Kroger - Flossed in the Fifties

Around 1955, Kroger kicked its expansion program into high gear, going far beyond simply replacing existing small grocery stores with larger supermarkets. For the first time in a decade, the company moved back into an acquisition mode, buying three supermarket chains in three successive months. On May 13, Kroger announced its purchase of Henke & Pillot, an 83-year old Houston based chain of 26 stores – 18 in greater Houston, three in Beaumont, and one each in Galveston, Port Arthur, Baytown, Velasco and Orange, Texas. In June, the company (who already had a sizable group of stores operating in its Madison, Wisconsin division)acquired Krambo Food Stores, Inc., an Appleton, Wisconsin based chain with seven Milwaukee stores, four in Appleton, three in Green Bay, two each in Oshkosh and Wausau, and one each in Fond-du-Lac, Merrill, Neenah, Manitowoc , Antigo and Sheboygan (yup, there ya go!). Additionally, six more Krambos were under construction at the time. And in late July, Kroger further beefed up its Texas presence (and picked up some new stores in Arkansas and Louisiana) when it bought out Childs Food Stores, Inc., of Jacksonville, Texas. The Childs stores operated under the Childs Piggly Wiggly name. The following year, Kroger added a big chain, at least in name. In January 1956, the company bought out Big Chain Stores, Inc. a chain of seven stores based in Shreveport, Louisiana, later combining it with the Childs group. All of these newly acquired stores continued to operate under their original names for a time, fitting in with Kroger chairman Joseph B. Hall’s much-touted decentralization approach. In 1957, in describing Kroger to a Business Week interviewer, he said “we are running 27 supermarket chains”.

Once again, Kroger threw in a divestiture amidst all of these acquisitions. In September 1957, Kroger sold off its Wichita, Kansas store division, then consisting of 16 stores, to J. S. Dillon and Sons Stores Company, then headed by Ray S. Dillon, son of the company founder. The former Kroger stores gave the Dillon firm a total of 51 units in 1957, located throughout central and western Kansas and in Denver, where the Dillon stores went under the name of King Soopers. As fate would have it, the Dillon family would play a key role in Kroger’s future. In 1982, Kroger would buy out the entire Dillon organization, which had of course grown impressively in the intervening years. In 2004, David Dillon, Ray S. Dillon’s grandson, was named chairman and CEO of Kroger, a position he presently holds.

Some new markets were started from scratch as well, with the introduction of Kroger’s first stores in Birmingham, Alabama. There was growth in the existing markets as well, with Chicago, for example, being the focus of a major push. In October 1956, Kroger announced a whopping 34-store expansion in the Chicago area, trumpeted by a special section in the Chicago Tribune. New Kroger stores were already open or soon would be in several of the new major new shopping centers in the area, including Old Orchard in Skokie, Hillside Shopping Center, located in west suburban Hillside off of the brand-spanking new Congress (now called Eisenhower) Expressway, and at Harlem-Irving Plaza (Harlem Avenue and Irving Park Rd, Chicago). Other stores were announced for Park Forest, Zion, and Franklin Park to name just a few locations.

This period also saw Kroger’s entry into the world of trading stamps. In nearly all cases, trading stamps were adopted as a defensive measure by chains needed to gain a competitive edge against other chains offering …well, trading stamps. Having successfully resisted the likes of Sperry and Hutchinson and others who tried to sell the idea to them over the years, Kroger decided to create their own program when it became necessary to jump in. In 1955, Kroger joined forces with a number of non-competing food chains to form Top Value Enterprises. Eventually, Kroger would buy out its partners, gaining full control of the company. Top Value redemption centers popped up all over Krogerland, oftentimes right next to the Kroger stores themselves. Several times a year, Top Value issued thick catalogs (several of which in the 60’s and 70’s featured Norman Rockwell-painted covers) offering all manner of treasures for those who weren’t offended by the taste of the multitudes of stamps it took to fill those good old “saver books”.

Shown above are three Kroger store photos from the fifties. The first store is an unknown Illinois location. The photo’s focus is a bit soft, but the great looking store can still be appreciated. I particularly like the dual appearance of the Kroger name on the front of the store, both above and on the store windows. The second photo shows the Kroger at the new Boardman Plaza, the first DeBartolo shopping center, which opened in their hometown of Boardman, Ohio (a Youngstown suburb) in 1951. This shopping center also featured an A&P and an independent called Century Foods.

The third photo features a very proud Kroger president Joseph B. Hall in front of the chain’s brand new flagship, a 44,000 square foot (gigantic for the time – most of Kroger’s new supermarkets were less than half that size) store that opened in May, 1957 at Swayne Field Shopping Center, Kroger’s first foray into shopping center development, in Toledo, Ohio. The huge store, Kroger’s “flossy new supermarket”, was featured in a profile piece (the Hall picture is from the cover of that issue) on Hall and Kroger in an August 1957 Business Week article. An earlier New York Times article listed the Toledo store’s attributes – “Gourmet and delicatessen departments stocked with such items as pickled rooster combs and chocolate covered ants - A barbecue corner that will custom-cook ribs, chickens, hams and other meats - a smokers’ center, staffed by a tobacconist, with lighters and pipes on sale - A lunch counter for quick snacks (Which, as the BW article helpfully noted, “keeps the men out of the way while the housewives do their shopping”), and the chain’s largest frozen food department”.

