Purchase Could Lower Prices At Harris Teeter
For the past five decades, Harris Teeter has been a locally-based company with a relatively small chain of regional supermarkets. Not anymore. The company announced Tuesday it’s being acquired by Kroger, the nation’s largest supermarket. What could the transformation from regional chain to national subsidiary could mean for you at checkout?
The Kroger Company already owns almost 2,500 supermarkets coast-to-coast, under a variety of names--Kroger, Ralphs, City Market, Food 4 Less, Dillons and Fred Meyer, to name a few. Those last two could serve as a guide for how Kroger will handle its Harris Teeter stores. The company bought both Dillons and Fred Meyer, kept their names, and then stayed relatively hands-off.
"They continued to operate largely autonomously for a long-time," says Mark Hamstra, retail and financial editor for Supermarket News. "You didn’t really see a whole lot of Kroger influence there, other than a greater degree of buying power which enables them to be more competitive on price."
In theory, Harris Teeter prices will go down, because its parent company can buy things in bulk. But, you may also notice your favorite Harris Teeter brand product tastes a bit different, because it’s now being made by Kroger’s supplier.
The fresh-made food at Harris Teeter, such as pizza and sandwiches, could show up at Kroger stores. The company's chief financial officer, Michael Schlotman, told investors on a conference call that the smaller chains stores make more money off their fresh food.
"That's actually one of the things we're excited that we think we can learn a little bit more about them," Schlotman told investors on a conference call.
Harris Teeter stores themselves shouldn’t go anywhere. Burt Flickinger, managing director of Strategic Resource Group, validates Kroger's claim that there’s very little overlap between the two chains.
"Harris Teeter’s in nine states where Kroger is relatively underdeveloped. North Carolina, obviously a key market, as well as Washington, D.C. which is a very tough market," Flickinger says.
Getting those new markets is the main thing Kroger has touted about the purchase.
In terms of jobs, the company has announced it plans to keep Harris Teeter’s Matthews-based management team intact. If history is any guide, Kroger could even do one better. The company has a history of promoting executives from companies acquires. For instance, the company’s current CEO is David Dillon. That’s as in Dillons, the mid-west chain Kroger bought thirty years ago.