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Kroger, Lucky’s pact

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CINCINNATI — Kroger Co. at the beginning of this month announced a strategic partnership with Lucky’s Market of Longmont LLC, a specialty grocer focused on natural, organic and locally grown food. Financial terms were not disclosed but, in a statement announcing the deal, Kroger characterized its investment in Lucky’s as “meaningful” and said the cash infusion would accelerate the 14-year-old company’s growth in new and existing markets.

Lucky’s is headquartered near Boulder, Colo., and it operates 17 Lucky’s Market stores in 13 states in the Midwest and Southeast. It employs about 1,800 people.

“Lucky’s ‘Organic for the 99%’ store format emphasizes its expansive selection of natural and organic food, including fresh produce, meat and seafood; prepared foods; and baked goods, as well as wine and beer and personal care goods,” Kroger commented in its statement. “With stores averaging approximately 30,000 square feet, Lucky’s layout resembles an indoor farmers market, with ‘garage door’ entrances, field bins, barrels and wooden crates. Its culinary department showcases great-tasting, restaurant-quality prepared foods made from recipes that include those developed by chief executive officer and former chef Bo Sharon and his wife Trish. Through its ‘L’ private label, Lucky’s provides a broad range of grocery items at great value that have no artificial colors, flavors or preservatives, and 10% of profits from its private label are reinvested in the communities it serves.”

In establishing Lucky’s, the Sharons shared a vision of creating a grocery store chain where food lovers like themselves would want to shop, with organic, natural and local food sold at affordable prices with genuine personal service, according to Kroger. The alliance demonstrates Kroger’s commitment to providing customers with affordable fresh organic and natural food as a part of its Customer 1st strategy, Kroger noted.

Kroger launched its Simple Truth organic brand less than four years ago, and it has grown into the nation’s largest organic food brand. Simple Truth accounted for $1.5 billion in sales last year, up from $1.3 billion in 2014, the company said last month during a presentation at the Bank of America Merrill Lynch Consumer and Retail Tech conference in New York.

Overall, sales of organic and natural food generated $11 billion last year, the company noted, representing 10% of Kroger’s $110 billion in sales.

Deals such as the Lucky’s partnership could allow Kroger to continue to achieve growth in natural and organic sales.

Kroger in February opened the first smaller-format Main & Vine store, in Gig Harbor, Wash., a 27,000-square-foot experiment that the company said will offer seasonally curated items, including fresh, organic, local and sustainable food items alongside big-brand staples, and will regularly host chefs and farmers who will provide tips on meal preparation. The store features a coffee, wine and beer bar at designated times during the day, plus a two-level café.

The Main & Vine pilot, in a former QFC store, is likely to benefit from smaller-store expertise gleaned by Roundy’s Inc. from its Mariano’s banner; Roundy’s was acquired by Kroger in mid-
December. Roundy’s, which operates Pick ’n Save, Copps, Metro Market and Mariano’s grocery stores, continues to be run from Milwaukee by key members of the chain’s senior management team. Roundy’s has 151 grocery stores and 101 pharmacies across Wisconsin and Illinois.

Kroger recently made an unsuccessful bid for small-format supermarket chain The Fresh Market Inc. of Greensboro, N.C. The specialty food retailer announced last month that it was being acquired for nearly $1.4 billion by private equity firm Apollo Global Management and company founder and chairman Ray Berry.

Despite the hiccup, Kroger’s growth trajectory remains on course.
In the fourth quarter, Kroger delivered its 49th consecutive quarter of positive identical-supermarket sales growth without fuel, and its 11th consecutive year of market share growth.

“Two thousand fifteen was an outstanding year for Kroger,” chairman and chief executive officer Rodney McMullen said in a statement. “We delivered on our performance targets, grew market share, created 9,000 new jobs, supported our communities and continued to expand our use of technology to drive growth. And we’re not done.”


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