The differences between Kroger and Albertsons

[architect]

My Kroger got probably the worse remodel in the early 2000s...basically mauled a greenhouse into the boring decor they had circa 2001, took out the red perimeter stripe and replaced with white tile but it didn't match the rest of the store, just a nasty nasty place. All this happened when they started focusing on a new "Signature" store to the south part of town (it has since remodeled to the "Fresh Fare" décor, mostly) and basically abandoning that one.

The Albertsons branded stores already had a décor unification problem (at one time in the late 1990s/early 2000s, there were probably at least 3 or 4 new packages going in stores and this was compounded when SuperValu started to cheap out on remodels.

There is a Kroger store similar to the one you described in the town where I went to college. The location is an old greenhouse that sadly had its front removed, with the decor only being partially replaced at the same time. Now, this store is essentially a shell of its former self, being superceded by a Signature store both to the south and another Signature store in the neighboring town to the north. Honestly, it is surprising that Kroger hasn't completely torn down this store and built anew, as this location is in close proximity to the university campus, and is just down the street from an H-E-B that does brisk business 24/7. The H-E-B parking lot is often completely full, while the Kroger is question will be essentially empty. Such a wasted opportunity.

Actually, that sounds exactly like the store I'm talking about.

Haha, I didn't realize you were in CS too! I graduated from A&M recently and now work in the DFW area.

[pseudo3d]

In terms of Kroger and Albertsons, I find it very telling that Kroger was the one to convert three Harris Teeter stores to Kroger stores (reading comments is universally negative on these sites), especially given that Kroger had claimed it would keep the local stores open. Conversely, Albertsons handed over control of some of its north Texas stores in the former D/FW division to United. Whether it's Albertsons commitment to keep one of it's divisions independent or an admission that United can run them better then they can, it definitely shows how these companies operate differently.

[klkla]

In regards to Harris Teeter in Nashville I think this is simply a case where HT only had a couple stores in the market and Kroger has many. It probably didn't make sense to operate under two separate banners. And it makes sense to go with the banner that has the most stores.

From that standpoint they seem to be a lot smarter than Albertsons. Operating three banners here in SoCal for instance that have very little differentiation doesn't make sense. Every week I get both an Albertsons and Vons ad in my mail. That's a waste of money and effort IMHO.

[pseudo3d]

In regards to Harris Teeter in Nashville I think this is simply a case where HT only had a couple stores in the market and Kroger has many. It probably didn't make sense to operate under two separate banners. And it makes sense to go with the banner that has the most stores.

From that standpoint they seem to be a lot smarter than Albertsons. Operating three banners here in SoCal for instance that have very little differentiation doesn't make sense. Every week I get both an Albertsons and Vons ad in my mail. That's a waste of money and effort IMHO.

The Harris Teeter example is better compared to United since it was a smaller chain that was acquired in 2013, not a huge merger earlier this year (rocking the boat this early in the game isn't a good idea, at least compared with what Albertsons did in 1999). The Market Street stores are still independent in Dallas, as well. That's not to say that Albertsons won't do anything down the line (unpredictable is the name of the game), while on the other hand Kroger is a little too predictable and there's not much to go on to say that Harris Teeter won't get lobotomized and become a Kroger in all but name.

[arizonaguy]

In regards to Harris Teeter in Nashville I think this is simply a case where HT only had a couple stores in the market and Kroger has many. It probably didn't make sense to operate under two separate banners. And it makes sense to go with the banner that has the most stores.

From that standpoint they seem to be a lot smarter than Albertsons. Operating three banners here in SoCal for instance that have very little differentiation doesn't make sense. Every week I get both an Albertsons and Vons ad in my mail. That's a waste of money and effort IMHO.

Kroger didn't see the value in operating multiple banners the same market in Arizona. At the time of the Kroger / Fred Meyer merger there were 3 banners in Arizona: Fry's, Smith's, and Smitty's Marketplace. I believe that there was approximately 60 stores under the Fry's banner, 40 under the Smith's banner, and 18 under the Smitty's banner.

