| Type | Public |
|---|---|
| Traded as | NYSE: KR S&P 500 Component |
| Industry | Retail |
| Founded | 1883 |
| Founder(s) | Bernard Kroger |
| Headquarters | Cincinnati, Ohio, United States |
| Area served | United States |
| Key people | David Dillon, CEO & Chairman |
| Products | Bakery, banking, beer, dairy, deli, frozen foods, gasoline (select locations), general merchandise, liquor (select locations), meat, pharmacy, produce, seafood, wine |
| Revenue | US$76.7 Billion (FY 2009)[1] |
| Operating income | US$2.45 Billion (FY 2009)[1] |
| Net income | US$1.25 Billion (FY 2009)[1] |
| Total assets | US$23.2 Billion (FY 2009)[2] |
| Total equity | US$5.18 Billion (FY 2009)[2] |
| Employees | 338,000 |
| Divisions | Inter-American Products various chains |
| Website | Kroger corporate website Kroger website |
The Kroger Co. (NYSE: KR) is an American supermarket chain founded by Bernard Kroger in 1883 in Cincinnati, Ohio. It reported US$ 76.7 billion in sales during fiscal year 2009. It is the country's largest grocery store chain[3] and its second-largest grocery retailer by volume[4] and second-place general retailer in the country, with Walmart being the largest.[5] As of 2010, Kroger operated, either directly or through its subsidiaries, 3,619 stores.[6]
Kroger's headquarters are centralized in downtown Cincinnati,[7] but it spans many states with store formats that include supermarkets, hypermarkets, department stores, convenience stores and mall jewelry stores. Kroger-branded grocery stores are located throughout the Midwestern and Southern United States.
Kroger is a union company, and Kroger employees are represented by the United Food and Commercial Workers (UFCW).
In 1883, Bernard "Barney" Kroger invested his life savings of $372 (roughly equal to $8,739.34 today) to open a grocery store in the Mount Airy neighborhood of Cincinnati. Kroger was the son of a merchant, and his slogan was simple: “Be particular. Never sell anything you would not want yourself.” Kroger tried many ways to satisfy customers. He tried to make his own products, such as bread, so that customers would not need to go to a separate bakery. In the 1930s, Kroger was the first grocery chain to monitor product quality and test foods offered to customers, and also the first to have a store surrounded on all four sides by parking lots. In 1955, Kroger acquired Henke & Pillot. Kroger rebranded that chain as Kroger in 1966. In the 1970s, Kroger became the first grocer in America to test an electronic scanner, and the first to formalize consumer research.
In 1983, The Kroger Company acquired Dillon Companies[8] grocery chain in Kansas along with its subsidiaries, King Soopers, City Market, Fry's, Gerbes, and the convenience store chain Kwik Shop. David Dillon, a fourth-generation descendant of J.S. Dillon, the founder of Dillon Companies, is now the CEO of Kroger. In the late 1990s, Kroger acquired Pay Less Food Markets, Owen's Market, JayC Food Stores, and Hilander Foods. In 1997, Kroger merged with fifth-largest grocery company Fred Meyer along with its subsidiaries, Ralphs, QFC, and Smith's. In 2001, Kroger acquired Baker's from Fleming Companies, Inc. In 2007, Kroger acquired Scott's Food & Pharmacy from SuperValu Inc. In 2011, Kroger sold its Hilander chain to Schnucks.
Kroger Marketplace is a chain of hypermarkets. The brand was introduced in 2004 in the Columbus, Ohio, area, which lost the Big Bear and Big Bear Plus chains in Penn Traffic's Chapter 11 bankruptcy. The Kroger Marketplace format is based on the Fry's Marketplace stores that the Arizona division of Kroger is currently operating.
Similar to rival chains Meijer, Sears Grand, Super Kmart, Walmart Supercenter, and Albertsons, and modeled after Kroger-owned Fred Meyer, these stores contain multiple departments. In addition to the grocery department, they contain a Fred Meyer Jewelers, Starbucks, Donatos Pizza, and an in-store bank, as well as sections for toys, appliances, home furnishings, and bed and bath, something that Big Bear once had in their stores in the Columbus area.
