Roundy's Troubles May Have Created Openings for Kroger, Other Grocers in Milwaukee Market

Nov 11, 2015

The Milwaukee grocery scene has been competitive and evolving in recent years. A number of new players have enter the market and, on Wednesday, came some of the biggest news. The locally-owned Roundy’s chain is being bought by Kroger.

Roundy’s used to be the dominant player in the Milwaukee area with its Pick N Save stores, but Douglas Munsen, of MTN Retail Advisors, says the company has been in trouble for years.

“Over the course of the past several years, Roundy’s has for the lack of a better word, sort of floundered. They just really haven’t capitalized on their presence in the market. It’s sort of a resting on their laurels position, I think,” Munsen says.

He says the fact that Roundy’s has been struggling opened the door for other players to enter the market. Among them are chains such as Meijer and Cermak.

"Grocery chains recognizing that maybe Roundy’s wasn’t on their A game and realizing that there was just an opportunity to come in as a market share leader and bring a newer store, newer presence, different format into the market. So I think that’s really why you’re seeing a lot of the activity with the new market entries in there,” Munsen says.

Munsen says, for years, it has seemed as though Roundy’s was positioning itself for a sale, but now the question is - what does Kroger get.

“They are very, very methodical in either new market incursions or in acquisitions like this. It gets Kroger into a new market, right Milwaukee and Wisconsin in general,” Munsen says.

What Kroger really wants are the Mariano stores in Chicago, according to David Livingston. He owns Milwaukee based DJL Research, a grocery industry research company. Livingston says Kroger will probably end up closing a number of stores.

“I would guess maybe 25 stores in Wisconsin,” Livingston says.

For those that remain open, he expects them to retain their name.

“I think Pick N Save is a good brand and it’s got good brand name recognition. Kroger hasn’t done that with other acquisitions in other markets, so I think Kroger will want to capitalize on that brand name,” Livingston says.

Kroger operates close to 3,000 stores across the country, while Roundy’s owns 150 in Wisconsin and Illinois. The deal is expected to be finalized by the end of the year.