As the dust settles on the $866 million December acquisition of Milwaukee-based grocery store operator Roundy’s Inc. by Cincinnati-based supermarket behemoth The Kroger Co., some changes are expected this year at Wisconsin Pick ’n Save and Metro Market stores.
Chief among them are what the stores look like and which products they carry, at what prices.
“Usually Kroger, after they acquire a store, they integrate their own product in the store; they try to sync their frequent shopper card up with those stores,” said grocery industry analyst David Livingston.
Among the changes coming down the pike this year are store remodels, as well as pricing and product shifts, said James Hyland, vice president of corporate communications and public affairs at Roundy’s Supermarkets Inc., which now operates as a subsidiary of Kroger.
“There’s obviously going to be changes in product that people will see and there will be pricing changes and there may be some changes to the store,” Hyland said. “We have committed to increase our capital spending throughout all of our Wisconsin banners. While we don’t publicly disclose our spending plans, over time our customers will notice changes in merchandising, pricing and store aesthetics.”
The larger scale that Kroger brings should benefit customers, Livingston said.
“It’s going to work out pretty good for the customer because it will give them a little more access to some better deals,” he said.
But for employees, the integration may not be as favorable.
There are just more than 500 employees at the Roundy’s corporate headquarters in Milwaukee. The company has a total of 23,000 employees, 13,000 of whom are in Wisconsin, Hyland said.
He wouldn’t answer questions about any employment changes occurring at the corporate offices in Milwaukee.
“You’re asking strategic questions and we don’t reveal strategy to the media,” Hyland said. “If I’m Hy-Vee or Festival (Foods) or somebody else, I would love to know what Roundy’s is doing. Like any other industry, those are things we keep close to the vest and we have to do that for competitive reasons.”
“The whole point of acquisitions is to eliminate redundancies,” Livingston said. “A lot of those (corporate) functions are already being done in Cincinnati and Roundy’s has a lot of good people, so it wouldn’t surprise me if they made some offers to people to move to Cincinnati.”
But the name on the outside of the store is not likely to change, at least in the Milwaukee area, Livingston said. Kroger is narrowing its Wisconsin banners to Pick ’n Save and Metro Market, and this summer is renaming the Copps stores in the Fox Valley to Pick ’n Save.
A Roundy’s manager who declined to be named said the pricing department has been told to cut prices in half on some Roundy’s brand and national brand products to make room for Kroger brand products. Pick ’n Save and Metro Market stores currently carry Roundy’s brand products, which are made by about 275 employees at the Roundy’s commissary in Kenosha.
Hyland said there may be some product changes, but the 120,000-square-foot commissary will remain in operation. It supplies fresh and prepared food to 150 stores in Wisconsin and Illinois.
Prices are likely to be lowered across the store network to compete with Meijer and Walmart, Livingston said.
“I could see prices being lowered around 4 percent,” he said.
Roundy’s will likely also improve its pharmacy program, harnessing the service to drive up to 10 percent of sales, Livingston said.
But at the same time, methodical store closures are on the horizon over the next several years, he predicted. While Roundy’s may lose market share this way, its sales per square foot will improve.
“I think they’re going to close probably up to 20 percent (of the Roundy’s stores),” Livingston said. “They’re just too close to the other stores. It just wouldn’t make sense to keep them open.”
