Introduction
In the world of U.S. grocery retail, Kroger and Meijer are two names that loom large. With thousands of stores, tens of billions in revenue, and a presence in dozens of states, these companies have become household names for millions of Americans. But despite their similar industry and Midwestern roots, an interesting question remains – does Kroger own Meijer?
As a long-time retail industry analyst and a notoriously picky shopper myself, I‘ve made it my mission to provide the full scoop. In this comprehensive deep dive, we‘ll explore the intertwined yet separate paths of these two grocery giants. We‘ll trace their histories, dissect their strategies, and ponder a potential future together. So put on your retail geek hat and join me on this fascinating journey!
Kroger: The American Grocery Goliath
Our story begins with The Kroger Company, an absolute behemoth in the U.S. grocery landscape. Founded by Bernard Kroger in Cincinnati, Ohio way back in 1883, this company has stood the test of time and then some.
From its humble beginnings as a single store, Kroger has morphed into the nation‘s largest supermarket chain by revenue and its second largest general retailer overall (behind only the mighty Walmart). The company‘s staggering $132.5 billion in fiscal 2020 sales came from a sprawling empire of 2,742 supermarkets and multi-department stores across 35 states and D.C.
To truly grasp Kroger‘s scale, consider this – the company employs over 465,000 people, putting it in the top 20 largest private employers in the U.S. Its stores operate under two dozen different banners, ranging from its eponymous Kroger supermarkets to regional names like Ralphs, Harris Teeter, and Fred Meyer.
But Kroger is far more than just a supermarket chain. The company also runs 1,596 fuel centers, 2,255 pharmacies, and 225 in-store clinics. It manufactures many of its own products in 35 food production plants and even processes milk in 17 dairies. Talk about vertical integration!
One of Kroger‘s greatest strengths is its powerful data analytics capabilities. With over 60 million households in its loyalty program, Kroger captures detailed shopper data to personalize promotions, optimize assortments, and inform business decisions. Its pioneering use of data has been a key competitive advantage.
While already a dominant force, Kroger is not content to rest on its laurels. The company has made aggressive moves into e-commerce, expanding its pickup and delivery options and partnering with cutting-edge players like Britain‘s Ocado to build automated fulfillment centers. In fiscal 2020, Kroger‘s digital sales skyrocketed 116% to over $10 billion.
Meijer: The Supercenter Pioneer
Now let‘s turn our attention to Meijer, another Midwestern grocery powerhouse with a unique history and identity.
The Meijer story began in 1934, when Dutch immigrant Hendrik Meijer opened a modest grocery store in Greenville, Michigan during the depths of the Great Depression. But it was Hendrik‘s son Fred who would truly leave his mark, pioneering the "supercenter" concept in 1962 – a full 26 years before Walmart opened its first such store.
Under Fred Meijer‘s visionary leadership, the chain expanded rapidly throughout Michigan and into surrounding states. The company‘s strategy was encapsulated in its famous slogan "Thrifty Acres", combining low prices with an unmatched one-stop shopping experience.
Today, Meijer has grown into a major regional force, with 256 supercenters and grocery stores across Michigan, Ohio, Indiana, Illinois, Kentucky, and Wisconsin. The retailer generated approximately $20 billion in revenue in 2020, making it the 26th largest in the U.S.
While not as massive as Kroger overall, Meijer punches above its weight in the states where it operates. The company commands a leading 26% grocery market share in its home state of Michigan, for example. Its stores are also known for their impressive size, averaging over 200,000 square feet.
Meijer‘s supercenters offer an expansive assortment that spans far beyond groceries, delving into categories like apparel, home goods, electronics, and even automotive supplies. This breadth allows Meijer to capture a greater share of wallet from its shoppers.
Although Meijer has expanded its digital capabilities in recent years, the company still generates the vast majority of its sales from its physical stores. Its e-commerce strategy has focused on leveraging its store footprint for pickup and delivery, as opposed to building standalone digital infrastructure.
One interesting aspect of Meijer is its continued private ownership. The company is still controlled by the Meijer family, with brothers Hank and Doug Meijer serving as co-chairmen. This private structure allows Meijer to make long-term investments without the pressure of public markets.
Meijer is also known for its strong corporate citizenship, donating over 6% of its profits to charity. The company has a particular focus on hunger relief, education, and health/wellness causes in the communities it serves.
Kroger and Meijer: A Competitive Comparison
Now that we‘ve laid out the key facts about each company, let‘s dive into how Kroger and Meijer stack up:
Financial Metrics
Kroger Meijer
Revenue (2020) $132.5B ~$20B
Market Cap $28B Private
As the financial metrics show, Kroger‘s national scale dwarfs Meijer‘s regional footprint. Kroger generates over 6.5x the revenue of Meijer and operates nearly 11x as many stores across a much wider geographic range.
However, these top-line numbers don‘t tell the full story. Within its core Midwestern markets, Meijer often matches or exceeds Kroger‘s market share. Meijer also generates significantly higher sales per store than Kroger ($78M vs. $48M), due to its larger supercenter format.
Strategies & Positioning
Beyond the numbers, Kroger and Meijer have some noteworthy differences in their strategies and market positioning.
