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Kroger Pulling Out of Raleigh-Durham Market

Lack of ability to grow business, overstoring of the region among the reasons for sudden move
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Kroger will abruptly shutter all of its 14 stores in the Raleigh-Durham, N.C., market, citing “a changing retail environment” and “overstoring” as the reason. 

The stores, operated by Kroger's Mid-Atlantic division, have had a presence in Raleigh-Durham since 1989, and will close on or about Aug. 14, with sister division Harris Teeter moving into eight of the properties and Food Lion and Crunch Fitness taking over one store each, with discussions in motion of what to do with the remaining stores.

Jerry Clontz, president of the Mid-Atlantic division of Kroger, said the decision was made after a "thorough evaluation of the market for a significant time period," adding that "while we have had some success, we have not been able to grow our business the way we would like in this market."

“The retail environment is challenging and changing in Raleigh-Durham,” he said. “Many retail analysts say the Raleigh-Durham market is overstored.”

The move would take the Kroger banner out of North Carolina completely, although the company maintains a presence there with its Charlotte-based Harris Teeter division, which was acquired in 2013 and is run as a separate division. Both Kroger and Harris Teeter have dealt with an invasion of new competitors in recent years, notably from Publix, Lidl and Wegmans, which has announced four stores in development. North Carolina is reportedly one of the first markets where Walmart took an aggressive new pricing stand, and where Food Lion has improved volumes and store trips with its "Easy Fresh and Affordable" initiative.

Food Lion officials said it plans to complete an "extensive remodel" of its acquired store, set to open in early 2019, and "will offer an expanded variety and assortment of products that are relevant to customers, such as more local, natural, organic and gluten-free items."

"We've been the neighborhood friend that our customers can count on for more than 40 years in Raleigh," said Food Lion President, Meg Ham. "With the addition of this new store, we have an even greater opportunity to serve more customers – our neighbors – with fresh, quality products at affordable prices every day with the caring, friendly service they expect from their local Food Lion."

The closings will impact about 1,500 associates, more than half of which are part time. Clontz said helping associates transition is the company's "No. 1 priority," and that Kroger would make "every effort" to assist associates in finding employment through job fairs, job placement services and employee assistance programs to help them manage the process. 

Kroger Mid-Atlantic worked with The Food Partners, a Washington, D.C.-based, grocery industry focused investment banking firm, as a strategic adviser for the divestiture of these stores.

Locations of the eight stores that Harris Teeter has agreed to acquire are:

  • 202 W. NC Highway 54, Durham
  • 3457 Hillsborough Road, Durham
  • 5116 N. Roxboro Road, Durham
  • 1273 N.W. Maynard Road, Cary
  • 8345 Creedmoor Road, Raleigh
  • 940 U.S. Highway 64, Apex
  • 1802 North Point Drive, Durham
  • 1371 E. Broad St., Fuquay-Varina

Crunch Fitness will acquire the store at 6300 Creedmoor Road, Suite 150, Raleigh. Food Lion will acquire the store at 7905 Falls of Neuse Road, Raleigh. The transactions described remain subject to customary closing conditions.

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