If you want to understand what bad shape A & P was in, consider this fact: Kroger passed on the opportunity to buy the chain.
Even A&P’s Number One marketshare rating in the biggest market in the country, a market in which Kroger has no presence, could not outweigh the functional obsolesce of many of the stores, the deferred maintenance in others, the tarnished brands and difficulties with the union workforce. Local retailers, which can fill in on distribution routes and utilize current advertising campaigns and regional management to cover more stores, have bought or put bids in for about 187 of A&P’s 297 stores – the rest seem likely to not sell at all and just be taken over by landlords
Kroger did buy Harris Teeter, of course and, now, the company has bought Roundy’s. Kroger’s executive team may well feel they can better manage the conventional grocery stores in Wisconsin, perhaps changing the Pick ‘n Save into Kroger’s Food 4 Less Banner, but Kroger really made the acquisition to get Mariano’s.
Here you have a match made in heaven. A brilliant urban concept, field tested and ready to roll out but constrained because its parent company, Roundy’s, did not have the balance sheet strength to finance that roll-out. Now Kroger has a golden concept — Mariano’s is such a special store that we know people who selected one apartment over another because they wanted to be near a Mariano’s — that is right on trend for smaller footprint, urban stores and whatnot. One could look for Mariano’s to roll out across the country.
Of course, it might not. When Kroger bought Fred Meyer, we thought now that Kroger had its own supercenter concept, it would roll them out across the country and give Wal-Mart a run for the money in the supercenter wars — but it never did.
Kroger is an interesting company and being “on trend” doesn’t seem to worry its executives very much. When others would have urged it to go global, it has stayed firmly rooted in the USA. It is certainly innovative, using data better than almost anyone, but it is incremental.
It is a path you can’t really argue with. Kroger recently announced its 47th consecutive quarter of identical supermarket sales growth, an accomplishment no supermarket chain in living memory has accomplished.
Maybe Kroger will take what learnings it can from Mariano’s and quietly integrate into its other concepts, and find itself with 50 consecutive quarters of identical supermarket sales growth.