In 2005, the company began renovating many Kroger Food & Drug stores in Ohio to give out an expanded and remodeled look, converting them to the Kroger Marketplace format. In February 2006, Kroger announced plans for two new Kroger Marketplace stores to open by the end of the summer in Cincinnati suburbs Lebanon and Liberty Township.[10] The store in Liberty Township opened in July 2006.[11] On October 5, 2006, a new Kroger Marketplace opened in Gahanna. With the Gahanna opening, the number of Kroger Marketplace stores is six, four in the Columbus area and two in the Cincinnati area. Two more stores were planned in 2007, one in Middletown(which opened in 2008, and the old store was razed and made part of the current parking lot) and one in Englewood.[12]
In 2011, the Elder Beerman in Centerville, OH [13] was torn down and a new marketplace has been built in its place with a fuel center and opened on Dec. 8, replacing the 60000 square foot store in the same shopping center. This newest marketplace is the largest Kroger store ever built to date at 147000 square feet. Two more stores have opened in the Cincinnati area, in the Northern Kentucky suburbs of Hebron and Walton which were completed in November 2008. A Kroger Marketplace store has opened in Newport, Kentucky on December 10, 2009. Another renovated store has recently opened in Blue Ash, and two more opened in Lexington, KY in 2009. Another store has been opened in Beavercreek, Ohio. A Mt. Orab, Ohio store is planned to open in the spring of 2010.[14] Kroger opened a new 60,000 sq ft (5,600 m2) store in North Augusta, SC. The store includes a fuel center.
The first Kroger Marketplace store in Texas opened October 9, 2009 in the Waterside Marketplace in Richmond, Texas.[15] The second Kroger Marketplace store in Rosenberg, Texas opened December 4, 2009.[16] The third opened in Frisco, Texas in early 2010.[17] The fourth Kroger Marketplace in Willis, Texas opened August 11, 2011.[18] The next Kroger Marketplace stores in Texas are: in Little Elm, Texas; Fort Worth's Alliance Town Center and Mansfield.[17]
The first Kroger Marketplace store in Tennessee opened in Farragut, TN (a small suburb outside of Knoxville) at the end of 2008, and a second store in Thompson's Station, TN (about 20 miles (32 km) south of Nashville) in early 2009. A third location opened in Gallatin, TN on March 11, 2010. On February 11, 2010, Kroger sold 4 Brookshire's stores in Jackson, Mississippi which were Albertsons.
The first Kroger Marketplace in Arkansas opened in August 2010 on Chenal Parkway in West Little Rock.
The first Kroger Marketplace in Virginia is planned to open on Midlothian Turnpike in Richmond, VA, on the site of the former Cloverleaf Mall.[19] The progress of construction has been slow. The mall has yet to be razed, despite numerous announcements dating as far back as 2003. In fact, events continue to be planned inside the mall (as of Sept. 2011). [20]
The first Kroger Marketplace in Indiana opened on September 29, 2011 on Dupont Road on Fort Wayne's northwest side. This store is a rebuilt Kroger Food & Drug. A second Kroger Marketplace will open from a rebuilt Scott's Food and Pharmacy in the Village at Coventry on the southwest side of Fort Wayne. Construction on this store is underway, with plans for a 2012 opening. These two stores are part of a $100 million expansion project in the Fort Wayne area.
As well as stocking a variety of regional brand products, The Kroger Co. also employs one of the largest networks of private label manufacturing in the country. Forty plants (either wholly owned or used with operating agreements) in seventeen states create about half of Kroger's nearly 20,000 private label products. Similar to most major supermarket retailers, Kroger uses a three-tiered private label marketing strategy.
Kroger operates 40 manufacturing plants, and packages and sells items for other retailers under the Inter-American Products Company name.[21][22]
Kroger operates 15 dairies and three ice cream plants
The Kroger Value line of products was introduced in 1981 by the name of Cost Cutter and was known for its near-generic product labeling. It was then succeeded by FMV, which was a backronym to mean For Maximum Value, originally meaning Fred Meyer Value. It offered staple products such as sugar, flour, bread, and canned goods at the lowest price for that particular product in the store. Though some FMV products (such as their cheese made with water and partially hydrogenated soybean oil) use a lower-quality manufacturing process, other products appear to be indistinguishable from their banner brand equivalent (FMV sugar and Kroger sugar, for example) other than the price.
