Harris Teetering

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Recently, there has been a wild amount of frenzy regarding apotential sale of Matthews-based grocer Harris Teeter.  Speculation is ablaze about what might happento the regional upscale grocer, which has stores in the Mid Atlantic region andthe Southeast.  When The Wall StreetJournal reported that Harris Teeter was exploring options for a sale and thechain consulted with J.P. Morgan financial advisors, other chain grocery storenames such as Kroger and Publix were mentioned. However, it is our thinking that the most likely scenario is that aprivate equity firm will buy the chain and keep its name and branding as-is,and retain the headquarters just outside of Charlotte. 
If a sale occurred to Kroger, which is the second-largestgrocery chain after Walmart, then we would see a return of the mid-marketgrocer to the Charlotte market, as well as a return to other markets that haveexperienced Kroger’s absence, like the Washington, D.C.-metro area.  Kroger, however, is the most typical mid-marketgrocer in America, which a price point that is more on par with Bi-Lo thanHarris Teeter.  Kroger only has a handfulof stores in North Carolina currently, in Raleigh and Durham, and if a takeoverof Harris Teeter were to occur, this would make Kroger one of the most dominantgrocery store chains in the state.
With Publix expanding into the Charlotte metro area, onewould think that the quickest takeover for Harris Teeter, its most formidablecompetitor, would give them a stronghold of the market.  We don’t see this happening either though,because Publix grows a little more organically rather than throughacquisition.  Publix is planning onopening stores in Charlotte’s Ballantyne and South End communities soon.
Ultimately, much of the speculation is just that, and likewe said our prediction is that the customer won’t notice any changes if andwhen a transaction occurs.  With thestore-swap with Lowes Foods last year in the Charlotte area, we think that HarrisTeeter has worked hard to keep its core footprint of suburban markets and upand coming urban areas.