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Ukrop’s, the Richmond, Virginia-based, family-owned supermarket chain, is being acquired by Dutch conglomerate Royal Ahold for $140 million.

Store managers were informed of the transaction yesterday at a 2 pm meeting, and then were sent back to their stores to inform employees and show them a video made by Jim and Bobby Ukrop, according to the Richmond Times Dispatch.

The deal, which according to the Washington Post includes all inventory, equipment and leases, marks a major turning point in the history of both companies. Ukrop’s, which was founded in 1937, has been a bastion of the local community and a company with specific cultural touchstones - its stores were closed on Sunday and did not sell alcohol. Until recently, Ukrop’s seemed to be almost unassailable in its markets, but a toughening economy seemed to make it vulnerable; at the same time, expansions into new markets such as Roanoke did not go well, and rumors have been flying around for months that the company was on the sales block.

As for Ahold, the decision to buy Ukrop’s seems to send a strong message that the company is back, and completely recovered from the financial scandal that roiled its ranks just a few years ago. Ahold sold its Tops stores in western New York three years ago and was the focus of investor pressure to sell all of its US operations; at times, it seemed like management was uncertain about how to operate the company;s various divisions, especially the Stop & Shop and Giant-Landover divisions, where operations were centralized and more recently seemed to be going through something of a decentralization process.

The Washington Post reports that Ukrop’s “will become part of Ahold's Giant-Carlisle division based in Carlisle, Pa., which also includes the Martin's supermarkets in Virginia.”

According to the Times Dispatch, “Under its new ownership, Ukrop’s will retain its name for a couple of years and be open on Sunday, according to company sources. The stores, which have been closed Sundays and do not sell alcoholic beverages, will begin selling alcohol but only after the Ukrop’s name is removed, the sources said.

The sale is expected to close in the first quarter.
KC's View:
Inevitable and sad news, if only because it is a shame when people of an independent mind get out of the business. Real innovation almost always comes from smaller players that have less bureaucracy to deal with, that are more in touch with their customers needs and wants. The death of Ukrop’s - and no matter how this plays out, this is the death of one of America’s preeminent independent retailers - is not good for the business.

This also is a strong statement by Ahold, saying that the company is back...and means business. One has to assume that it will be able to grow Ukrop’s sales just by opening on Sunday...though it also should take pains to preserve what is special about the customer-focused culture at the company.

If Ahold forces Ukrop’s into its way of doing things, going for efficiencies at the expense of effectiveness, it will be a mistake. Addition can actually be multiplication of you do it right.