Kroger Competitive Advantage

Kroger Supermarkets were started in 1883 by Barney Kroger in downtown Cincinnati. Mr. Kroger started his business with the motto: “Be particular. Never sell anything you would not want yourself.” Through the years Kroger has strived to uphold this motto to its customers and to provide great service, the freshest products and expansion to meet the needs of their customer base making it one of the world’s largest retailers. Kroger now has over 2,600 stores in 34 states with $108.5 billion in annual sales. Kroger operates 37 food processing facilities and Kroger was the first grocery retailer to use the electronic scanner.

Kroger’s corporate strategy consists of continuously innovating and creating new ways of bring value to the customer. They were pioneers for many of the things that we now consider norms in grocery stores. In the past, Kroger had rapidly expanded to many store locations to gain market share. This expansion strategy caused them to lose profits in

Headquartered in Cincinnati, Ohio, The Kroger Company is one of the largest supermarket retailers across the United States. Founded in 1883, Barney Kroger invested his life savings of $372 to open his first grocery store at 66 Pearl Street in downtown Cincinnati. (Kroger, 2011). Barney was quite proud. He was the first grocer ever to have a bakery, to sell meat, and to sell other groceries all in one store. From the start, Barney operated his business with a simple motto: “Be particular. Never sell anything you would not want yourself.” (Kroger, 2011). Today, one hundred and twenty-eight years later, the Kroger Company is still following Barney’s motto.

Wal-Mart is a brand that is well known around the world, especially in the USA. It has gradually developed into the largest retailer in the world. Wal-Mart’s globalization efforts have been happening rapidly. But have they been successful in all aspects of their international expansion or not? This is the main thought that is going to be discussed in this essay. The questions I will be looking at are based on a case called “Wal-Mart takes on the world” from the book of International Business The Challenge of Global Competition eleventh edition – Ball, McCulloch, Geringer, Minor, and McNett. Questions are the following:

The purpose of this business report is to gain familiarity with Wal-Mart and to learn about the different aspects that make Wal-Mart a successful company. This report gives an in-depth analysis of the company history, services and products provided, the company philosophy, business methods, organizational structure, and financial and competitive analysis.

1. The grocery industry is a commoditized industry, which makes it difficult for grocers to sustain through differentiation. Buyer power is high and thus, cost leadership and operational efficiencies are critical. There is fierce competition amongst various grocery stores, with the main players such as Loblaw and A&P holding multi-banner stores in various market segments. Traditional grocery stores also lose some of their market share to drug stores, convenience stores and other retailers who have entered the industry. Threat of substitutes from fast-food and take- away outlets is not as prevalent, since many grocery stores have started stocking ready-to-eat meals and have deli services available for consumers. Competitive

The main competitors in the national grocery chain are Kroger, Whole Foods, IGA, and Supervalu; several regional grocery chains including BI-LO, Winn-Dixie, Ingles, Fresh Market, Sweetbay, Piggy Wiggly consolidated with warehouse and retail chains including Wal-mart, Costco, Kmart, Target, BJ’s Wholesale and Sam’s Club. Publix for 15th consecutive years has been named as one of the Fortune 100 Best Companies to work. It has never had any layoffs even though some stores have closed and new ones have opened. Each year, the company issues shares of its stock to eligible full- and part-time employees, and cash dividends earned on these shares are paid directly to employees. Publix is a highly established and successful supermarket with friendly service and an immense array of products. They offer “buy- one- get- one- free” deals which vary from week to week on several products within the store.

Publix is an employee-owned supermarket chain that is said to be the largest of its kind in the United States. Its operations span throughout the southeast region, with locations in Tennessee, Florida, Georgia, Alabama, North Carolina and South Carolina; with Florida having nearly half of the company’s operating base. George W Jerkins founded the corporation as an employee-owned private entity. The company has managed to create over 168,000 jobs in its numerous branches now totaling to a tune of 1098 stores. Moreover, it has invested in cooking schools and grocery distribution. The company’s turnover in the previous year, 2014, was 28.92 billion US dollars to 1.74 billion as its net profit ranking it to be the thirteenth largest private retail company in the United States (Forbes.com, 2014). Currently, the price of its stock share is around 39 US dollars per share capital. The company has managed to build a niche for itself competing with the likes of Costco, Whole Foods, BJ’s Wholesale Club, Sam’s Club and even Wal-Mart.

