfillment volume out of storefronts lowers the volume and freshness of these stores which leads to a vicious cycle of less-good store operations and on and on. I look at a region like the Grosse Pointes in Michigan, where they're essentially a monopoly operator (there is one high-priced independent which just did a nice expansion, but they're basically a monopoly operator with the closest Meijer being 5 miles away) Dense, affluent to very affluent inner-ring suburbia, four stores splitting the territory including a "downtown" Fresh Fare (in-line in a downtown area--shared parking lot with other stores) and a brand new Marketplace, essentially no competition in one direction (into Detroit) and the lake/river on the other side, but pulling delivery volume out starts a slow path of lost in-store volume, lowered standards, and irrelevance.
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Re: Could Kroger be preparing for a Florida move-in?

Post by arizonaguy »

storewanderer wrote: April 14th, 2021, 11:38 pm
pseudo3d wrote: April 14th, 2021, 8:36 pm This still seems like an expensive distraction. I'm not sure what percentage of delivery grocery shopping regular stores operate from, but for the most part it's probably not much.

If Kroger wanted to invest in Florida, then they can expand Harris Teeter beyond their one store in the state (which they DID expand), not by offering a half-baked novelty delivery service. They could knock off some business from Publix and Walmart, but even then, "but it's not Publix" didn't save Albertsons' last gasp in the state, and probably won't pave the way for Kroger to open full stores in the state.

More importantly, the whole project (assuming it doesn't turn out to be a money-losing failure) just robs capex from other divisions.
Yes, but I am impressed they are actually running delivery trucks, etc. I have my opinions on how this money pit project will turn out, but let's see.

Actually I think they should have tried it in a few very dense markets first- New York, San Francisco, to see if it would even work in those places. Maybe not under the name Kroger either.

What I want to know- which they likely do know- is if it is so much cheaper to fulfill via these warehouses, that they could just tell customers who currently use the in-store pick up that they will deliver their orders to their home at the same price as the in-store pick up (since this automated warehouse should use a lot less labor than the in-store pick up) but I am thinking whatever labor savings comes from not picking the order a big chunk will be lost in driving it to someone's home. But in real dense areas where the delivery truck did not have to drive far, it could pan out.
The warehouse in Phoenix will be on the West side of town and, I'd assume, a large amount of the users of their service here will be 30 - 45 minutes away from the warehouse (in Scottsdale and Tempe/Chandler/Gilbert). Unless they get a huge volume of orders they'll have to truck a ton of orders 30 - 45 minutes away.

Walmart seems to have the better solution with microfulfilment at its store sites, IMHO. Even Amazon is moving in that direction with its Fresh stores.
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