In early 2007, Kroger replaced FMV with the new Kroger Value brand. This has led to a situation where Kroger brand and Kroger Value brand products are sold side-by-side with little to distinguish them except for packaging and price. The brand change departed from the typical orange-fade-to-yellow labels and is now simply white with blue and red. Since then Kroger has expanded the line to many other items, for example: frozen food, butter, dog and cat food, ice cream, paper towels, bleach, and other food and household items. Most Kroger Value brand items are labeled bilingually (English and Spanish).
Banner Brands, goods that bear the name of Kroger or its subsidiaries (i.e., Ralphs, King Soopers, etc.) or make reference to them (i.e., Big K) are offered with a "Try it, Like it, or Get the National Brand Free" guarantee, where if the customer does not believe the Kroger brand product is as good as the national brand, they can exchange the unused portion of the product with their receipt for the equivalent national brand for free. Many of Kroger's health and beauty goods, one of the company's fastest-growing private label categories, are manufactured by third-party providers; these products include goods like ibuprofen and contact lens solution.
Products marked Private Selection are offered to compare with gourmet brands or regional brands that may be considered more upscale than the standard Kroger brand products.
While the Private Selection name includes many products, two of the most popular Private Selection items are ice cream and deli meat.
As well as the major grocery brands, Kroger's manufacturing creates a variety of general merchandise brands. These are featured especially in Fred Meyer stores, where more than half the goods sold are non-food, or in the smaller Fred Meyer-based Marketplace stores. The following brands might be found in various Kroger-owned stores:
Bread
Dairy
Deli
Drug & General Merchandise
Frozen Food
Grocery and General Merchandise
Whole Health (Nutrition)
i-wireless is a national wireless service provider sold in over 2,200 retail locations within the Kroger family of stores across 31 states. i-wireless allows customers to accrue minutes on their i-wireless phone in exchange for using their shopper's card on qualifying purchases. The i-wireless service functions over the Nationwide Sprint Network. Customers can choose from monthly, unlimited, or pay-per-use plans that do not have contracts, activation fees, or roaming charges.
In 2006, Kroger partnered with the consumer products division of The Walt Disney Company to add the Disney Magic Selections line to its private label offerings.[24] In reality, many of these products have been substituted in place of Kroger's Signature brand equivalents on the shelf, often with an increase in price. With packaging featuring animated Disney and Pixar characters, such as Mickey Mouse as Chef Mickey, these products are marketed to help promote healthy eating among children. Most of the approximately one hundred initial products contain zero grams of trans fat and include food offerings such as yogurt, breakfast foods, and small fresh fruit cups. This product offering is currently in a phase out process and being re-replaced with Kroger Brand product. They no longer offer this brand.
Kroger previously owned and operated the SupeRx drug store chain. In 1985, Kroger outbid Rite Aid for the Hook's Drug Stores chain, based in Indianapolis, IN, and combined it with SupeRx to become Hook's-SupeRx. In 1994, Kroger decided to get out of the stand-alone drug-store business, and sold its SupeRx stores to Revco, which later was sold to CVS.[25]
Today, Kroger operates more than 1,900 pharmacies. Most of them are located inside its supermarkets. The Kroger Pharmacies continue as a profitable portion of the business, and have been expanding to now include pharmacies in City Market, Dillons, Fred Meyer, Fry’s, King Soopers, QFC, Ralphs, Smith’s Food and Drug, and Kroger Supermarkets.[26]
Since 1998, Kroger has added fuel centers in the parking lots of its supermarkets, and as of the first quarter of 2010, Kroger operated 909 of them.[27]
Most Kroger locations now feature Redbox movie rental kiosks, except for locations in the Columbus, Ohio market which feature kiosks from rival Blockbuster Express (formerly DVDPlay). Previously, some Kroger locations featured kiosks from The New Release (aka Moviecube); most of these kiosks have since been replaced by Redbox kiosks.
Kroger has a 3-tiered distribution system. The 2nd and 3rd tiers, internally known as "Peyton's", service retail stores and provide promotional and seasonal products. Kroger operates five "Peyton's" which include:[28]
Kroger operates its own fleet of trucks and trailers to distribute products to its various stores, in addition to contracts with trucking companies First Fleet and Quickway Distribution.
