Dive Brief:
- Kroger will consolidate Roundy’s Wisconsin and Mariano’s into a single division that will operate under the Roundy’s name, according to a report in the Chicago Tribune. The division will be headed by Michael Marx, who has led the Roundy’s division since Kroger acquired it in 2015.
- A few top Mariano’s executives that worked closely with Roundy’s founder Bob Mariano will depart at the same time the consolidation takes place. Don Rosanova, Mariano’s president, will retire on September 29 while Don Fitzgerald, Mariano’s vice president of merchandising and John Boyle, vice president of operations for Roundy’s, will remain as strategic advisers until January.
- Kroger acquired Roundy’s in 2015 for $800 million and in 2016 split Mariano’s and its conventional chains, headed by its Pick N’ Save banner, into separate divisions.
Dive Insight:
Kroger made its stamp on Roundy’s in 2016 by naming Marx as head of the division. Now it’s expanding his responsibilities at a crucial time for the company.
Roundy’s has invested more than $300 million over the past few years in store remodels throughout the state. These are vitally important updates for the company, particularly in Milwaukee, where it operates around 60 stores and holds the market share lead. Aldi, one of the biggest threats to Roundy’s Pick N’ Save, Copps and Metro Market banners, announced last year it would spend $37 million to update 23 Milwaukee stores.
Marx and the Kroger team will also be challenged to keep Mariano’s at the top of its game in Chicago. It’s a bit concerning that the grocer, which is known for its fresh and prepared foods, is losing executives who were so closely tied to the chain’s founding and former CEO and namesake Bob Mariano.
Mariano’s came to Chicago in 2010, at a time when names like Jewel-Osco and Dominick’s had a firm hold on the market. But the grocer succeeded by carving out a niche for itself, and by getting ahead of trends like gluten-free foods and cold-pressed juices. Bob Mariano put his personal stamp on the chain. When Dominick’s went out of business in 2013, Mariano’s scooped up a dozen stores. Now, the banner operates more than 40 locations and is seen as a leading name in the Windy City grocery scene.
Kroger will have plenty of managers and other leaders to help Mariano’s keep humming along. It also has a nationwide network of stores and some of the best top executives in the business.
Ultimately, the consolidation is a way for Kroger to reduce costs as it continues to invest in existing stores and promising growth initiatives. The company saw its stock price tumble last week after it reported slower growth than anticipated for the most recent quarter. Still, many analysts believe the grocer, through its Restock growth initiative, is making necessary moves to face down the numerous threats against it.
“We are closely watching [Kroger’s] ability to deliver on its Restock plan and other efforts, and remain encouraged by the collective actions to date,” Rupesh Parikh, senior research analyst at Oppenheimer & Co., wrote in a recent note to clients.
