Supermarket mergers and acquisitions have been heating up in the past week, as four new deals in the industry were announced. Many retailers are using acquisitions to expand their chain or release new product offerings, instead of doing so organically.
The Kroger Co. will acquire Hiller's Market and its seven Detroit area stores, reported Crain's Detroit Business. The deal will help Kroger expand its specialty and ethnic product offerings, which Hiller's is known for. Many shoppers frequent Hiller's to buy specialty items such as meats, seafood and organic items, while going to larger chains, such as Kroger, to do general shopping. This acquisition will give Kroger the opportunity to win back those specialty shoppers using Hiller's already established customer base. Kroger has been focusing on the Michigan market, planning to spend $150 million on new stores, remodels and expansions in the area in 2015, which is the most it has ever spent in one year, according to its president Jayne Homco.
One of the larger supermarket acquisitions recently was ACON Investments LLC's acquisition of Fiesta Mart LLC from the Levit family. Fiesta Mart has 60 locations throughout Texas and is one of the largest Hispanic grocery chains in the country. Michael Byars, previously with Bi-Lo LLC, Minyard Food Stores Inc. and the Delhaize Group, will become president and CEO of Fiesta.
In addition to that deal, the Levit family also sold its Gerland's grocery store chain to Lewis Food Town Inc., parent of Food Town Grocery Stores, reported Houston Business Journal. The Levits previously franchised 10 of its 16 locations in Houston with Food Town, giving Food Town an expanded local presence. Acon Investments would have acquired Gerland's as well, but Lewis Food Town made an offer, which had been in the works since October, just in time to purchase the 16 stores. Mike Lewis, president of Lewis Food Town, plans to improve sales at the 6 stores the company was not franchising by limiting the in-store clutter and amount of non-food items sold.
One other recent deal was SpartanNash Co.'s proposed purchase of Dan's Supermarket in North Dakota, reported The Detroit News. The six stores will still operate under the Dan's name after the transaction is completed in June. SpartanNash will supply the stores from a Fargo distribution center, replacing the stores' current distributor Supervalu. SpartanNash previously bought two stores from Dan's in 2013.
The increasing trend of supermarket mergers and acquisitions isn't new this year. In 2013, there were 28 supermarket M&A deals, nine more than in 2012, and the most since 2007, according to Food Institute data. And if that jump wasn't large enough, they continued to skyrocket in 2014, with 36 deals in the sector.