Food distribution and buying takes place under various subsidiaries and divisions. These include:
Kroger Personal Finance was introduced in 2007 to offer various stores' branded MasterCards; mortgages; home equity loans; pet, renter's and home insurance and identity theft protection.[30]
Kroger had a number of stores in the Western Pennsylvania region, encompassing Pittsburgh and surrounding areas until the early 1980s, when the U.S. began experiencing a severe economic recession. The recession had two significant and related effects on Kroger's operations in the region. First, the highly-cyclical manufacturing-based economy of the region declined in greater proportion than the rest of the U.S., which undercut demand for the higher-end products and services offered by Kroger. The second effect of the economic recession was to worsen labor-management relations which led to a protracted labor strike in 1983 and 1984. During the strike, Kroger withdrew all of its stores from the Western Pennsylvania market, including some recently opened "superstores" and "greenhouses". The new superstores in Western Pennsylvania, which included at least the one at North Huntingdon Township (Irwin, PA) and another at Cranberry Township, were Kroger's state-of-the-art facilities. They were equipped with optical (bar-code) check-out scanners that were new to the industry, and especially to the region. In addition to the usual meat/dairy/produce departments, they contained a separate bakery, deli, cheese shop, and seafood counter, amenities that have come to define the modern suburban grocery store. In an innovation that did not define future trends, the new superstores also included extensive non-foods departments that sold among other things, televisions, and other electronics.[31] Hence, the closure of these newly opened, trend-setting facilities represented an abrupt retreat in the region.
Kroger's exit ceded the market to lower-cost, locally owned rivals, most notably Giant Eagle and the Supervalu-supplied Shop 'n Save and FoodLand chains. (Ironically, Kroger bought Eagle Grocery company, whose founders went on to create Giant Eagle.) There has been recent speculation that Kroger may be re-entering the market since Giant Eagle and Wal-Mart (through the numerous supercenters Wal-Mart has opened in the Pittsburgh area in recent years) have since formed a de facto monopoly in the market as a result of Supervalu's inability to compete, as well as the launch of Kroger's Turkey Hill dairy brand in the area in 2005. Kroger still maintains a presence in the nearby Morgantown, West Virginia, Wheeling, West Virginia, and Weirton, West Virginia/Steubenville, Ohio areas where Giant Eagle has a much smaller presence and the Supervalu-supplied stores are virtually nonexistent, though in all of these cases Wal-Mart remains a major competitor and Aldi is the only other supermarket with any market overlap.
Kroger also experienced a similar withdrawal from Chattanooga, Tennessee in 1989. Many of these stores were sold to the local grocery chain Red Food, which was in turn bought by BI-LO in 1994. Today, Chattanooga is the only metropolitan market in Tennessee in which Kroger does not operate.
In northeastern Ohio, Kroger had a plant in Solon, Ohio, which is a suburb of Cleveland, until the mid-1980s. When that plant shut down, Kroger closed its northeastern Ohio stores in the Cleveland, Akron and Youngstown areas. Some of those former Kroger stores were taken over by stores like Acme Fresh Markets, Giant Eagle and Heinens.
Kroger stores existed in various Florida markets from the 1960s until 1986, when the chain decided to exit the state and sold most of its stores to Albertsons and Kash n' Karry. Kroger operated in Florida under the "SupeRx" and "Florida Choice" banners. Recently, retail analysts have begun to speculate about whether Kroger may capitalize on the misfortunes of Albertsons and re-enter Florida again, but the dominance of native Publix, Winn-Dixie and the growing force of Wal-Mart in Florida would be a tough sell for Kroger.
Kroger also had some presence in the Milwaukee area in the 1950s, 1960s and early 1970s, when it exited. Speculation occurred that it would return in 2008 when Roundy's was rumored to be for sale, but it never happened.
Kroger had about 50 stores in St. Louis until it left the market in 1986, saying that its stores were unprofitable. Most of its stores were bought by National, Schnucks, and Shop 'n Save.
Kroger entered the Charlotte market in 1977 and expanded rapidly throughout the 1980s when it bought some stores from BI-LO. However, most stores were in less desirable neighborhoods and did not fit in with Kroger's upscale image. Less than three months after BI-LO pulled out, that company decided to re-enter the Charlotte market, and in 1988 Kroger announced it would leave the Charlotte market and put its stores up for sale. In an ironic twist, BI-LO bought Kroger's remaining stores in the Charlotte area.[32]
Kroger also swapped all ten of its Greensboro-area stores in 1999 to Matthews-based Harris Teeter for 11 of that company's stores in central and western Virginia. Kroger still maintains a North Carolina presence in the Raleigh-Durham area. In the Raleigh-Durham area, Kroger closed its North Raleigh store in the Wakefield Commons shopping center on July 9, 2011 because the location failed to meet sales expectations. After the closure, Kroger will operate 16 stores in the Triangle. Kroger had a store in the Greenville from the 1980s until 2010 when it sold it to Harris Teeter.[33] A store in Wilson opened in 2002, but closed two years later.