At the onset of the merger, Kroger converted the Smith's stores (except for 3 in NW Arizona) to the Fry's banner and converted the Smitty's stores to the Fred Meyer Marketplace banner.
See this article: http://www.bizjournals.com/portland/sto ... tory3.html

Then, about a year and a half later, Kroger decided that operating 17 stores under one banner and the rest under another didn't make a lot of sense, and converted the Fred Meyer Marketplace stores to Fry's Marketplace.
See this article: http://www.prnewswire.com/news-releases ... 33102.html

Several Smith's stores never made the transition to Fry's:

Store # 310 857 N. Val Vista Dr., Gilbert, AZ 85234
Store # 318 730 S. Cooper Rd, Gilbert, AZ 85233
Store # 308 1135 N. Recker Rd., Mesa, AZ 85205
Store # 337 463 S. Alma School Rd., Mesa, AZ 85210
Store # 306 7565 W. Peoria Ave., Peoria, AZ 85345
Store # 333 17232 N. 19th Ave., Phoenix, AZ 85203
Store # 339 4735 E. Ray Rd., Phoenix, AZ 85044
Store # 196 2950 Ina Road, Tucson, AZ 85741
Store # 199 10380 E Broadway, Tucson, AZ 85748

Fun Fact, Smith's Store 199 went from Smith's to Safeway to Haggen and was one of the 3 stores in Arizona that Albertsons bought in the Auction.

In addition, over the past 5-6 years Fry's has closed the following original Fry's stores (with the reason that they were too close to other stores (namely former Smith's or Smitty's stores)):

4949 W. Chandler Blvd., Chandler, AZ
825 W. University, Mesa, AZ
390 N. Litchfield Rd., Goodyear, AZ
1625 W. Camelback Rd., Phoenix, AZ

The downside to all of this is that the Fry's banner is the symbol of inconsistency.

Under the Fry's Food and Drug banner there are the following types of stores:

- A large number of 1980s - early 1990s stores of 50,000 - 60,000 square feet built by Fry's using the design that Dillon's (Fry's former parent) used prior to being purchased by Kroger. Many of these stores lack a service meet / fish counter.

- A large number of late 1990s - early 2000s stores of 50,000 - 60,000 square feet built by Fry's using a "watered down" version of the Signature stores built in Texas during this era. The basic layout of the stores is similar to the Texas stores, however they have acoustic ceilings and are smaller to the stores built in Texas.

- Several 1989 - mid 1990s stores of 60,000 - 85,000 square feet originally built by Smith's. The larger of these stores contain some general merchandise such as patio furniture / supplies, an expanded cookware department, and some home decor.

- A handful of mid 1990s stores of around 60,00 square feet originally built by Smitty's but were never Smitty's Marketplace stores.

- A handful of 1970s - 1980s former Smitty's Marketplace stores where sections of the stores have been walled off and the remaining store has been converted to the conventional Food / Drug format.

- A 2004 build 94,000 square foot former Marketplace store that was converted to the Food and Drug format without any reduction in square footage. This store has the general food / drug mix plus an expanded bulk foods department, an expanded natural / organic department, an expanded lawn / patio department, an expanded pet supplies selection, and an expanded cookware selection.

- A 2014 build 94,000 square foot new build Food and Drug store with a wine bar, sushi, and an expanded soup/salad bar.

Between all of these different store designs / sizes there are some stores that use the current or early 2000s "standard" Kroger decor package and a handful of stores that use the current Food4Less decor package. Most of these stores are on the Boar's Head deli program, but at least 1 isn't and is focused on having a Hispanic oriented deli plus a full gelato selection at the deli. Some stores contain a more "value oriented" product mix while others contain more natural and organic items. Some also contain more Hispanic items than others. Unfortunately, it's virtually impossible to tell what the product mix of a particular store is without visiting it as the banner and website simply list the stores as a "Fry's Food and Drug"

Then there's the Fry's Marketplace stores:

- Most are 1970s - 1980s build former Smitty's stores of around 105,000 - 120,000 square feet. They've recently remodeled these stores into the latest nationwide Marketplace decor but they all have acoustic ceilings and often have a more limited product mix in general merchandise and "extras" compared to newer marketplace stores.

