Most Americans get their groceries from independent merchants or regional chains, but Kroger recently took a giant step toward expanding its footprint.
Kroger announced Wednesday (Nov. 11) that it had acquired Roundy's, Inc., the Wisconsin- and Illinois-based grocery chain. Kroger will begin operating all of Roundy's locations, which will bring its overall store total to 2,774 across 35 states with more than 422,000 employees. Rodney McMullen, CEO and chairman at Kroger, explained how the merger will allow both brands to do more than they could have alone.
"We admire what Bob Mariano [CEO of Roundy's] has done with the Mariano's banner in Chicago, where he has created an urban format that is resonating with customers and we expect to apply Roundy's experience to our stores in urban areas around the country," McMullen said in a statement. "Kroger's scale and strong financial position will enable Roundy's to reinvest in its home state of Wisconsin while continuing to grow in Chicago. Together, we are committed to investing in Roundy's people, communities, stores and merchandising to deliver a fantastic customer experience that will create opportunities for associates, grow customer loyalty and revenue, and create value for shareholders."
Kroger paid about 65 percent of Roundy's closing share price for the acquisition, though that seems a small price to pay for the opportunity to expand in a market where Kroger has little presence. In fact, Darren Tristano, president of Technomic, told The Chicago Tribune that the "acquire first, build second" mentality has proven a solid formula for Kroger and other brands looking to grow.
"What a lot of larger chain brands have learned is that it's easier to acquire than to build," Tristano said. "It's a good opportunity for Kroger to expand their footprint in the country. [Chicago] is not far away from their headquarters, and I think it's a sweet spot for them."
Whether Kroger's expansion - and its products - prove as sweet to Midwest shoppers remains to be seen.
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