Schnucks Exits Memphis Market

Citing competitive pressures, St. Louis-based Schnuck Markets Inc. is pulling out of the Memphis, Tenn., market after nine years serving Mid-South shoppers.

Schnucks is selling nine of its 12 Memphis-area supermarkets to the Cincinnati-based Kroger Co.; the three remaining Schnucks stores will close within 30 days of the sale, formally marking the company’s exit from the Mid-South region. As per the agreement, all 1,193 Schnucks associates will be given the opportunity to interview for positions with Kroger.

“Despite the best efforts of our talented store teams and a strong customer following, we were unable to gain the strong foothold we had hoped for when we entered the market in 2002,” said Scott Schnuck, Schnucks chairman and CEO. “Schnucks competes very favorably in other markets, but in the Mid-South, fierce competition including a growing number of non-traditional grocers and a lingering high price perception was the one-two punch that brought us to [the] announcement.”

Kroger, which reportedly intends to continue operating at least eight of the nine acquired stores, currently operates 37 stores in the Memphis metropolitan area. Two of the acquired Schnucks locations will replace two smaller existing Kroger locations, which will be converted and re-opened within two weeks after they close.

“Our primary goal is to minimize the inconvenience to our customers as we transition the stores to Kroger,” said Mark Prestidge, president of Kroger’s Memphis-based Delta Division, which currently operates 109 stores and 68 fuel centers in five states under the Kroger banner in Memphis and west Tennessee, Arkansas, Mississippi, southern Missouri and southwest Kentucky. “While the acquired stores will be temporarily closed during the conversion process, the pharmacies and in-store banks will be accessible and remain open to customers during regular business hours.”

Further, Kroger’s Hutchinson, Kan.-based Tom Thumb subsidiary, which operates 116 stores in Florida and Alabama, has purchased at least seven of Schnucks’ Memphis-area convenience stores and will operate them under the Kwik Shop banner.

Schnucks purchased the Memphis stores in 2002, and soon after built three new stores while remodeling all others, which were first sold in the 1980s by brothers Art and Jerry Seessel to American Banaco, a French-owned leverage buyout firm. The Seessel family eventually bought back the stores and sold them to Birmingham, Ala.-based Bruno’s Supermarkets in 1996, which in turn, sold to Albertson’s in 1998.

Describing the sale of its Memphis stores to Kroger “a difficult decision,” Scott Schnuck said “as a company of 15,000 teammates, we have an obligation to look to the future. Unfortunately, that means making tough decisions in order to keep our company strong and to continue serving customers and providing careers down the road. While it saddens me to announce our departure from the Mid-South,” Schnuck continued, “I can honestly say that I believe our presence here has had a positive effect on the market. Over the years, Schnucks invested heavily in our stores and in our teammates and stirred local competition to step up their games in terms of food expertise and service. Customers across the region will benefit from that work even after we’ve moved on.”

Vowing to make the transition go as smoothly as possible, Schnuck extended thanks to its “Mid-South teammates as well as customers and community leaders who immediately embraced Schnucks and over the years have allowed us into their lives and into their homes. It’s been an extraordinary partnership for which we are grateful.”

Kroger, meanwhile, has committed to interviewing Schnucks employees who wish to apply for employment at the nine stores. “We are always looking for great people to become part of the Kroger team. We have positions available in many of our stores and we will also need to staff the newly acquired stores,” Prestidge said. “We will be relying on many of the Schnucks employees to fill those positions.”

Schnuck Markets Inc. currently operates 105 stores (including five Logli stores) and 101 in-store pharmacies in Missouri, Illinois, Indiana, Wisconsin, Iowa, Tennessee and Mississippi.