Flossy. Real flossy.

The artists’ renderings below show Kroger’s three acquisition prizes from 1955.

Barney Kroger - The Cincinnati Kid

The history of Kroger, like that of so many companies born in the same era, is a great American story. The roots of today’s Kroger Company reach back to 1876, when 16-year old Bernard Henry Kroger took a job selling coffee and tea door-to-door for The Great Northern and Pacific Tea Company in his hometown of Cincinnati. Kroger, one of ten children born to German immigrants, worked hard to help support his family, who lived in a flat above a dry goods store the family owned. After two years, Kroger left Great Northern to join the William White Company, another coffee and tea firm, leaving that firm shortly thereafter for the Imperial Tea Company.

When Imperial began to run into trouble, the owners asked young Kroger (who had been working a wagon route up to that point) to manage the company’s store for a 10% cut of the profits, which at the time were virtually nonexistent. Convinced he could turn things around, he took up the challenge. A stickler for quality with more than a bit of starch in his personality, Kroger built a following for the store. Interestingly, as Progressive Grocer noted, “It wasn’t a wealthy clientele. They were wage-earners’ wives who came back to shop, and told their friends…” Having saved up $372 from a year of toil, a considerable sum in 1883, Kroger approached the Imperial Tea owners with an offer to buy a one-third interest in the company. They refused, offering an increased share of the profits instead. Adamant about owning a stake in the game, Barney decided to strike out on his own.

With an additional $350 borrowed from a friend, Kroger opened “The Great Western Tea Company”, a tiny store on Cincinnati’s Pearl Street, replete with fire-engine red paint and gilt lettering, with a horse-drawn wagon sporting the same colors. Through some initial setbacks, including the loss of the horse and wagon in an unfortunate train crossing accident, a flood which destroyed the store’s initial stock, and an attempt by his landlord to increase his store’s rent (forcing Kroger to move to a less attractive location on a side street), Kroger persevered.

Within months, Kroger opened a second store, and by mid-1885 had added two more for a total of four units. By 1893, after ten years on his own, Kroger had 17 stores and was considered one of the most successful businessmen in Cincinnati. In 1902, The Great Western Tea Co. was reincorporated as The Kroger Grocery and Baking Company, which would remain the company’s legal name for the next 40 years. The word “baking” in the company’s name reflected an important aspect of Kroger’s business. At the turn of the century, Kroger made a splash by announcing his plans to set up the company’s own bakery, selling loaves to Kroger customers at half the average going price, then 5 cents each. Not only would this help build business for his stores, but it also would enable Kroger to capture a bigger chunk of his customers’ bread budget, beyond just bulk flour, butter and egg sales. As he acknowledged to a New York Times interviewer in 1901 - “In Cincinnati, with its large percentage of thrifty Germans, bread is usually baked in the home”. At two for a nickel, Kroger projected sales of 25,000 loaves per day to those thrifty folks.

Another innovative step Kroger took was born out of the company’s 1904 acquisition of the Nagel butcher shop chain in Cincinnati. After initially operating the meat markets separately, Kroger made a decision to integrate them into his grocery stores. Over the initial objections of his butchers, who resented the loss of their independence and the new bookkeeping requirements Kroger imposed, these early forerunners of the “complete food market” proved to be a huge success and had a great influence on the chain food store business as a whole.

With a solid base in Cincinnati, Kroger began to expand to other areas, first to nearby Hamilton, Ohio, then to Dayton and Columbus, where the company had 15 and 8 stores respectively by 1910. These initial forays were followed by an expansion drive (which reached a fever pitch by the late 1920’s) to other cities and the smaller towns in between- Detroit, St. Louis, Peoria, Indianapolis, Toledo, Cleveland, Grand Rapids, Youngstown and Charleston (WV), to name some examples. Much of this growth was accomplished through acquisition – 109 Piggly Wiggly and 43 Kohn Stores in the St. Louis and Central Illinois areas, 108 Piggly Wiggly stores in Louisville, 114 Bowers grocery stores in Memphis and the surrounding area, (along with yet more Piggly Wigglys) and Universal Stores of Madison, Wisconsin. In the coming decades, acquisitions would continue to provide a major vehicle for Kroger’s growth.

In late 1926, rumors began to fly that Kroger would merge with Philadelphia-based American Stores Company, possibly in combination with First National Stores or the H.C. Bohack chain. While some talks were held, these plans never came to fruition, and in my opinion would likely have not gone over well in light of the beginnings of a movement against chain store “monopolists” (or more accurately, oligarchs) that would gain sentiment as the 30’s rolled on.

In December 1927, B.H. Kroger sold his stock in the company, staying on as chairman but stepping down as president, turning that responsibility over to William H. Albers. Later on, he would repurchase a huge block of Kroger stock to help bolster confidence in the company through the depression years that followed. In November 1931, with nearly 4,900 stores in operation, he retired altogether. Barney Kroger passed away in July 1938, leaving behind a company that 70 years later is the largest company in America whose mainline business is supermarkets – an admirable legacy.

These photos are undated – the top photo showing a “B.H. Kroger” store circa the dawn of the 20th century. Below is a typical Kroger from the early 30’s, near the end of Mr. Kroger’s tenure with the company.