Kroger Company

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KROGER COMPANY

The Kroger Company traces its roots back to 1883, when Bernard H. Kroger began the Great Western Tea Company, one of the first chain store operations in the United States. Kroger left school to go to work at age 13 when his father lost the family dry goods store in the financial panic of 1873. At age 16 he sold coffee and tea door-to-door. At 20 he managed a Cincinnati grocery store, and at 24, he became the sole owner of the Great Western Tea Company, which by the summer of 1885 had four stores. Kroger's shrewd buying during the panic of 1893 raised the number of stores to 17, and by 1902, with 40 stores and a factory in Cincinnati, Kroger incorporated and changed the company's name to The Kroger Grocery and Baking Company.

Kroger Company historians characterize B.H. Kroger as somewhat of a "crank," fanatically insistent upon quality and service. Profanity was called his second language; he often advised his managers to "run the price down as far as you can go so the other fellow won't slice your throat."

Part of Kroger's success came from the elimination of middlemen between the store and the customer. In 1901 Kroger's company became the first to bake its own bread for its stores, and in 1904 Kroger bought Nagel Meat Markets and Packing House which made Kroger grocery stores the first to include meat departments. This important innovation, however, was not easy. It was common practice at that time for butchers to short weigh (give a customer less than the stated weight) and take sample cuts home with them, practices that did not coincide with B. H. Kroger's strict accounting policies. When Kroger installed cash registers in the meat departments, every one of them inexplicably broke. When Kroger hired female cashiers, the butchers opened all the windows to "freeze out" the women and then let loose with such obscene language that the women quit in a matter of days. When Kroger hired young men instead as cashiers, the butchers threatened them with physical force. But Kroger was stubborn, and in the long run his money-saving, efficient procedures won out.

From the beginning Kroger was interested in both manufacturing and retail. His mother's homemade sauerkraut and pickles sold well to the German immigrants in Cincinnati. And in the back of his store, Kroger himself experimented to invent a "French brand" of coffee, which is still sold in Kroger stores. The Kroger Grocery and Baking Company soon began to expand outside of Cincinnati; by 1920, the chain had stores in Hamilton, Dayton, and Columbus, Ohio. In 1912 Kroger made his first long-distance expansion, buying 25 stores in St. Louis, Missouri. At a time when most chains hired trucks only as needed, Kroger bought a fleet of them, enabling him to move the company into Detroit, Michigan; Indianapolis, Indiana; and Springfield and Toledo, Ohio.

After World War I (1914–1918), the company continued to expand, following Kroger's preference for buying smaller, financially unsteady chains in areas adjacent to established Kroger territories. In 1928, one year before the stock market crashed, Kroger sold his shares in the company for more than $28 million. One of his executives, William Albers, became president. In 1929 Kroger had 5,575 stores, the most there have ever been in the chain.

During the Great Depression (1929–1939), the company maintained its business. By 1935 Kroger had 35 "supermarkets," adopting the format that had debuted earlier in the decade, consisting of a bigger self-service grocery store featuring large quantities of food at low prices. Frozen foods and shopping carts were introduced in the 1930's. And, instead of going through the usual channels for buying produce, the Kroger Grocery and Baking Company began to send its buyers to produce farms so they could inspect crops to ensure the quality of the food their stores sold. This counteracted the frequent complaint that chain stores sold low-quality foods. This policy eventually resulted in the formation of Wesco Food Company, Kroger's own produce procurement organization.

Following World War II (1939–1945), the company changed its name to the Kroger Company. The postwar period was a time of rapid growth for super-markets. Between 1948 and 1963, the number of supermarkets in the country nearly tripled and Kroger participated in this fast growth. In 1960 the company began its expansion into the drugstore business, with an eye on the potential for drugstores built next to grocery stores. To increase the accuracy and speed of checkout systems, in 1972 Kroger, in partnership with RCA, became the first grocery company to test electronic scanners under actual working conditions. Also during the 1970s Kroger moved more towards the "superstore" concept of one-stop shopping, testing additional in-store specialty departments such as beauty salons, financial services, cheese shops, and cosmetic counters. By the late 1990s Kroger was the largest grocery retailer in the United States with 1,400 stores located in 24 states.

See also: Chain Stores