Supermarket giant Kroger eyeing Hawaii for first Isle location

Duane Shimogawa

Reporter- Pacific Business News

                                                                                         

Supermarket giant The Kroger Co., which nearly acquired Safeway a year ago, may be eyeing Hawaii for its first locationin the Islands.

The Cincinnati-based company, which is the largest supermarket chain in the U.S. and the second-largest general retailer in the nation behind only Wal-Mart Stores (NYSE: WMT), registered as a new business in Hawaii in early February, according to public records.

The Kroger Co. (NYSE: KR) first registered a new business in Hawaii in 2006, but later withdrew the registration.

Kroger has more than 2,600 locations in the nation, with several store formats including supermarkets, department stores and convenience stores in 34 states, including such brands as Dillons, Fred Meyer, Fry's, Harris Teeter, QFC, King Soopers, Ralphs and Smith's, Food 4 Less, City Market and Jay C.

A year ago, Kroger was reportedly looking to buy California-based Safeway, the second largest grocery store chain in the country.

Safeway, which has 21 stores in Hawaii, eventually agreed to be acquired for $9.2 billion by another large grocery store chain, Albertsons, a subsidiary of Cerberus Capital Management. Cerberus, which until recently also owned the four Waikiki hotels operated by Starwood Hotels & Resorts Hawaii, will pair Safeway's stores with the Albertsons chain it already owns.

Kroger's most recently available earnings report noted that it expects to "obtain sales growth from new square footage, as well as from increased productivity from existing locations."

Steve Sofos, president of Honolulu-based Sofos Realty Corp., told PBN that it would be hard to bring another supermarket chain into Hawaii as they would have shell shock with Hawaii rents and land prices.
"Rents for supermarkets in Hawaii are at a minimum double to quadruple higher than Mainland prices because supermarkets typically have a small profit margin as compared to clothing and food retailers," he told PBN in an email.