Kroger Company

Company information

• Date founded: 1883
• Industry: Grocery retail and production
• Corporate headquarters: Cincinnati, Ohio
• Type: Public

Overview

Kroger Company is an American grocery store chain that also produces some of its own food products. It was founded in 1883 and soon became known for innovative practices and policies. Kroger stores were the first in the nation to have an in-store bakery and butcher shop, saving shoppers from visiting multiple stores. In 1916, they were among the first to allow customers to choose their own products from the shelf, helping to establish the self-serve grocery store model that is common today. Kroger’s founder also helped innovate grocery delivery and was among the first to adopt the use of automobiles instead of horse-drawn wagons for this service. Modern Kroger innovations include centralized storage facilities, the adoption of electronic technology to facilitate services, one-hour delivery, and the use of in-store nutritionists to assist shoppers with “food prescriptions” to improve their health.

History

The Kroger Company was founded by Barney Kroger in 1883. Kroger was born on January 24, 1860, in Cincinnati, Ohio. He was the son of John and Mary Kroger. His father owned a dry goods store but lost everything during a widespread economic panic in 1873. A short time after declaring bankruptcy, Kroger’s father died, and his son, then thirteen, left school and sold coffee and tea door-to-door.

Drawing on what he learned from his father’s retail business, Kroger got a job as a grocery clerk and soon became a store manager. Under his management, the store’s sales and profits increased. However, those increases were not shared with Kroger, so he left.

On July 1, 1883, ten years after his father’s bankruptcy, Kroger used his life savings of $372 and some funds borrowed from a friend to open the Great Western Tea Company. This first store was in a 17-foot storefront at 66 Pearl Street in Cincinnati. It originally focused just on tea. Within a year, Kroger had expanded to four locations and began adding groceries. He is said to have built his business by focusing on providing products that he himself would use.

Kroger also focused on innovation. One of his first significant innovations was the in-store bakery. At that time, customers would visit a baker for fresh baked goods, a butcher for meat, and stores like Kroger’s for assorted dry goods such as coffee, tea, sugar, flour, etc. Grocery stores sometimes resold bread bought from bakers to make it more convenient for their customers. Kroger recognized he could provide both convenience and a lower price by cutting out the bakeries and selling bread made in his stores. When this proved successful, he added in-store butcher services. By 1902, the stores were known as Kroger Grocery and Baking Company.

Kroger added other innovations as the years went on. For instance, in the company’s early days, he found a good price on locally grown cabbage. He bought it up and had his mother make home-canned sauerkraut, which his German immigrant customers readily purchased. This was the start of Kroger producing and selling many of its own food items. He also began delivering food directly to customers by horse-drawn wagon.

Prior to the 1910s, shoppers went into stores, told the shop employee what they wanted, and waited while their items were gathered and packaged. In 1916, Kroger became one of the first stores in the country to adopt a new trend of allowing shoppers to choose their own grocery items from shelves.

What started as one store in Ohio in 1883 continued to grow. First, stores were added one by one. Then, in the 1950s, the company began buying up other grocery store chains so that into the mid-2020s, there were more than 2,700 Kroger-owned stores operating in thirty-five states and the District of Columbia operating upder various names. The company is often known simply as Kroger, and, in 2024, the company reported an annual revenue of $150.04 billion. Also in 2024, more than 414,000 people were employed by Kroger companies. In October 2022, Kroger announced its intention to buy Albertsons, a deal that would merge two of the nation’s largest supermarket chains. Citing concerns about stifling competition; potential threats to consumers, such as increased grocery prices as well as reduced quality and choice; and the possibility of negative effects on employees regarding benefits and working conditions, the Federal Trade Commission (FTC), along with nine state attorneys general, sued to block the merger in February 2024. Both companies stood behind the acquisition and disputed the FTC's arguments. Following months of ongoing legal obstacles, Albertsons announced in December 2024 that it had called off the merger. Albertsons subsequently filed a lawsuit against Kroger for breach of contract, seeking at least $6 billion in damages.

