Kroger

  • Company Industry
    Consumer Products

History of Kroger

In 1883, Barney Kroger invested his life savings of $372 to open a grocery store at 66 Pearl Street in downtown Cincinnati. The son of a merchant, he ran his business with a simple motto: “Be particular. Never sell anything you would not want yourself.”

It was a credo that would serve The Kroger Co. well over the next 130 years as the supermarket business evolved into a variety of formats aimed at satisfying the ever-changing needs of shoppers. 

With more than 2,400 stores in 31 states under two dozen banners and annual sales of more than $96 billion, Kroger today ranks as one of the world’s largest retailers.

Many aspects of the company’s business today trace their roots to Mr. Kroger’s early efforts to serve his customers. Consider two specialty departments that today are regular fixtures in the company’s supermarkets – bakeries and meat and seafood shops. In the early 1900s, most grocers bought their bread from independent bakeries. But Mr. Kroger, always pursuing quality as the key ingredient for profit, recognized that if he baked his own bread, he could reduce the price for his customers and still make money. So, in 1901, he became the first grocer in the country to establish his own bakeries. He was also the first to sell meats and groceries under one roof.

Mr. Kroger also spied the promise of increasing his income by manufacturing the products he sold. It began in that first Kroger store on Pearl St. When farmers came to town with their produce, he bought far more cabbage than he could expect his customers to buy. He took the cabbage home to his mother who, following her favorite recipe, turned it into tangy sauerkraut that proved hugely popular with his German customers.

The manufacturing effort born in that back room was the beginning of what is today one of the largest food manufacturing businesses in America. Kroger operates 37 food processing facilities that make thousands of products ranging from bread, cookies and milk to soda pop, ice cream and peanut butter. About 40% of the more than 12,000 private-label items found in the company’s stores today are made at one of Kroger’s manufacturing plants. These Corporate Brands today account for an impressive 24% of Kroger’s total store dollar sales, providing the company with a significant strategic advantage.

Yet in many other respects, Mr. Kroger would hardly recognize the company today. In response to customers who want the convenience of one-stop shopping, stores have grown much larger to accommodate more variety and more merchandise. New combination stores, Kroger’s primary format, today average 67,000 square feet or more. The company’s Marketplace stores, which offer expanded general merchandise, average 125,000 square feet, and multi-department stores under the Fred Meyer banner truly tip the scales at over 165,000 square feet. 

The shelves today are packed with up to 50,000 items ranging from basic grocery staples to more innovative fare such as organic vegetables, natural foods, and hot meals ready to eat. Kroger operates more than 1,940 in-store pharmacies that fill more than 160 million prescriptions a year. Its floral shops ring up enough business to make Kroger the world’s largest florist. And Kroger has installed fuel centers in more than 1,180 locations to appeal to customers who want to gas up their cars during their shopping trip. 

Mergers have played a key role in Kroger’s growth over the years. In 1983, 100 years after the company’s founding, Kroger merged with Dillon Companies Inc. in Kansas to become a coast-to-coast operator of food, drug and convenience stores.

The biggest merger in Kroger’s history came in 1999, when the company teamed up with Fred Meyer, Inc. in a $13 billion deal that created a supermarket chain with the broadest geographic coverage and widest variety of formats in the food retailing industry. The merger also enabled Kroger to generate huge economies of scale in purchasing, manufacturing, information systems and logistics. In an era when many larger mergers failed, the success of the Kroger-Fred Meyer merger stands out.

Today Kroger offers a store format for nearly every kind of shopper. Our formats include supermarkets, multi-department stores, Marketplace stores, price-impact stores, convenience and fine jewelry stores.

Throughout its rich history, Kroger has served as an innovator and pioneer in the food retail industry. During the 1930s, it was the first grocery chain to routinely monitor product quality and scientifically test foods. In 2012, the company’s long-standing commitment to food safety and quality earned it the highly prestigious Black Pearl Award, awarded to only one company each year by the International Association for Food Protection.

In 1972, Kroger became the first grocery retailer in America to test an electronic scanner. It was installed in a store in suburban Cincinnati, and visitors from around the country attended the event. Technology continues to play an important role in Kroger’s store operations today. In just the last few years, Kroger pioneered QueVision, an innovative faster checkout program that has reduced the time customers wait in line to check out, on average, from four minutes in 2010 to less than 30 seconds in stores today.

Also in the ‘70s, the company became the first grocer to formalize consumer research, interviewing 4,000 shoppers the first year. In 2012, the company listened to 1,993,227 customers, who provided invaluable feedback and insights. 

Innovation is also at the heart of Kroger’s sustainability efforts, aimed at improving today to protect tomorrow. In the mid-2000s, Kroger created a process to rescue safe, edible fresh products and donate them quickly to local food banks. This innovation has been replicated by other retailers and today fresh products make up more than half of the food distributed nationwide by Feeding America, America’s largest food bank network.

With dozens of manufacturing facilities and distribution centers around the country, Kroger also has one of the largest privately-owned truck fleets in the country. Trucks moving merchandise and supplies among our stores, warehouses and manufacturing plants log nearly 297 million miles annually. 

