retail news in context, analysis with attitude

Kroger this morning announced that it plans to buy Roundy's, including its Mariano's chain of 34 upscale supermarkets, for $800 million.

Bob Mariano, Roundy's chairman/president/CEO, said in a prepared statement, "We are excited about becoming part of The Kroger Co. Kroger's scale, knowledge and experience allows us to accelerate the strategic initiatives we have invested in and makes us a more formidable competitor in the marketplace. This is a great win for our customers, communities, employees and our shareholders, and I personally look forward to continue to exceed customer and employee expectations."

Rodney McMullen, Kroger chairman/CEO, said, ""Mergers for Kroger always involve both parties bringing something to the table. We admire what Bob Mariano 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. 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."

MarketWatch writes that "the new entity will operate 2,774 supermarkets and employ more than 422,000 people across 35 states and the District of Columbia." The companies aid that "following closing, Roundy's will continue to operate its stores as a subsidiary of The Kroger Co. and will continue to be led by key members of Roundy's senior management team. There are no plans to close stores."

The deal is subject to regulatory approvals, but no problems are expected in that area.
KC's View:
The folks I talk to tell me that they believe that the Kroger influence will be a positive on on Roundy's and help make its stores more competitive ... kroger is very good at acquisitions and turning the whole into something greater than the sum of its parts.

It'll be very interesting to see how this impacts the Mariano's format and long-term growth ... I have to believe that local competition in Chicago has to be worried about the extent to which Kroger plans to expand and strengthen the concept.