The company continued to be headquartered near where it began in Cincinnati, but Kroger holdings expanded beyond grocery production and sales. It added supermarkets of various sizes, food manufacturing plants, supermarket fuel distribution centers, department and other retail stores, and walk-in medical facilities. A number of its stores provided combination grocery-pharmacy services, including its original Kroger stores as well as King Soopers, Fred Meyer, Fry’s, Harris Teeter, and Dillons. All of these, except for Harris Teeter, could also be found as part of Kroger Marketplaces. These big-box stores generally offered groceries with additional specialized locations inside dedicated to one of the Kroger Company’s Fred Meyer Jewelry stores, pizza places, Starbucks, banks, and expanded retail areas for non-food merchandise such as household goods and toys.

The Kroger model has focused on keeping as much of its business within the company as possible. To that end, the company established a fleet of delivery trucks for transporting its own line of products produced at the company's own food plants, bakeries, and dairies. Kroger store-brand products are produced in three levels, from a lower-cost, no-frills product line to a premium line. These upper-level products are often organic. The product line in the middle is modeled after the national brand products sold in other grocery stores.

While innovation has led to success for Kroger, there have been times when a reluctance to innovate has inspired competition. In the 1930s, a store manager named Michael Cullen proposed creating “super-markets.” He envisioned huge stores with a wide variety of products surrounded by large parking lots that are common in contemporary times. Kroger did not adopt this vision, and Cullen left Kroger to open his own supermarket, King Kullen. When Cullen’s idea proved successful, Kroger began establishing its own line of supermarkets.

The company has also experienced some controversy. It has been criticized by environmental activists for selling threatened fish species and by gun safety activists for allowing open carry in some of its stores. During the second year of the COVID-19 pandemic, the company was in the news when it stopped allowing two-week emergency leave to employees who caught COVID-19 if they were unvaccinated and for charging these employees more for their monthly health insurance premiums. The company has also been criticized for being among the many large retailers who keep most of their employees in part-time status, keeping their wages low while company profits grew. Additionally, activists fighting against the opioid epidemic in the country had included Kroger and its pharmacies on their list of responsible parties. In late 2023, the company, without admitting to wrongdoing, agreed to monetary settlements with claimants.

Impact

In addition to the Kroger Company’s size and presence in the market, its many innovations have made a mark on the grocery and retail industries. In its early days, Kroger innovated one-stop food shopping by adding in-store bakeries and butcher services. They were among the first to produce their own store-brand products and to adopt motor vehicles for delivery services. In the 1930s, Kroger became the first grocery chain to monitor the quality of the products it was selling. Later in the twentieth century, the company’s adoption of electronic checkout systems from Ocado in 1972 marked another innovation that was soon adopted by grocery and other retailers everywhere.

Kroger continued to leverage new technology as it entered the twenty-first century. Some of this was part of its survival instinct, as grocery stores operate on the lowest profit margin of any retail business. The innovations also included new ways to do business online, including easy-to-use websites that allow customers to shop virtually, coupled with new delivery methods. New products available from Ocado, such as a service that provides automated fulfillment of orders, allow the company to handle more online traffic.

Another key innovation from Kroger was a move to demand forecasting for products. By examining shopping trends and using technology to predict when demand for different products will increase, stores can anticipate demand and avoid the kind of shortage and disappointment that sends customers to other stores. Kroger also added a partnership with Instacart delivery services and a special Kroger Rush delivery service that allows customers to receive orders as soon as an hour after they are placed. In addition, the company has experimented with delivery drones with the aim of providing products directly to a customer’s location, even when they are not home. For example, a drone might be dispatched to deliver ketchup to a family having a cookout in the park.

Kroger also added nutritionists to some stores to help customers fill their physician’s “prescription” for food that will improve their health. After uncovering a customer's need to better understand what kind of food amounts to fulfilling a physician’s instructions to “eat better” or “eat less meat,” Kroger added in-store nutritionists to help turn those instructions into actionable food choices. Following the onset of the COVID-19 pandemic in 2020, the company began offering virtual consultations. Analysts expected Kroger’s efforts and success with these innovations to have a significant impact on how other stores do business.

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