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The Cincinnati Business Courier has a story about how Kroger CEO Rodney McMullen told analysts this week that its acquisition of Roundy's presents very different challenges than the company is used to.

"“We’re very good at managing high-quality companies and bringing together the best of both worlds,” he said, adding, "One of the things we don’t know is whether we can do a fixer-upper. It is a lot of work.”

CFO Mike Schlotman chimed in, saying that "we’re clearly shining up a slightly tarnished star. Getting back to a 50 (percent) market share from 30 or 35 is a lot of work.”

Interestingly, Bloomberg has a story at the same time suggesting that whatever the challenges at Roundy's, Kroger's desire for deals may not be sated. Kroger has suggested, the story says, that "it was eager for deals but has struggled to find another can't-miss target like Harris Teeter -- the successful Southeastern grocery chain for which Kroger shelled out $2.5 billion in 2014 and quickly absorbed without much trouble. CEO Rodney McMullen assured investors that, if there's such a potential target out there, Kroger has looked at it."

Possibilities include "publicly traded Ingles Market and Sprouts,  now-bankrupt Fairway and privately held Fresh Market, which has drawn Kroger's attention in the past," Bloomberg writes. "These are fresh-focused chains with high-income customers and good business models, which could benefit from better management. Kroger could also make a play for a meal-kit maker or food-delivery company such as Blue Apron or Door Dash, which could give it an edge over competitors."

McMullen told the analysts, the Courier writes, "that the Roundy’s deal served as a way for Kroger to get into a new market. That’s something Kroger was trying to do on its own at the time the Roundy’s opportunity came up. The acquisition cost was about the same as what Kroger would have spent to open a new market."

The story also notes that "One key was Kroger’s realignment of the management team, with one team handling Roundy’s Wisconsin operations and another focused on Mariano’s in Illinois ... Kroger has converted 13 Roundy’s stores to its system, with changes in pricing, products, customer rewards and tech systems. Roundy’s has 117 stores in Wisconsin under the Pick ‘n Save, Copps and Metro Market banners as well as 34 Mariano’s stores in the Chicago area. Kroger is moving quickly to convert the others..."
KC's View:
Tarnished star, indeed. I'd actually go farther than that in describing what is supposed to be the jewel of the Roundy's system.

I've spent some time in a few Mariano's stores lately, and I have to admit that I am less impressed than I used to be. Some of them work, but some seem overbuilt and awkward. And most of all, I've been surprised by the degree to which they seemed empty of customers ... even on weekends, when one would expect them to be far busier.

This was not a scientific survey, so I don't want to make too much of it. But as impressive as some of the Mariano's stores are, there also seems to be something missing there. Kroger may have its work cut out for it as it looks for ways to expand the Mariano's brand ... I think its Main & Vine format in Washington State is a lot more interesting.