Job cuts. Layoffs. Store closings.
All of those topics loom large as Milwaukee retail giant Roundy’s Supermarkets, Inc. turns over to Cincinnati-based grocer, Kroger Co.
Although there has been speculation for months, news of the acquisition reported in a Roundy’s quarterly earnings release early today, came as a shock to many, with the transaction is expected to close by the end of 2015.
Roundy’s, whose headquarters is located at 875 E Wisconsin Ave., is the local operator for Pick ’n Save and Metro Market stores in Milwaukee, Copp’s stores Wisconsin-wide and Mariano's Fresh Market stores in Chicago. The company's nine distribution centers supply more than 800 supermarkets in Wisconsin and 13 other states.
But, it was a good buy for Kroger Inc. – known for its strong organic and natural offerings – as it extends the retailer’s reach in Chicago and the upper Midwest, both market segments they haven’t previously touched.
In a press release, Kroger CEO Rodney McMullen notes that, "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."
Despite the furor over the Kroger buyout and Roundy’s long-term, this isn’t the first time the grocery company has been acquired by an outside firm. In 2002, Roundy’s was acquired by Willis Stein & Partners, an equity investment firm based in Chicago. However, under the acquisition agreement, which was valued at $750 million, Roundy's retained its independent status as a grocery wholesaler and retailer.
And according to Roundy's, the company will continue to be headquartered in Wisconsin, even after the Kroger's merger.
A brief history
Roundy’s was founded in 1872 when Judson A. Roundy and two partners, Sidney Hauxhurst and William A. Smith, found a wholesale grocery company called Smith, Roundy & Co. in Milwaukee.
In 1953, the firm reorganized as a grocery cooperative, with only independent retailers allowed to hold Roundy's stock. In 1955, it opened its grocery distribution center in Wauwatosa, and the center would remain as a hub for business until 2003 when it was moved to Oconomowoc. In 2007, the property was sold to HSA Commercial and is now home to the Mayfair Collection.
By 1975, in a response to the recession which began in 1974, Roundy’s opened its first Pick 'n Save Warehouse Foods, a store some might remember for its minimal decor and rock-bottom prices. By keeping costs down, Roundy's warehouse stores offered consumers consistently low prices, and by 1980, a survey of Milwaukee-area stores found all the company's major competitors losing market share, while the Roundy's Pick 'n Save chain gained.
But things change
Despite success with its Mariano’s chain in Illinois, Roundy’s has been hit hard by increased competition in the Milwaukee area in recent years. And, despite efforts – including increasing the amount of fresh produce in its stores and bolstering customer service efforts – the longtime grocery has continued to struggle to maintain a market share in Milwaukee’s increasingly competitive market.
And questions remain.
Will Kroger's be able to battle rivals like Whole Foods and Meijer Inc. to regain a stronghold in the Milwaukee market? Will Sendik's Food Markets Inc. – the Whitefish Bay-based grocer – be able to hold its ground now that it boasts the highest number of locally owned grocery stores in the area?
Only time will tell.