COMPTON, Calif. -- Ralphs Grocery Co. here said it has signed a 15-year lease on a two-building distribution center in Stockton, Calif.
The southern California chain said it will utilize the facility to service its northern California stores, which include 20 units operating under the names Cala, Bell and FoodsCo and 32 units divested by Boise, Idaho-based Albertson's.
Ralphs is a division of Kroger Co., Cincinnati.
According to a spokesman, Ralphs converted three of 29 Sacramento-area stores to the Ralphs banner last week -- in Roseville, Auburn and Granite Bay, Calif. -- with two to four conversions a week to follow through the end of October.
He said the chain reopened the first divested Albertson's unit in Sacramento two weeks ago -- a former Super Saver store that Ralphs will operate as a warehouse store under the FoodsCo banner. It will convert two other locations to warehouse formats over the next few weeks, the spokesman added.
To accomplish the conversions, stores will be closed at 6 p.m. on a Sunday night to change prices, product mix and signage before they reopen the following Thursday. The spokesman said stores will retain the Albertson's decor and general layout until they are completely remodeled, which will be done over the next two to three years.
The distribution complex Ralphs will use was formerly leased to a company outside the food industry.
Ralphs said it will take immediate occupancy of one of the two buildings -- a 177,000-square-foot facility that will be expanded by 130,000 square feet for use as a dry grocery warehouse.
The other building, a 314,000-square-foot facility, will undergo retrofitting, at an estimated cost of $12 million-15 million, to facilitate storage of frozens and perishables. Ralphs said it will move into that facility during the first quarter of next year.
Ralphs said the lease agreement includes an option to purchase contiguous land within the next four years for further development of the distribution center.
Ralphs has been filling most of the needs of its 20 existing northern California stores through the northern California division of Certified Grocers of California, Los Angeles. The spokesman said he was unsure whether Ralphs would continue to buy from Certified once the new facilities open.
According to Tom Gast, vice president, corporate real estate, for Ralphs, "The Stockton distribution center will provide Ralphs with the necessary backstage support to serve our existing Bay Area stores and meet our immediate and future growth needs."