- A handful of mid 2000s stores that are slightly smaller than the former Smitty's stores (around 94,000 square feet). These stores have the "warehouse style" ceilings that the newer marketplace stores have.

- 2010s - present 124,000 square foot stores which are virtually indistinguishable from the current Marketplace stores being built now in other Kroger divisions

The Fry's Signature stores:

- A few of these stores were built in the mid 2000s using a 75,000 template similar to Ralph's Fresh Fare
- 1 store was an late 1990s / early 2000s Food and Drug 55,000 square foot store that was given a slightly more "upscale" product mix
- 1 was a early 1990s former Smith's 85,000 square foot Smith's store that was converted to something similar to the new build stores. This store includes a bar and a wine cellar.

The Fry's Signature Marketplace:

- The "crown Jewel" of Fry's stores. This is a 136,000 store opened in 2010 as a replacement for a former Smitty's Marketplace store. This store has valet parking, custom car washes, a cooking school, wine bar and expanded selections of organic produce and high-end meats, a Fred Meyer Jewelers, and a Murray's cheese shop.

The Fry's Mercado Store:

- Opened in 2006, this is a 66,000 square foot former Smitty's Marketplace store which has a Mexican restaurant, fresh tortillas, and Mexican deli/bakery/produce products, fruit flavored water, and ice cream.

Fry's is a lot less consistent store-to-store than Safeway or Albertsons or even many other Kroger divisions. I guess this is a case study that one banner -could- work in other markets for Albertsons / Safeway. However, it may make some sense to have the Hispanic themed stores rebannered "Food4Less" and some of the larger Fry's Food and Drug stores rebannered as Fry's Signature.

[arizonaguy]

In regards to Harris Teeter in Nashville I think this is simply a case where HT only had a couple stores in the market and Kroger has many. It probably didn't make sense to operate under two separate banners. And it makes sense to go with the banner that has the most stores.

From that standpoint they seem to be a lot smarter than Albertsons. Operating three banners here in SoCal for instance that have very little differentiation doesn't make sense. Every week I get both an Albertsons and Vons ad in my mail. That's a waste of money and effort IMHO.

The Harris Teeter example is better compared to United since it was a smaller chain that was acquired in 2013, not a huge merger earlier this year (rocking the boat this early in the game isn't a good idea, at least compared with what Albertsons did in 1999). The Market Street stores are still independent in Dallas, as well. That's not to say that Albertsons won't do anything down the line (unpredictable is the name of the game), while on the other hand Kroger is a little too predictable and there's not much to go on to say that Harris Teeter won't get lobotomized and become a Kroger in all but name.

I'd say that the jury is still out on what will happen to Harris Teeter.

They were building stores built on the Dillon's design (as opposed to a Kroger design) in Arizona for years after Kroger bought Dillon's.

As I mentioned in my last post, they operate all varrying kinds of stores in Arizona. Some stores have wine cellars / wine bars while others have Mexican restaurants and tortilla bakeries.

I believe Harris Teeter and Mariano's give them something that they had been lacking. The "Fresh Fare" or "Signature" (not Texas) concepts are a step in that direction but they seem to be somewhat half-baked. I'd expect to see some elements of Harris Teeter and Mariano's brought out to the other divisions once Kroger has had a chance to digest them.

Harris Teeter and Roundy's private label brands likely will be melded into the general Kroger private label program before much else happens.

[storewanderer]

Pseudo, the Harris Teeter Stores in Nashville were poorly performing and located a long, long ways from distribution. It never made sense that Harris Teeter was even in that market. Those stores were an island. They had a high cost to provide distribution to. They did not have very good service. They were living on double coupons and $3.99/lb salad bars. They were not merchandised right for the market. Nashville is not DC and not the Carolinas. It is a different market. Harris Teeter in Nashville looked no different than any other Harris Teeter.

Kroger in Nashville is much stronger. Kroger in Nashville when up against Publix is doing much higher volume than Publix, especially if it is a marketplace store such as Thompsons Station, TN. Kroger Nashville runs much cleaner and better merchandised stores than Kroger Atlanta does (very sloppy operation down there and Publix seems to do better against them).

The outcome of Harris Teeter in Nashville would have happened, Kroger or not.

