July 9, 2013
Kroger says it has agreed to buy Harris Teeter Supermarkets Inc. for about $2.44 billion in cash.
Kroger and Harris Teeter are the dominant players in the battle for grocery dollars in Charlottesville and Albemarle County. The two chains constitute nearly 50 percent of all grocery sales in the area.
Kroger already owns more than a dozen other grocery chains.
"They purchased Harris Teeter in large part because of the name and the recognition that it has," said Michael Ho, a professor at the Darden School for Business, and an expert on mergers and acquisitions.
Ho says the deal also allows Kroger to reach new customers.
"(Harris Teeter) addresses a slightly different market than Kroger traditionally has," Ho said.
However, shoppers may not notice much of a difference from the acquisition.
"Harris Teeter will become a division of Kroger," said Harris Teeter spokeswoman Danna Jones. "We will maintain the Harris Teeter banner, our management teams, our new store growth plan, our distribution and manufacturing facilities in North Carolina as well as our headquarters in Matthews, NC. We will continue to provide our shoppers the outstanding product and customer service they have come to expect from their Harris Teeter."
Kroger officials say it is too early to tell how the merger will impact the items sold at Harris Teeter. They wouldn't say, for example, whether Harris Teeter will start offering Kroger's generic brands, or whether Harris Teeter will start offering fuel points, as Kroger does.
Harris Teeter regulars, like Tom Brett, say they are hoping the changes are minimal.
"The foods are fresh. The employees are very helpful. And I'd hope they would keep that up," said Brett.
"If they were to conform it more into a Kroger, then I probably wouldn't shop here anymore," said Lynn Walker, another Harris Teeter shopper.
Kroger officials say they do not plan to close any Harris Teeter stores. However, Professor Ho says the company will try to make things more efficient.
"Kroger is at least ten times larger than Harris Teeter," Ho said. "It can bring a lot of purchasing power."
Kroger officials say they hope to save up to $50 million dollars in the next three years as a result of the acquisition.
If the acquisition is approved by shareholders and regulators, Kroger will own six grocery stores in Charlottesville and Albemarle County. Ho says the government may consider that a monopoly.
"The government could make a case that there might need to be some divestitures here," Ho said. "But it's too early to tell."
According to annual reports, most Kroger employees are members of a labor union. However, no Harris Teeter employees are in unions.
Kroger representative Keith Dailey says the Harris Teeter stores will remain under Harris Teeter management, which means the employees will keep the same employment practices that they currently have.