Kroger to sell its 784 convenience stores

Kroger announced last week that it reached an agreement to sell its convenience store business for $2.15 billion to EG Group, a petroleum and convenience store retailer based in Great Britain. The deal includes 784 stores across 18 states.

The EG Group plans to continue operating the stores under their current banners (Turkey Hill, Kwik Shop, Quick Stop, Tom Thumb and Loaf 'N Jug), and plans to establish its North American headquarters in Cincinnati, where Kroger is based.

Burt Flickinger III, managing director at Strategic Resource Group, doesn't support the sale.

"For Kroger to sell more than 700 convenience stores when they had the opportunity to get to 1,700 stores, it is really regrettable that the company succumbed to this activist pressure because the c-stores were performing so well across all banners."

Flickinger believes that Kroger will miss out on the opportunity to further grow the business by installing Amazon lockers in the c-stores, as Marathon Speedway currently does.

Aldi and Lidl planning shake-up of U.S. grocery landscape

A Wall Street Journal article last month said "the two scrappy German discounters that have wreaked the most havoc in Britain are ratcheting up their U.S. ambitions." The discounters are, of course, Aldi and Lidl.

Aldi currently has over 10,000 stores in 18 countries. (Aldi is actually broken down into Aldi Nord and Aldi Sud, a breakup that occurred in 1960 as a result of a rift over cigarette sales between the Albrecht brothers. Aldi Sud operates Aldi in the U.S. and a number of other countries, while Aldi Nord includes Trader Joe's U.S. stores.) Aldi recently said it would invest about $3 billion into opening new stores in the U.S., and that it plans to increase its U.S. store count from 1,400 to 2,000 by the end of 2018.

The very next day, Lidl, which has over 10,000 stores across Europe, outlined its plans to enter the U.S. market, most likely in 2017 or 2018. As brokers, landlords and real estate developers up and down the east coast know, Lidl has been aggressively pursuing sites for the past year. Lidl is owned by Schwartz Group, Europe's largest retailer.

In Great Britain the success of Aldi and Lidl has contributed to continuing problems - falling share prices, lost jobs and closed stores - for the country's traditional grocers. On the other hand, the success of these discounters has proven to be a boon for consumers in the form of lower prices and more convenient shopping.

The two food retailers "are on everybody's radar in the U.S. today," according to Craig Rosenblum, a retail consultant at Willard Bishop.

With Aldi's aggressive growth plans and Lidl's planned entry into the market, U.S. discounters like Walmart and Save-A-Lot are on notice.