At least Kroger tried to run those poorly performing Harris Teeter stores in Nashville as Harris Teeter without pulling the plug immediately.

If you had visited all of those Harris Teeters in Nashville (which I did, before the Kroger merger) you would have a better understanding of the situation with those stores...

Also Pseudo, Kroger and Harris Teeter are still competing against each other in Raleigh, NC, Charlottesville, VA, and Norfolk, VA and are running different ads and the stores are obviously still doing their own thing in those markets. There isn't a Kroger private label item anywhere in Harris Teeter. Same old Harris Teeter/Topco items as before (this could be due to a contract...).

As I said before what happened in Nashville has nothing to do with Kroger's "attitude" toward its acquired chains but everything to do with Harris Teeter being a poor performer in Nashville and one that never had a chance there just for logistics reasons, among competitive issues.

If Kroger had the "one size fits all approach" you are implying, Pseudo, the Harris Teeter locations in those other three markets noted above would also have been closed and/or converted to a different Kroger division.

At this point Harris Teeter still has its own private labels, still has its own website, still has its own systems, still has its own loyalty card... and Kroger has owned it for how long now? Compare this to Albertsons who is already centralizing private label and merchandising in stores it has not even owned for a year yet, already meshing fresh department mix in some regions, already running the same ads, etc.

Also the Albertsons Stores that converted over to United were done for logistics reasons. They were closer to United's distribution and it made sense to convert those over. United Stores generally did higher volumes too. You will use your best "weapon" in the market and obviously they decided the United weapon was a better one to use. Maybe sometimes you need two weapons as Kroger seems to use in a lot of markets (F4L/Ralphs in CA, Fred Meyer/Smiths in Southern Idaho, Fred Meyer/QFC in OR/WA, Kroger/Harris Teeter in assorted markets, Marianos/F4L in Chicago, etc.).

[klkla]

Pseudo, the Harris Teeter Stores in Nashville were poorly performing and located a long, long ways from distribution. It never made sense that Harris Teeter was even in that market. Those stores were an island. They had a high cost to provide distribution to. They did not have very good service. They were living on double coupons and $3.99/lb salad bars. They were not merchandised right for the market. Nashville is not DC and not the Carolinas. It is a different market. Harris Teeter in Nashville looked no different than any other Harris Teeter.

Kroger in Nashville is much stronger. Kroger in Nashville when up against Publix is doing much higher volume than Publix, especially if it is a marketplace store such as Thompsons Station, TN. Kroger Nashville runs much cleaner and better merchandised stores than Kroger Atlanta does (very sloppy operation down there and Publix seems to do better against them).

The outcome of Harris Teeter in Nashville would have happened, Kroger or not.

At least Kroger tried to run those poorly performing Harris Teeter stores in Nashville as Harris Teeter without pulling the plug immediately.

If you had visited all of those Harris Teeters in Nashville (which I did, before the Kroger merger) you would have a better understanding of the situation with those stores...

Also Pseudo, Kroger and Harris Teeter are still competing against each other in Raleigh, NC, Charlottesville, VA, and Norfolk, VA and are running different ads and the stores are obviously still doing their own thing in those markets. There isn't a Kroger private label item anywhere in Harris Teeter. Same old Harris Teeter/Topco items as before (this could be due to a contract...).

As I said before what happened in Nashville has nothing to do with Kroger's "attitude" toward its acquired chains but everything to do with Harris Teeter being a poor performer in Nashville and one that never had a chance there just for logistics reasons, among competitive issues.

If Kroger had the "one size fits all approach" you are implying, Pseudo, the Harris Teeter locations in those other three markets noted above would also have been closed and/or converted to a different Kroger division.

At this point Harris Teeter still has its own private labels, still has its own website, still has its own systems, still has its own loyalty card... and Kroger has owned it for how long now? Compare this to Albertsons who is already centralizing private label and merchandising in stores it has not even owned for a year yet, already meshing fresh department mix in some regions, already running the same ads, etc.