Kroger had stores in the Charleston, South Carolina area with locations also in North Charleston, Mount Pleasant, Goose Creek, and Summerville until 1988 when they sold the stores to BI-LO along with the Charlotte area stores.[34]
Kroger closed almost all of its northern Michigan stores in the 1980s and 1990s. The locations in Flint and the Tri-Cities were converted to Kessel Food Market beginning in 1982. These Kessel locations were bought back by Kroger in 2001; conversion was completed in 2006. In December 2008, Kroger opened a new 76,000-square-foot (7,100 m2) store in Saginaw at Green Acres Plaza on State Street. This opening neccessated the closure of the original Kessel location and one other location, both just down the road from the new site. The Kroger stores in Grand Rapids and most of northern Michigan were sold to Hamady, a chain based in Flint, Michigan.[35]
In the mid 1950s, Kroger entered the Houston, Texas market by acquiring the Houston-based chain Henke & Pillot. The stores were eventually converted to the Kroger banner in the mid 1960s.
Kroger entered the competitive San Antonio, Texas market in 1980 but pulled out in mid-1993. On June 15, 1993, the company announced it would close its 15 area stores 60 days later.
Safeway (excluding the Randalls chain) exited the Houston market in early 1988. It sold many of its own properties to Kroger, the market leader in the region, which is still followed by Randalls (now owned by Safeway) today.
Albertsons exited the San Antonio and Houston markets in early 2002, selling many of the Houston stores to Kroger.
In the late 1990s, it acquired many stores from Super Fresh as it exited many markets in the South.
Long the dominant grocer in western Virginia, Kroger entered the Richmond, Virginia, market in 2000, where it competes against market leaders Former Ukrop's and Food Lion. Kroger entered the market by purchasing Hannaford stores that either already existed or were being built in Richmond, Hannaford purchases also included the competitive Hampton Roads market where it now competes with Farm Fresh, Harris Teeter, and Food Lion.[36] The Hannaford locations in these markets were purchased from Delhaize by Kroger as a condition of Delhaize's 2000 acquisition of the Hannaford chain, which had previously competed against Food Lion, also owned by Delhaize.[37] Wal-Mart Supercenters are also major competitors in both markets, and the chain briefly competed against Winn-Dixie, which has now exited Virginia.
In 2004, Kroger bought most of the old Thriftway stores in Cincinnati, Ohio, when Winn-Dixie left the area. These stores were reopened as Kroger stores.
Although Kroger has long operated stores in the Huntsville-Decatur area of northern Alabama (as a southern extension of its Nashville, Tennessee, region), it has not operated in the state's largest market, Birmingham, since the early 1970s, when it exited as a result of intense competition from Winn-Dixie and local chains Bruno's Supermarkets and Western Supermarkets.
In August 2010, Kroger and Publix are among potential bidders for the aforementioned BI-LO chain in the southeast. Neither of those chains, however, would give additional details.[38]
"Right Store. Right Price." and "More Value for The Way You Live" are the current advertising slogans for Kroger and most other chains owned by the Kroger company. In the Southwest Division the current advertising slogans are "Right Store. Right Price." and "LOW PRICES plus MORE!" Probably the best known advertising slogan in the company's history was "Let's Go Krogering," which was accompanied by a jingle of the same name. It still appears on the bottom of some stickers which are placed on large items, handed out to children in stores (just like banks give lollipops to children). Other previously used slogans included "Your Total Value Leader", "Kroger, Where It Costs Less to Get More", "See What We're Doing Today", "Feel the Difference", "Listen to the scissors, don't you love the sound of a price coming down" and "Kroger, Count on Us".
On its website, Kroger mentions they have diverted recyclable materials ranging from composting to recycling cardboard. Like many grocery stores, they participate in plastic bag recycling.[39]
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