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Kroger surprised many locals and retail observers with its announcement last week that it would exit the Raleigh-Durham market and sell its 14 stores in the region. The nation's largest grocer blamed over-saturation in North Carolina's Triangle region.
“After a thorough evaluation of the market for a significant time period, we have decided to close our stores in the highly competitive Raleigh-Durham market,” said Jerry Clontz, president of Kroger Co.’s mid-Atlantic division, in a statement. “While we have had some success, we have not been able to grow our business the way we would like in this market.”
Kroger entered the region in 1989.
Harris Teeter, acquired by Kroger in 2014, will take over eight of the locations. The two businesses operate separately under Kroger’s family of banners.
An article in The News & Observer indicated that Kroger was gaining market share in the region and ranked as the fourth-most-popular grocery store in Raleigh. But the gains may have been coming at the expense of margins.
Kroger reportedly faced challenges on the lower end from Walmart, Costco, B.J.s and newcomers such as Aldi and Lidl. Publix also recently entered the region. Meanwhile, locals such as Harris Teeter, Food Lion and Lowes Foods benefit from their North Carolina-heritage.
Mike Walden, an economics professor at North Carolina State University, suspected the upcoming arrival of Wegmans, more stores from Publix, and Whole Foods’s ongoing changes under Amazon’s ownership all also played a role in Kroger’s decision to exit.
But he also believes Kroger “never really caught on” in the region and the primary reason wasn’t too many grocery stores.
“Who wouldn’t want to be in the market because we’re probably going to double in population over the next 30 to 40 years,” Mr. Walden told wral.com. The professor believes Harris Teeter with its longer heritage in area and slightly more upscale positioning has a better chance to compete.
In March, Kroger provided a weak outlook for the year due to expected margin pressures. Rodney McMullen, chairman and CEO, told analysts at the time, “We’re not going to lose on price, but we’re not out there trying to lead the market down.”
- Kroger to close all its stores in the Triangle; 1,500 workers affected – The News & Observer
- Here's why the Triangle's grocery wars claimed Kroger. Who else is in danger? - The News & Observer
- 1,500 expected to lose jobs as Kroger closes all stores in Triangle - WRAP
- MAP: Kroger quits competitive Raleigh-Durham “Triangle;” to sell 14 stores – Produce Retailer
- Kroger cites margin pressure in 2018 outlook – Supermarket News