News Feature | January 24, 2014

Kroger, Harris Teeter to Merge

By Kara Murphy, contributing writer, Integrated Solutions For Retailers

Merger Agreement

Cincinnati-based grocery chain gets FTC approval for $2.5 billion deal

The Federal Trade Commission has approved Kroger’s $2.5 billion acquisition of North Carolina-based Harris Teeter. The sale is expected to be finalized by the end of January. Merging the two profitable grocery chains will create a supermarket company with sales of more than $100 billion annually.

Kroger officials say Harris Teeter will keep its name and autonomy. There is no word, however, whether any of the 550 jobs at Harris Teeter’s North Carolina headquarters will be dissolved. Kroger, based in Cincinnati, Ohio, already has 2,414 stores with 343,000 employees across the United States operating under the banners of Kroger, Fred Meyer, King Soopers, Food 4 Less, and Ralphs, with annual sales of about $97 billion. In comparison, Harris Teeter has 212 stores with 25,800 employees and $4.7 billion in annual sales. Most of its stores are in North Carolina, but the company has recently started expanding into markets such as Washington D.C. Kroger has assured customers there will be no major changes inside stores.

Chuck Cerankosky, a managing director at Northcoast Research, told the Charlotte News & Observer that Harris Teeter customers will likely notice nothing different at their favorite supermarket — at least at first. “I don’t see them doing a lot to fix something that’s working just fine,” Cerankosky says. “It’s not going to be Kroger walking in the door and saying, ‘You have too many registers open,’ or ‘We’re going to completely revamp your pricing and promotion strategy.’ I don’t think they’re going to touch that stuff.”

However, Kroger officials say they will bring the chain’s data-analytics program to the Harris Teeter stores, which allows them to gather detailed information about customer purchases. Kroger’s program is operated by dunnhumbyUSA, which is one of the premier data aggregators and analysts for food retailers.

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The data-analytics information, combined with Kroger’s more powerful purchasing power, and a combined distribution system will save the Cincinnati-based company $40 million to $50 million a year, according to Kroger executives.

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