Between 1983 and 2013, the Kroger Co. held to its No. 2 spot among the nation’s top grocers.
Safeway fell from first to fifth, and Wal-Mart came from nowhere among the top 10 to first, said David Dillon, the company’s retired CEO, during the University of Tulsa’s Friends of Finance.
Dillon said that like many public companies Kroger, which had its beginning in 1883, focused on trying to satisfy stockholders in the 1990s by raising prices when, he admitted, sales tanked.
He attributed Kroger’s retaining the No. 2 spot to a decision in the early 2000s to change its focus to satisfying customers through “good prices,” not “great,” a term he used to describe the company’s 400,000 employees who provide a better service that make customers want to return.
Focusing on sales instead of profit was “a pretty major change,” Dillon said.
Also in the 1990s, Wal-Mart entered the grocery business pricing food “as a loss leader to bring in business.”
Wal-Mart prices have risen, while Kroger prices declined under its new focus until now they are on par, he said.
In 1930, Kroger had more than 5,500 stores, today it is 2,800, although the Kroger company now includes 10 other grocery chains for a total of 3,500. Among those is the Kansas-based Dillon chain founded by the speaker’s great-grandfather. The company also includes jewelry stores and 37 food processing plants.
“Things are always changing in retail,” Dillon said. “If you don’t improve, you are going to go backward.”
Looking to the future, Dillon said he did not think online ordering and delivery will work for the grocery business, which he described as “a very local business” although it may work for Amazon.
Dillon said he sees growth or on-line ordering with customer pickup, which is being offered in the Tulsa area by Reasor’s, which he visited before speaking at TU.
While he has seen no scientific data that organic food is better nutritionally than food that has been raised with the use of herbicides or genetically modified organisms (GMOs), Kroger offers both varieties.
GMOs are “one of the ways we feed the world,” he said.
“We want to sell what you want to buy,” Dillon said.