The business principles that made the first Kroger store successful in 1883 – service, selection and value – continue to guide the company’s operations today. From one tiny grocery store in Cincinnati more than a century ago, Barney Kroger laid the foundation for what today ranks as one of the largest companies in America.
 

Operations Overview

Food stores are our primary business and account for approximately 94% of total company sales. Our convenience and jewelry stores and manufacturing facilities contribute the remainder of total sales. The information below is current as of June 19, 2014.

  • We operate 2,642 grocery retail stores in 34 states under nearly two dozen banners. Our formats include supermarkets, price-impact warehouse stores, and multi-department stores, which are similar to supercenters, but offer an expanded variety of national brand appeal and general merchandise. State by state facts can be seen here.
  • Kroger also operates 787 convenience stores under six banners in 19 states. Our C-stores provide valuable synergies for the rapid expansion of our supermarket fuel centers.
  • 324 fine jewelry stores under names like Fred Meyer Jewelers and Littman Jewelers. This is a high-margin business with good cash flow.
  • Kroger is the only major U.S. supermarket company to operate an economical three-tier distribution system.
  • Kroger also operates 37 food processing or manufacturing facilities producing high quality private-label products that provide value for customers and enhanced margins for Kroger.
  • Kroger operates 1,261 supermarket fuel centers, which are a natural addition to our one-stop-shopping strategy.
  • Kroger's 2,109 pharmacies, located in our combination food and drug stores, provide high quality services at everyday low prices.

 

Grocery Retail

The Kroger Co. operates grocery retail stores under the following banners:

  • Supermarkets - Kroger, Ralphs, Dillons, Smith's, King Soopers, Fry's, QFC, City Market, Owen's, Jay C, Pay Less, Baker's, Gerbes, Scott's Food & Pharmacy, Harris Teeter
  • Multi-department stores - Fred Meyer
  • Dillons Marketplace, Fry's Marketplace, King Soopers Marketplace, Kroger Marketplace, Smith's Marketplace
  • Price-impact warehouse stores - Food 4 Less, Foods Co

Kroger operates its grocery retail stores in the following four formats:

  • Supermarkets
  • Multi-department stores
  • Price-impact warehouse stores
  • Marketplace stores

Supermarkets

The combination food and drug store is Kroger's primary supermarket format. These stores are able to earn a return above the cost of capital by drawing customers from a 2 - 2.5 mile radius.

Although considered "neighborhood stores" - in terms of size, shopping experience, and travel time - they are large enough to offer the high-margin specialty departments that customers desire. Specialty departments include: whole health sections, pharmacies, pet centers and world-class perishables, such as fresh seafood and organic produce.

Multi-department stores

Fred Meyer - Operated successfully by Fred Meyer since 1922, the multi-department store is a unique one-stop shopping experience. Fred Meyer is the nation's third-largest supercenter operator. Stores average over 165,000 square feet and carry more than 225,000 food, apparel, and general merchandise products under one roof. The multi-department stores include a broad selection, including:

  • Full-line supermarket
  • Apparel
  • Home fashion
  • Shoes
  • Accessories
  • Garden
  • Home electronics
  • Paint and hardware
  • Nutrition centers

An important part of Fred Meyer's competitive advantage is its emphasis on national brand products, such as Levi's, Columbia Sportswear, Nike, Kitchen Aid, adidas, Skechers, Dockers, Carhartt, Apple, Panasonic, Nikon, Canon, Jockey, Krups, Ashley, and Sony. Also included are many private-label products that offer high-quality alternatives at lower prices.

Marketplace Stores

These multi-department stores offer full-service grocery, pharmacy and expanded general merchandise including outdoor living products, electronics, home goods and toys. Marketplace stores opened during the last two years range in size from 100,000 to 130,000 square feet.

Price-impact warehouse stores

The high-quality produce in these stores is unique in the warehouse format and is a key competitive advantage. These formats also offer distinctive ethnic products, catering to the demographics of the neighborhoods that they serve.

Food 4 Less currently operates grocery warehouse stores under these banners:

  • Food 4 Less in Southern California, Nevada, Illinois and Indiana
  • Foods Co in Northern California

These stores average more than 57,000 square feet in size and offer budget-conscious shoppers everyday low prices, superior quality, and a wide selection of national brand groceries, health and beauty care items, meat, dairy products, baked goods and fresh produce.

Supermarket petroleum group

Kroger believes that gasoline is a natural addition to the one-stop-shopping experience. We began selling petroleum on the parking lots as an addition to the supermarket offering in 1998. At the end of the first quarter 2013, Kroger operated 1,182 supermarket fuel centers. The typical supermarket fuel center consists of:

  • Fuel pumps (three to seven)
  • Kiosk to buy cigarettes, snacks, candy and miscellaneous oil-related products
  • Well-lit canopy that covers the entire center

All of the fuel centers accept credit and debit cards at the pump. In most divisions, the gasoline offering is tied to the loyalty program.

Current Job Openings

There are no active positions available at this time.



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