Making good on rampant reports that its acquisition appetite has not yet been satiated following its recent purchases of Harris Teeter and Roundy's, The Kroger Co. has forged a “strategic partnership” with Boulder, Colo.-based specialty grocer Lucky’s Market. The hybrid deal, terms of which were not disclosed, is expected to significantly accelerate the growth of the 17-store Lucky’s banner in new and existing markets.
Kroger officials said the partnership, which closed on April 1, is designed to further enhance the best products, practices and techniques of Lucky's Market, combining them with the Cincinnati-based retailer's scale and experience to generate more benefits for customers. The alliance further demonstrates the Cincinnati-based grocery giant’s “deep ongoing commitment to providing customers with affordable fresh organic and natural foods as a part of its Customer 1st strategy,” according to Kroger, which indicated that the deal will gel well with its first-ever small format Main & Vine concept store in Gig Harbor, Wash., which mixes local, specialty and everyday products.
The alliance with Lucky's follows in the wake of Kroger’s attempted acquisition of The Fresh Market and its successful merger with Roundy’s, operator of the popular Mariano’s Fresh Market chain in the Chicago area.
Sagent Advisors LLC and Wilson Sonsini Goodrich & Rosati acted as financial advisor and legal advisor, respectively, to Lucky's Market. Weil, Gotshal & Manges LLP acted as legal advisor to Kroger.
“It is a very special day in our industry when our largest traditional grocer and one of our fastest-growing specialty grocers form a strategic growth partnership," Scott Moses, managing director and head of food, drug and specialty retail investment banking at New York-based Sagent, told PG. "Lucky’s is truly unique in its mission, its ethos and its egalitarian approach to good, healthy food. With Kroger’s help, we expect Bo and the Lucky’s team to continue their rapid growth and really make a mark in the sector over the next few years. We are honored to have played a part in helping these two great companies embark on this exciting journey together.”
Organic for the Masses
Founded in 2003, Lucky's Market and its affiliates employ more than 1,800 associates in 13 states throughout the Midwest and Southeastern United States. Lucky's "Organic for the 99%" store format emphasizes its expansive selection of natural and organic food, including fresh produce, meat and seafood, prepared foods and baked goods, as well as wine and beer and personal care goods.
With stores averaging about 30,000 square feet, Lucky's layout resembles an indoor farmers market, with "garage door" entrances, field bins, barrels and wooden crates. Its culinary department showcases restaurant-quality prepared foods made from recipes that include those developed by CEO and former chef Bo Sharon and his wife Trish, who together founded the banner that grew from a single location in a former convenience store.
Through its "L" private label, Lucky's provides a broad range of grocery items that have no artificial colors, flavors or preservatives, and 10 percent of profits from its private label are reinvested in the communities it serves.
Kroger operates 2,778 retail food stores under a variety of local banner names in 35 states and the District of Columbia.