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Kroger

The Kroger Co. is an American retail supermarket chain and parent company, founded by Bernard Henry Kroger in 1883 in Cincinnati, Ohio. It reported over US$70 billion in sales during fiscal year 2008 and is currently the second-largest grocery retailer in the country by volume and third-place general retailer in the country, with Wal-Mart and The Home Depot filling slots one and two, respectively. As of the first quarter of 2008, Kroger operated, either directly or through its subsidiaries, 2,474 supermarkets, and had 723 fuel centers.

Kroger's Headquarters are centralized in Cincinnati, OH, but it spans many states with store formats that include supermarkets, hypermarkets, department stores, convenience stores and mall jewelry stores. Alabama, Arkansas, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Carolina, Ohio, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, and West Virginia are among those with Kroger stores carrying the Kroger name.

History

Kroger was founded by Bernard Henry Kroger in 1883 in Cincinnati, Ohio. Kroger pioneered the first supermarket surrounded on all four sides by parking lots in the 1930s. In 1983, The Kroger Company acquired Dillon Companies grocery chain in Kansas along with its subsidiaries, King Soopers, City Market, Frys, Bakers, Gerbes, and the convenience store chain Kwik Shop. David Dillon, in the 4th generation under J.S. Dillon, the founder of Dillon Companies, is now the CEO of Kroger.

Chains

Kroger Marketplace

Kroger Marketplace is a relatively new style of store for Kroger. The brand started 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 and Sears Grand also Super Kmart, and modeled after Kroger-owned Fred Meyer, these stores contain multiple departments. In addition to the grocery department, they contain a Fred Meyer Jewelers, Donato's Pizza, and an in-store bank, as well as sections for toys, appliances, and home furnishings, 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 into 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. The store in Liberty Township opened in July 2006. 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 are planned in 2007, one in Middletown and one in Englewood.

One more store is being built in the Cincinnati area, in the Northern Kentucky town of Hebron, due to be completed in November, 2008. Another renovated store has recently opened in Blue Ash, and two more are being opened in the Lexington, KY area.

The first Marketplace store in Texas will be built in Rosenberg and is slated to open in 2009.

Manufacturing

As well as stocking a variety of national brand products, The Kroger Co. also employs one of the largest networks of private label manufacturing in the country. Forty-two plants (either wholly owned or used with operating agreements) in seventeen states create about half of Kroger’s nearly eight thousand private label products. A three-tiered marketing strategy divides the brand names for shoppers’ simplicity and understanding.

Manufacturing Plants

Kroger operates 42 manufacturing plants, and packages and sells items for other retailers under the Inter-American Products Company name.

Dairies

Kroger operates 15 dairies and 3 ice cream plants

  • Centennial Farms Dairy - Atlanta, GA
  • Compton Creamery - Compton, CA
  • Crossroad Farms Dairy - Indianapolis, IN
  • Heritage Farms Dairy - Murfreesboro, TN
  • Jackson Dairy - Hutchinson, KS
  • Jackson Ice Cream - Denver, CO
  • King Soopers Dairy - Denver, CO
  • Layton Dairy - Layton, UT
  • Michigan Dairy - Livonia, MI
  • Riverside Creamery - Riverside, CA
  • Southern Ice Cream Specialties - Marietta, GA
  • Swan Island Dairy - Portland, OR
  • Tamarack Farms Dairy - Newark, OH
  • Tolleson Dairy - Tolleson, AZ
  • Turkey Hill Dairy - Conestoga, PA
  • Vandervoort Dairy - Fort Worth, TX
  • Westover Dairy - Lynchburg, VA
  • Winchester Farms Dairy - Winchester, KY

Bakeries/Delis

  • Anderson Bakery - Anderson, SC
  • Clackamas Bakery - Clackamas, OR
  • Columbus Bakery - Columbus, OH
  • Country Oven Bakery - Bowling Green, KY
  • Deli Kitchen - Compton, CA
  • Dillons Bakery - Hutchinson, KS
  • Indianapolis Bakery - Indianapolis, IN
  • KB Specialty Foods - Greensburg, IN
  • King Soopers Bakery - Denver, CO
  • La Habra Bakery - La Habra, CA
  • Layton Dough Plant - Layton, UT