Kroger‘s primary focus is on dominating the traditional grocery category. While it has expanded into adjacent areas over time, its core competency remains supermarket retail. In contrast, Meijer has always been more of a general merchandise player that happens to sell groceries. Its supercenter model is geared toward capturing a larger overall share of household spending.
This strategic divergence is reflected in the companies‘ store formats. Kroger operates a wide range of store sizes and types, but its average store is around 65,000 square feet and primarily food-focused. Meijer, on the other hand, only has two main formats – supercenters (averaging 200,000+ sq. ft.) and neighborhood markets focused on pharmacy and essentials.
In terms of target demographics, both chains aim to appeal to a broad middle-class customer base. However, Kroger tends to skew slightly more upscale in its branding and assortment, especially at its Marketplace and Fresh Fare stores. Meijer‘s brand perception is more centered on value and one-stop shop convenience.
From a digital perspective, Kroger has invested much more aggressively in omnichannel capabilities. The company has over 2,000 pickup locations, delivers from over 2,400 stores, and is building a network of highly automated "shed" fulfillment centers. Meijer has rolled out pickup and delivery but relies on third-party partners like Shipt rather than building its own digital infrastructure.
Private Label Prowess
One area where Kroger and Meijer share a similar strength is in private label development. Both companies have a long history of building strong store brands that drive loyalty and profitability.
Kroger‘s Our Brands portfolio includes over 15,000 items across food and non-food categories, accounting for over 25% of total units sold. The company‘s Simple Truth brand, focused on natural and organic products, has become the largest natural/organic label in the country with over $2.5 billion in annual sales.
Meijer‘s private label program is also robust, spanning over 12,000 products and contributing 19% of revenue. The company‘s flagship Meijer brand is complemented by several other owned brands like True Goodness (healthier options) and Meijer Organics.
The success of these private labels is a testament to both Kroger and Meijer‘s merchandising capabilities and their deep understanding of shopper needs. As I can personally attest, many of their store brand products offer excellent quality at a compelling value.
Culture & Community Impact
Finally, it‘s worth touching on the distinct corporate cultures and community engagement approaches of Kroger and Meijer.
Kroger‘s culture is often described as data-driven and results-oriented. The company is known for its relentless focus on efficiency, continuous improvement, and using insights to inform every aspect of the business. At the same time, Kroger has a strong stated commitment to its purpose of "feeding the human spirit" and uplifting its associates, customers, and communities.
Meijer‘s culture seems to reflect its Midwestern roots, with an emphasis on pragmatism, hard work, and service. The company‘s long-time private ownership and family leadership have instilled a certain humility and long-term thinking. Meijer also prides itself on its local giving, having donated over $65 million to charitable causes since 2006.
Envisioning a Kroger-Meijer Combo
So we‘ve established that Kroger and Meijer are separate and formidable competitors, but let‘s indulge in a bit of speculation. What if Kroger were to acquire Meijer? What would be the strategic rationale, synergies, and challenges?
On the potential benefits side:
- Kroger would gain an immediate stronghold in the Michigan market and several other Midwestern states, complementing its existing footprint.
- Meijer‘s expertise in supercenters and general merchandise could help Kroger diversify its format mix and capture a greater wallet share.
- Combining the two companies‘ purchasing volumes could drive significant cost savings and enhance private label capabilities.
- Kroger‘s digital/tech capabilities could be leveraged to accelerate Meijer‘s e-commerce growth.
However, there would be major hurdles to overcome:
- The Meijer family has given no indication of wanting to sell the company. As a private, family-owned business, Meijer may not be interested in being absorbed into a larger public entity.
- The price tag for Meijer would likely be steep, given its size and the "family premium" often required to acquire multi-generational businesses.
- Significant antitrust scrutiny would be likely, especially in Michigan where a combined Kroger-Meijer would have dominant market share. Store divestitures would probably be needed for approval.
- Integrating the two companies‘ systems, processes, and cultures would be a major challenge. Kroger and Meijer have very different operating models and organizational DNAs.
Ultimately, the probability of a Kroger-Meijer deal seems low given these impediments. But in the rapidly consolidating grocery industry, one can never say never.
Conclusion
In summary, Kroger and Meijer are two of the most important and interesting players in U.S. grocery retail. While they share Midwestern roots and a focus on foodstuffs, they‘ve each charted their own distinct course to success.
Kroger has achieved dominance through relentless expansion, operational excellence, and cutting-edge data/tech capabilities. Meijer has carved out a strong regional niche through its pioneering supercenter format and local market knowhow. Both have proven resilient in the face of intense competitive pressures.
For us as shoppers, the continued independence of Kroger and Meijer means more choice in the marketplace. We can pick the retailer (or combination of retailers) that best meets our individual needs and preferences, whether that‘s Kroger‘s data-driven personalization, Meijer‘s one-stop-shop convenience, or a bit of both.
So the next time you‘re perusing the aisles of your local supermarket, take a moment to appreciate the rich histories and competitive dynamics at play. While they may have taken different paths, Kroger and Meijer share one ultimate goal – to win the hearts, minds, and wallets of grocery shoppers like you and me. As a committed retail watcher, I for one will be closely following these two grocery giants‘ next steps. The battle for supermarket supremacy shows no sign of slowing down.
