Business

Kroger to acquire Harris Teeter, says no stores to close

Posted July 9, 2013

Map Marker  Find News Near Me

— The Kroger Co., the country's largest grocery store chain, announced Tuesday that it will acquire Harris Teeter Supermarkets Inc. for about $2.5 billion in cash. 

According to a news release, there are no plans to close Harris Teeter stores, which will continue to operate under the Harris Teeter name. The Matthews, N.C.-based supermarket chain will become a subsidiary of Cincinnati-based Kroger.

Harris Teeter operates 212 stores in the Southeast, including 136 in North Carolina and 20 in the Triangle. Kroger, meanwhile, operates about 10 times that number of stores under more than a dozen names in 31 states.

"Harris Teeter is an exceptional company with a great brand, friendly and talented associates and attractive store formats in vibrant markets," Kroger Chairman and Chief Executive David Dillon said in a statement. "We look forward to bringing together the best of Kroger and Harris Teeter while continuing to operate and grow the Harris Teeter brands."

Still, customers worried Tuesday that Kroger will eventually change Harris Teeter stores, which they consider to offer higher-quality foods and offer better service.

"Harris Teeter is, quality-wise, absolutely better than Kroger, so that's definitely a concern," shopper Erin Parks said.

Supermarket generic, grocery store Customers fret over supermarket merger

Kroger spokeswoman Kari Armbrewster said it's too early to speculate on possible changes to product selection in stores, but she said the chain would evaluate what works well in both Kroger and Harris Teeter stores and may decide to incorporate "best practices" across the board.

It's also unclear whether Kroger will retain Harris Teeter's police of doubling the value of coupons every day. Kroger stopped that practice in May, choosing to cut prices instead.

Kroger shopper Heidi Delozier said she hopes the merger leads to lower prices.

"It would be nice to see the price point for Harris Teeter to come down," Delozier said. "I like their things and I think it's good, but it's just one of those things, as a single mom, it's very difficult to afford their prices."

A study at South Dakota State University found that larger supermarket chains produce greater economies of scale, which could lead to lower prices. A study by the Federal Trade Commission said pricing depends on the competition in a market, with prices rising by about 2 percent in areas where one or two chains control the market.

Harris Teeter customers shouldn't worry about the takeover, said Mike Walden, an economist at North Carolina State University. Kroger would not pay the price it agreed to in the deal "and go out and destroy the company," he said.

Mike Walden Economist: Kroger deal best for Harris Teeter

Walden, who grew up shopping at Kroger in Cincinnati, called Harris Teeter "a juicy, ripe apple" that was bound to be picked off sooner or later by a larger chain.

"The nature of the grocery industry, of the supermarket industry, is to get bigger, to go national. That helps with advertising, that helps raising money," he said.

He called the deal "a complementary match," noting that Kroger doesn't have a great presence in the mid-Atlantic region, which is Harris Teeter's main base.

Kroger did close two Raleigh stores in January that it said were unprofitable. One on New Bern Avenue has since been converted into a Carlie C's IGA supermarket, and Mount Peace Baptist Church says it has purchased the vacant Kroger on Martin Luther King Jr. Boulevard for a community grocery store and church wellness center.

Kroger will finance the transaction with debt and expects to achieve annual cost savings of approximately $40 million to $50 million over the next three to four years. Kroger plans to assume Harris Teeter's outstanding debt of about $100 million.

The $49.38 per share purchase is 34 percent more than Harris Teeter's closing stock price on Jan. 18, the day of the first media report that the chain was considering a sale, Bloomberg reported Tuesday. Harris Teeter had $4.5 billion in revenue in 2012.

219 Comments

This story is closed for comments.

Oldest First
View all
  • Bendal1 Jul 10, 1:40 p.m.

    We avoid shopping at Krogers unless absolutely necessary. This wasn't always the case, but when the company closed the only two Krogers stores on the east side of Raleigh, including the one right down the street from us, we decided their policies weren't worth our money any more. I don't believe they will keep all the H-T stores open either; some of them are too close to existing Kroger stores to keep both open.

  • seriouslyrevoked Jul 10, 1:00 p.m.

    I shopped at Kroger for over tens years, I stopped about ten years ago, other than occasionally at the Eno River store. Last time there it was unbelievably trashy, only one cart available although it wasn't busy. Usually the Fire Lane is full of vehicles of those to lazy to park and walk in. HT has a higher standard for customer service, cleanliness, and quality of food. Thus the higher prices.
    It is understandable people must go where they can afford to. I heard that today's average Males income, when adjusted for inflation, is at its lowest since 1968. As males income drops the incentive for women to marry follows suit. And government dependence rises. Welcome to hope and change.

  • Homesteader79 Jul 10, 12:25 p.m.

    Well, whatever happens is out of our control. At least we still have choices....

  • xylem01 Jul 10, 11:28 a.m.

    We need more Aldi's!

  • ccsmith1902 Jul 10, 11:15 a.m.

    I'm worried about quality. Period.

  • rhess2 Jul 10, 8:49 a.m.

    I certainly hope Kroger is reading public reaction online about the purchase of Harris Teeter. Overall most don't like it! It is very telling how many shoppers feel about Kroger. Perhaps it will be an awakening for them. Sometimes within a corporation there is a belief they are either the best or very good. My guess is Kroger thinks so about their stores. If they change Harris Teeter in any major way it will be the biggest business mistake a company could make. My concern is that they may not have the capability to keep HT's high standards. If they did wouldn't Kroger stores be comparable to Harris Teeter?

  • superman Jul 10, 8:13 a.m.

    They dont have plans "yet" to close stores. But we all know that they will be looking at every store and making appropriate adjustments. If it is not showing a profit it will likely be closed. Very few companies continue to operate anything that is not showing a profit. Dont remember ever shopping at a Kroger store and my visits to HT are few and far between. I shop and always get value for my money. When you shop at HT you are paying for that nice store. I prefer to have cash in my pocket than that nice bag from HT.

  • mfarmer1 Jul 9, 7:52 p.m.

    >> says no stores to close
    Sure. Why Is There, Not One Kroger's Fayetteville?

  • sunshine1040 Jul 9, 7:48 p.m.

    We use to have two clean and customer oriented Kroger in Fayetteville area but they decided they could not compete with commissary years ago. Would love to see a Public move into the area

  • taylor3297 Jul 9, 7:16 p.m.

    kikinc- I guess we both know someone involved in the project and so far Publix is still planning in the Cary location. Also, another friend is looking to move her local business and was looking at opening shop in the same complex. Publix was listed on the site map.

More...