In a field beset with competitive pressure from traditional retailers of all kinds as well as the burgeoning e-commerce sector, Kroger Co. has been a model of quality and consistency.In a field beset with competitive pressure from traditional retailers of all kinds as well as the burgeoning e-commerce sector, Kroger Co. has been a model of quality and consistency.
The nation’s largest supermarket operator continues to find new ways to enlarge and improve its business, even as it maintains a long streak of solid financial results.
The company’s merger agreement with Roundy’s should enhance that impressive track record. Announced earlier this month, the deal will bring Kroger 151 food stores and 101 retail pharmacies under the Pick ’n Save, Copps and Metro Market banners in markets new to the company, including Milwaukee, Madison and northern Wisconsin. In addition, Kroger will extend its reach in greater Chicago with 34 Mariano’s stores.
The agreed-upon purchase price of $3.60 per share represents a hefty premium over the level at which Roundy’s stock had been trading prior to the merger. The reason Kroger was willing to pay so much is that, in addition to the stores and added market penetration, the company is receiving a good deal of know-how when it comes to operating supermarkets in a major urban market. Since its debut in Arlington Heights, Ill., in July 2010, Mariano’s has done much to reenergize the food retailing scene in Chicago. The chain bases its appeal on a commitment to fresh, high-quality food from around the world and a shopping environment that features such amenities as a sit-down sushi bar, a wood-burning pizza oven and an Italian coffee shop, to name just a few.
Kroger chairman and chief executive officer Rodney McMullen was up-front about the intangible benefits that will result from the addition of Roundy’s to the company’s retailing empire, which after the deal is finalized, will encompass 2,774 supermarkets in 35 states and the District of Columbia. He praised Robert Mariano, Roundy’s chairman, president and CEO, for the skill he exhibited in crafting an urban format that resonates with consumers and operating in a dense urban environment, while also pointing to the benefits that the acquired stores will derive from Kroger’s vast scale and financial muscle.
As long as Kroger retains the ability to leverage its existing strengths and supplement them when the right opportunities arise, it will maintain its place as one of America’s premier food retailers.