With more than 2,600 stores in 34 states under two dozen banners and annual sales of more than $108.5 billion, Kroger today ranks as one of the world’s largest retailers.
Many aspects of the company’s business today trace their roots to Mr. Kroger’s early efforts to serve his customers. Consider two specialty departments that today are regular fixtures in the company’s supermarkets – bakeries and meat and seafood shops. In the early 1900s, most grocers bought their bread from independent bakeries. But Mr. Kroger, always pursuing quality as the key ingredient for profit, recognized that if he baked his own bread, he could reduce the price for his customers and still make money. So, in 1901, he became the first grocer in the country to establish his own bakeries. He was also the first to sell meats and groceries under one roof.
Mr. Kroger also spied the promise of increasing his income by manufacturing the products he sold. It began in that first Kroger store on Pearl St. When farmers came to town with their produce, he bought far more cabbage than he could expect his customers to buy. He took the cabbage home to his mother who, following her favorite recipe, turned it into tangy sauerkraut that proved hugely popular with his German customers.
The manufacturing effort born in that back room was the beginning of what is today one of the largest food manufacturing businesses in America. Kroger operates 37 food processing facilities that make thousands of products ranging from bread, cookies and milk to soda pop, ice cream and peanut butter. About 40% of private-label items found in the company’s stores today are made at one of Kroger’s manufacturing plants. These Corporate Brands today account for an impressive 26% of Kroger’s total store dollar sales, providing the company with a significant strategic advantage.
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