Also the Albertsons Stores that converted over to United were done for logistics reasons. They were closer to United's distribution and it made sense to convert those over. United Stores generally did higher volumes too. You will use your best "weapon" in the market and obviously they decided the United weapon was a better one to use. Maybe sometimes you need two weapons as Kroger seems to use in a lot of markets (F4L/Ralphs in CA, Fred Meyer/Smiths in Southern Idaho, Fred Meyer/QFC in OR/WA, Kroger/Harris Teeter in assorted markets, Marianos/F4L in Chicago, etc.).

Good analysis.

[pseudo3d]

At this point Harris Teeter still has its own private labels, still has its own website, still has its own systems, still has its own loyalty card... and Kroger has owned it for how long now? Compare this to Albertsons who is already centralizing private label and merchandising in stores it has not even owned for a year yet, already meshing fresh department mix in some regions, already running the same ads, etc.

Safeway already had its own private label, and Albertsons is adapting to that instead of using SuperValu's brand, so it's not like they've really rolled out a "centralized brand" to its acquired stores other than a name change. Meanwhile, the former Safeway brands DO have their own card and brand still.

Also the Albertsons Stores that converted over to United were done for logistics reasons. They were closer to United's distribution and it made sense to convert those over. United Stores generally did higher volumes too. You will use your best "weapon" in the market and obviously they decided the United weapon was a better one to use. Maybe sometimes you need two weapons as Kroger seems to use in a lot of markets (F4L/Ralphs in CA, Fred Meyer/Smiths in Southern Idaho, Fred Meyer/QFC in OR/WA, Kroger/Harris Teeter in assorted markets, Marianos/F4L in Chicago, etc.).

United still has their Dallas-area distribution center (coincidentally) almost next to the Tom Thumb warehouse, so it's not like it's the "best" thing. As for these "weapons", those all tend to be different....Food 4 Less is more of a low-end brand, Fred Meyer is the "large store" concept in the regions where it is, Mariano's is really too new to know of any changes that may occur, and as for Harris Teeter, the store has been with Kroger almost two years, but Harris Teeter is a big chain with a lot of fans who aren't especially fond of Kroger. Looking around, there's an article that talks about how Kroger is integrating Harris Teeter back in March 2014, and really no other articles on how Kroger is keeping Harris Teeter a "special". Meanwhile, there's an article on United's first year under Albertsons ownership.

Kroger could just go for the jugular and have the stores become Kroger within the months of the acquisition, but Kroger isn't stupid, in fact, the botched Lucky merger is probably now enshrined in the supermarket industry as how not to rebrand other labels.

[storewanderer]

United has been left on its own due to the sale agreement. Albertsons had to let United stay this way for a certain number of years. Kroger had a similar agreement with Jay C back when they bought it. Couldn't touch much for 10 years. That's passed now. These types of things get thrown in when you buy private companies.

Safeway's brands are very centralized; this is the company that made Lucerne dairy items and trucked some like yogurt back to Chicago to sell. They sell largely the same items everywhere and their line of items isn't very extensive. Safeway doesn't even have a private label baking soda and is missing hundreds of private label drug items that Supervalu offered and previously that the old Albertsons offered. The private label program used by the old Albertsons and by Supervalu varied by division in its mix, how the stores merchandised it, and its pricing. The Safeway brand roll out there is centralized, same items to every division and zero regional tinkering.

The Kroger private label program varies by division in a major way. It is very inconsistent on mix. The basic items are there in all locations but the odd items are not. You won't find Kroger cold brew tea bags in the west but you'll find them in the south. You won't find Kroger honey buns in the west either but you'll find those in the south too. You won't find much Private Selection or Simple Truth in a F4L but you'll find a lot of the generic owl brand. For some reason you won't find Private Selection frozen waffles at Smiths but you'll find them at Fry's. And I don't know why Kroger all natural crunchy peanut butter is sold at Fred Meyer but not at Smiths.

At Safeway none of what I described above happens. Same items everywhere, coast to coast. Albertsons is following that path now by implementation of Safeway private label. The only thing that causes any allowed deviation is store size and corporate controls what items get cut, not the division.

You don't see articles about HT being special or kept special because, frankly, it isn't special. You don't see many articles of people talking about changes Kroger is making there either because they have not made many... It is profitable and they are letting it be for now.