Through the dozens of merchandise sections within these departments, the company is able to offer customers one-stop shopping convenience in addition to the company operating a dairy, bakery, kitchen, and photo plan. These functional approaches incorporate the fundamental concept of integration with combining and coordinating products and services to offer the consumers one-stop shopping (Smith &Albaum, 2005). This type of marketing and operational strategiesprovides the company an advantage in multiple areas of business while contributing to the organization’s direction and mission. Fred Meyer’s organizational structures are effective in the company’s strategy of seeking competitiveness by enabling each department and each product division in response to the local competition with marketing and operational strategies. The position of the company is measuredby concepts of awareness, use, share, and competitive evaluation in determining the appropriate organizational structure to achieve the goals of the organization. This position of the company impacts the organizational functions in accordance to the organizational design and organizational structure. The operational and marketing functions performed by Fred Meyer reflect qualities of the organization geared toward the appropriate organizational design to achieve the direction of the company.

According to the Kroger business web page, in 1883 Barney Kroger invested his life savings of $372 to open a grocery store at 66 Pearl 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 is a motto that has served him well for the next 120 years. Today, Kroger has grown to 2500 stores with $70 billion revenues, 40 food processing plants ranging from bread, milk, soda pop, ice cream and peanut butter. Kroger operates under two dozen banners, has acquired warehouses, trucking companies, and has over 14,400 private-label items (The Kroger Co., 2012).

Since its first public offering, Kohl’s Corporation has shown steady growth and strong profits and much of that is a result of exclusive and private brands, ability to embrace technological changes and carefully adjusting its business model to changing customer expectations.

In 1883 Bernard (Barney) Kroger invested 372 dollars that consisted of his life savings to open the first ‘Kroger’ grocery. That first store, located at 66 Pearl Street in downtown Cincinnati, would soon turn into the giant retail chain that consists of nearly 2,500 stores all over the country and most recently produced sales of over 76 billion dollars. Barney Kroger was revolutionary in the formation of the modern grocery, in that he was the first grocer to have his own bakery, as well as selling meat and other groceries all under one roof. Kroger was also the first to manufacture the products that he in turn sold in his own store. This was the beginning of what is today one of the largest food manufacturing companies in America.

The Kroger Company grew in 128 years from one store to over 3,500 stores of various banners and products. The Kroger Company is the largest food and drug retailer in the United States and is growing constantly with diversity in the retail market, dealing in food, pharmacies, apparel, jewelry and fuel. Kroger is governed by a 14 member Board of Directors including a Chief Executive Officer. Kroger is a leader in Corporate Social responsibility by maintaining environmental consciousness, social awareness and energy conservation awareness. Kroger is committed to customers, builds diversity and focuses on growth. The company operates a large part of it’s own manufacturing and distribution to increase profit

The Kroger brand was born in 1883, Bernard 'Barney ' Kroger took his life savings of $372 to open his first store in downtown Cincinnati. This location is by I-71 that passes the Great American Ballpark. Barney Kroger, the son of a merchant, had a simple "Be particular. Never sell anything you would not want yourself." This was the credo that would serve The Kroger Co. well over the next 130 years as the supermarket business evolved into a variety of formats aimed towards satisfying the needs of their shoppers in as many aspects as possible. With nearly 3,619 stores in 34 states under 24 different names, such as Kroger, Dillons, Turkey Hill Minit Markets, Ralphs, Tom Thumb Food Stores, QuikStop, Fred Meyer Jewelers, and Littman Jewelers with an annual revenue of more than $70 billion. Kroger today ranks as one of the nation’s largest retailers.

This strategic analysis of The Kroger Company will take a look at the changing trends of