Watch out, Publix: Kroger backing organic grocer with Florida expansion plans

Apr 1, 2016, 1:10pm EDT Updated Apr 1, 2016, 1:19pm EDT

Ashley Gurbal KritzerReporterTampa Bay Business Journal

A specialty grocer that's expanding in Florida now has the backing of one ofPublix Super Markets Inc.'s biggest competitors.

Kroger Co. (NYSE: KR) based in Cincinnati, said Friday that it has entered a "strategic partnership" with Colorado-based Lucky's Market.

A Lucky's Market storefront in Louisville, Kentucky.

"Kroger has made a meaningful investment in Lucky's, which will significantly accelerate Lucky's Market's growth in new and existing markets. The financial terms of the transaction, which closed today, were not disclosed," the companies said in a statement.

Lucky's has three locations in Florida — in Naples, Gainesville and Coral Springs. Four more stores are planned, in Neptune Beach, Melbourne, Orlando and Plantation. It has plans to open seven Florida stores in 2016.

The grocer has 17 stores in 13 states.

But there's likely a lot more to come, especially with the backing of a powerhouse like Kroger. In 2014, Lucky's told the Tampa Bay Business Journalthat Florida was one of its target growth markets. Retail real estate brokers in the Tampa Bay region say the grocer is one of a handful new concepts scouting the market for space.

A Lucky's spokeswoman did not immediately return a request for comment Friday.

With Kroger behind it, Lucky's is likely to become a much more significant competitor in the grocery world — and yet another new concept to chip away at Publix's market share. In recent years, Publix has held its own against specialty grocers by offering more organic and natural items and increasing its prepared foods departments.

Both Publix and Kroger have seen success from adding upscale touches to their mainstream stores — it's been particularly effective at luring in shoppers fromWhole Foods Market Inc. (NASDAQ: WFM), which is struggling.

"This strategic partnership is designed to further enhance the best products, practices and techniques Lucky's Market has to offer," the companies said. "These strengths, combined with Kroger's scale and experience, will in turn create benefits for customers and help Lucky's Market grow over time."

The partnership may also give Kroger an upper hand in its mainstream stores, in markets where it competes with Publix — metro Atlanta and the Carolinas. Ties with a company like Lucky's could strengthen Kroger's organic and specialty offerings across the board.

Lucky's competes on both price and quality. Its tagline is "organic for the 99 percent." The company's 30,000-square-foot stores are built to resemble "an indoor farmers market," with "garage door entrances, field bins, barrels and wooden crates."

It's also known for its prepared foods and private label goods — two big growth areas in the grocery world.

Lucky's isn't the only organic grocer with Florida in its crosshairs. Sprouts Farmers Market (NASDAQ: SFM) has big plans for the Sunshine State — with the first confirmed location in Palm Harbor. A prime corner in South Tampa is also said to be a target for Sprouts.