Meat Plants

  • King Soopers Meat - Denver, CO
  • Sunland Meat - Tolleson, AZ
  • Vernon Meat - Vernon, CA

Grocery Items

  • America's Beverage Co. - Irving, TX
  • Bluefield Beverage Co. - Bluefield, VA
  • Delight Products Co. - Springfield, TN
  • Kenlake Foods - Murray, KY
  • Pace Dairy of Indiana - Crawfordsville, IN
  • Pace Dairy of Minnesota - Rochester, MN
  • Pontiac Foods - Columbia, SC
  • Springdale Ice Cream & Beverage - Cincinnati, OH
  • State Avenue - Cincinnati, OH
  • Tara Foods - Albany, GA

Private Brands

Kroger Value

Early in 2007, Kroger introduced its Kroger Value line. The Kroger Value line is the successor to the FMV or For Maximum Value brand previously offered at Kroger stores. The brand change departed from the typical orange-fade-to-yellow labels and is now simply white with blue and red.

For Maximum Value (Kroger Value)

For Maximum Value (FMV), originally named Fred Meyer Value, 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 & 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 (these are more than likely examples of loss leaders).

In 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. FMV itself was the successor to Kroger's former Cost Cutter brand, which had been introduced in 1981 and was known for its near-generic product labeling. Most Kroger Value brand items are labeled bilingually (English and Spanish).

Banner Brands

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.

Private Selection

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.

Other private label brands

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

  • SuperKids - IronKids bread competitor

Dairy

  • Springdale - milk by the gallon
  • Mountain Dairy - milk by the gallon (Smith's, Fry's and Ralphs)
  • Sungold - sweet and unsweet gallon jug tea
  • Thirst Rockers - imitation juice (water, high fructose corn syrup, 0% juice)
  • Country Club - butter

Deli

  • Angelino's - pizza with its own bake pan
  • Your Deli Selection - baked beans, coleslaw, potato salad

Drug & General Merchandise

  • HD Designs – upscale home goods
  • MotoTech – automotive supplies
  • Office Works – stationery and office supplies
  • Splash Sport, Splash Spa, and Bath & Body Therapies – bath and body supplies

Frozen Food

  • Country Club - real butter sticks, half-gallon ice cream/frozen yogurt
  • Old Fashioned - gallon tub ice cream/frozen yogurt

Grocery and General Merchandise

  • aromaFUSIONS - air freshener supplies, scented candles
  • Big K - soda, cooler drinks, sparkling water
  • Crystal Clear - flavored sparkling water
  • Disney's Old Yeller - dry dog food
  • Everyday Living – kitchen gadgets & cleaning supplies, furniture
  • On the House - margarita and other drink mixes
  • Pet Pride - dry dog & cat food, cat litter
  • Tempo - laundry detergent & fabric softener

Whole Health (Nutrition)

  • Naturally Preferred – organic and natural foods

Disney Magic Selections

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. In reality, many of these products have been substituted in place of Kroger's Signature brand equivalents on the shelf. 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.

Pharmacy Group

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 standalone drug-store business, and sold its pharmacies to Revco, which later was sold to CVS.

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.

Supermarket Petroleum Group

Since 1998, Kroger has added fuel centers in the parking lots of its supermarkets, and as of the first quarter of 2008, operated 723 of them. In the case of the Fort Wayne, Indiana market, Kroger continues to operate one of its fuel centers even as its respective supermarket has closed.

Distribution/Logistics

Kroger has reduced its distribution centers from 44 to 20 since 1995, and has driven down costs and increased efficiency with 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:

Kroger operates its own fleet of trucks and trailers to distribute products to its various stores.

Food distribution and buying takes place under various subsidiaries and divisions. These include:

  • Inter-American Products - private label goods
  • Westco Foods - produce buying

Financial Services

Kroger Personal Finance was introduced in 2007 to offer various stores branded MasterCards, Mortgages, Home Equity Loans, Pet Insurance and Identity Theft Protection.

