When Cincinnati-based The Kroger Co. announced in November 2015 it was acquiring Milwaukee-based Roundy’s Inc. for $866 million, the company’s chairman and chief executive officer, Rodney McMullen, said there were no plans to close any of the company’s Pick ’n Save stores.
Less than one year later, the 77 people working at Clarke Square Pick ’n Save on Milwaukee’s south side learned that store would close by the end of the summer due to its weak financial performance.
The announcement is one of many coming to area Pick ’n Save stores, predicts grocery industry analyst David Livingston.
Within the next five years, at least a dozen Pick ’n Save stores in southeastern Wisconsin could close, due to redundancies of the stores themselves and increased competition in the market from newcomers like Meijer and Fresh Thyme Farmers Market, he says.
“My guess is they will announce one (Pick ’n Save store closure) per quarter,” said Livingston, who used to work for Roundy’s but now is managing partner of DJL Research LLC in Waukesha. “If they do it too fast, it upsets the investors, the real estate community and the employees. If you go slow and quiet, hopefully no one notices.”
In April, Kroger announced the Pick ’n Save store in Kimberly would close by the end of the year.
In the two years prior to the Kroger acquisition, Roundy’s closed Pick ’n Save stores in Waukesha, Saukville, Milwaukee, West Allis and Racine.
Looking at underperforming stores and redundancies, Livingston predicts the following Pick ’n Save stores will be closed over the next four to five years.
- Brookfield Ruby Isle, 2205 N. Calhoun Road
- Brookfield West, 17295 W. Capitol Drive
- Franklin The Shoppes at Wyndham Village, 7780 S. Lovers Lane Road
- Kenosha Uptown Brass, 1901 63rd St.
- Milwaukee East Pointe, 605 E. Lyon St.
- Milwaukee Silver Spring, 10202 W. Silver Spring Drive
- New Berlin Sunnyslope, 13995 W. National Ave.
- Oak Creek Ryan Road, 2320 W. Ryan Road
- Pewaukee, 601 Ryan St.
- South Milwaukee, 2931 S. Chicago Ave.
- Waukesha Sunset, 220 E. Sunset Drive
- Wauwatosa, 1717 N. Mayfair Road,
- West Milwaukee Miller Park Way, 2201 Miller Park Way
James Hyland, a Roundy’s spokesman, would not comment on future store closings.
“Company policy is to not pre-announce any store openings, closings or remodel actions that may occur in the normal course of operations,” Hyland said.
In many cases, the stores mentioned as possible targets for closures have another Pick ’Save location nearby. For example, there are four Pick ’n Save stores in Brookfield, two in Franklin, three in Kenosha, three in Oak Creek, where a Meijer opened in August 2015, two in Pewaukee and two in Wauwatosa.
There were four Pick ’n Save stores in Waukesha until October 2015, when the store at 1535 E. Moreland Blvd. closed. On Aug. 2, Meijer opened a store at 801 E. Sunset Drive, across from the Pick ’n Save at 220 E. Sunset.
I asked area commercial real estate brokers to take a look at Livingston’s list. They thought some of the locations, including the two in Brookfield, the New Berlin store on Sunnyslope and the Milwaukee store on Silver Spring, seemed logical targets to be shuttered.
But others, like the East Pointe Pick ’n Save, are strong performers that are just in need of a little TLC, they said.
Competition has steadily been increasing in the region’s already highly competitive grocery market. Meijer entered Wisconsin in June 2015, with its first stores in Grafton and Kenosha. The chain has since opened stores in Oak Creek, Wauwatosa, Waukesha and Sussex, and is planning stores in Greenfield, West Bend and Sheboygan.
Costco and Whole Foods also have been expanding their footprints in the area and Fresh Thyme Farmers Market has entered the mix with stores either opened or planned in downtown Milwaukee, Greenfield, Brookfield, Kenosha and Menomonee Falls.
“(Years ago) Roundy’s was in a four-horse race with Kohl’s, Sentry and Jewel and the other three horses had broken legs,” Livingston said. “Now, they are in the Kentucky Derby and in last place.”
Robert Monnat, chief operating officer of multi-family housing development firm Mandel Group, which developed the North End near downtown Milwaukee and leased space there to Fresh Thyme Farmers Market, said there is a significant repositioning of the local grocery market due to the influx of new players.
“The expansion of Meijer and Woodman’s create obvious turbulence at one end of the spectrum, while Fresh Thyme, Whole Foods and Sendik’s provide new shopping opportunities in the specialty grocer segment,” Monnat said. “Sooner or later, certain submarkets will be overserved, while others will be better served. Kroger is a tremendous competitor. I’m looking forward to seeing what they do to reposition certain stores in submarkets where they can outperform.”
Pick ’n Save’s market share in southeastern Wisconsin has fallen from about 65 percent in 2006 to around 39 percent today, Livingston said.
“You can expect market share to plummet (as more Pick ’n Save stores are closed), but it’s not all bad news,” Livingston said. “Sales per square foot should rise and get close to the Kroger Co. average after this all shakes out. The stores that will close are low volume with minimal market share. Kroger should still be around 30 percent, which would still make them the market share leader.”