Market entries and withdrawals

Kroger had a number of outlets in the Western Pennsylvania region, encompassing Pittsburgh and surrounding areas. After a protracted labor strike in 1983 and 1984, Kroger withdrew all of its stores from the Western Pennsylvania market, ceding the market to locally owned rivals, most notably Giant Eagle and the Supervalu-supplied Shop 'n Save & 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. Kroger still maintains a presence in the nearby Morgantown, West Virginia, Wheeling, West Virginia & 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 that Kroger does not operate in.

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 had about 50 stores in St. Louis until it left the market in 1986, saying that its stores were unprofitable. Most of their 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, they decided to re-enter the Charlotte market, and in 1988 Kroger announced they would leave the Charlotte market and put their stores up for sale. In an ironic twist BI-LO bought Kroger's remaining stores in the Charlotte area. Kroger also swapped all ten of its Greensboro-area stores in 1999 to Matthews-based Harris Teeter for 11 of their stores in central and western Virginia. Kroger still maintains a North Carolina presence in the Raleigh-Durham and Greenville areas, including a store in Wilson that opened in 2002 but closed two years later.

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. These Kessel locations were later bought back by Kroger; conversion was completed in 2006. The Kroger stores in Grand Rapids and most of northern Michigan were sold to Hamady, a chain based in Flint, Michigan.

Kroger exited the competitive San Antonio, Texas, market in mid-1993. On June 15, 1993, the company announced it would close its 15 area stores 60 days later. San Antonio-based H-E-B was the market leader at the time; its 37 area stores held a 43.2 market share. Kroger and Albertsons (10 stores) were the area's other two top grocers, Kroger holding a 13.7 share and Albertsons a 13.1 share. Albertsons would eventually also succumb to H-E-B and exit the market by closing its 20 remaining area stores in April 2002 after previously shuttering three other stores in December 2001. By the time Albertsons exited San Antonio, the 44-store H-E-B chain had reached a 61 market share, while second-place Albertsons held a 15 market share.

Long the dominant grocer in western Virginia, Kroger entered the Richmond, Virginia market in the 1990s but has not threatened the leader Ukrop's. Meanwhile, in 2000, Kroger purchased 20 Hannaford stores that either already existed or were being built. This allowed Kroger to quickly establish a presence in a competitive Hampton Roads market. It currently competes in this market with Farm Fresh, Harris Teeter, and Food Lion.

Advertisements

"Right Store, Right Price" is the current advertising slogan for Kroger and most other chains owned by the Kroger company. 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, The Store Where It Costs Less to Get More," and "Kroger, Count on Us."

Criticisms

Food Contaminations

On October 11, 2007, food manufacturer ConAgra asked stores to pull its Banquet and generic brand chicken and turkey pot pies due to 174 cases of salmonella poisoning in 32 states being linked to the consumption of ConAgra pot pies, with 33 people hospitalized. By October 12, a full recall was announced, affecting all varieties of frozen pot pies sold under the Kroger brand name, as well as Banquet, Albertson’s, Food Lion, Great Value (sold by Wal-Mart), Hill Country Fare, Kirkwood, Meijer, and Western Family. The recalled pot pies included all varieties in 7-oz. single-serving packages bearing the number P-9 or “Est. 1059” printed on the side of the package.

Near Fatal Incidents

On January 16, 2008, it was announced that Wayne Watson, a Denver consumer who developed bronchiolitis obliterans or "popcorn lung" after allegedly inhaling diacetyl fumes from microwaved popcorn, was suing the Kroger grocery store chain and its affiliates. In the lawsuit, filed in U.S. District Court, Watson's attorney claimed that the companies "failed to warn that preparing microwave popcorn in a microwave oven as intended and smelling the buttery aroma could expose the consumer to an inhalation hazard and a risk of lung injury.

Kroger's Environmentally Friendly Acts

Kroger recently opened its first energy-efficient store in Ohio. They have lowered their energy consumption by one billion watts. Publicists say that they are saving up to $125 million Kroger did this by adding additional lighting via sky lights. Open windows in the sun roof became tools of light lowering costs Kroger joined with GM for this event and with the support of Ohio’s governor Bob Taft, the event became a successful promotion for both corporations Unfortunately this act of environmental friendliness has hindered a long relationship with a West Virginia coal mining company. Buyers who bought gift cards from Kroger were donating five percent of each purchase to this coal mining company

References

External links

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