Broadcasting Telecasting (Apr-Jun 1957)

media. After all, the division has the right to decide how it will advertise. There's still room for improvement, Kroger men concede, in educating store personnel and the entire food industry in more effective use of radio and tv but a lot of progress has been made. Kroger private brands are effectively promoted on all media and with vivid impact on tv. A library of 150 specially produced film shorts offers unlimited opportunity to build the Kroger name and develop community attitude. Kroger operates what it proudly calls the largest and most complete food-testing and development laboratory in the retailing world. This Food Foundation does IVt. million tests a year, exploring everything from the quiver coefficient of gelatine to the toughness of a jelly bean's crust. Backing up the professional staff in the laboratory is a committee of 750 women who act as permanent advisors in making final decisions on product acceptance. The Kroger private label items get a through going-over at FF, from early dream stage to finished product. After an item has been accepted for store shelves it continues under careful scrutiny in a constant effort to improve quality. A non-Kroger product is given a brutal beating at FF before acceptance, and careful attention is paid to new food developments around the world. All this provides good promotional copy for the radio and tv programs. A consumer information service supplies material for clubs, schools and other groups. FF has found that that its Kroger instant coffee, produced in a new million-dollar plant, yields 6,540 cups of brew from 100 pounds of coffee beans compared to 3,825 cups from standard home-brewing methods. Instant coffee comprises 40% of the Kroger total compared to a national coffee average of less than 30%, reflecting the power of the advertising copy pushing this modern contribution to the American kitchen. Tenderay Beef, Kroger's exclusive label, is another darling of the copy writers. This process of achieving in 44 hours the results obtained in 20 to 30 days under nature's aging process, was developed in 1939 in co operation with Mellon Institute and Westinghouse Electric Co. Kroger's beef promotion technique is one of the most effective in the retailing field. Director George F. Garnatz, of FF, and Jean Allen, home economist, have appeared on countless radio and tv programs around the 21 -state Kroger marketing area as well as on such national shows as NBC's Home, which sent a crew to Cincinnati to do a feature on Kroger's way of controlling quality. Kroger does a big business in privatebrand items. Sales of Kroger manufactured foods alone exceed $130 million a year. The practice of selling products made by Kroger, or carrying the label, dates back to the 1880s. Ma Kroger, who watched with pride the brave efforts of her energetic boy, Barney, added two new items to the store's stock — pickles and sauerkraut. She made them herself at home, giving the store an innovation that helped develop the youth into one of retailing's most famous innovators. Barney's first store was opened at 66 Pearl St., Cincinnati, a good spot for a store but too close to the Ohio River front as he learned from painful experience when he found the store flooded one morning. A heart-wrencher, this flood, but it was the second major tragedy. B. A. Branagan, his partner, who had provided $350 of the original $722 capital, had escaped with his life after colliding with a train but the $225 delivery wagon and $195 horse had been inactivated. Six Outlets by 1881 Other early crises were survived and by 1891 six stores had been opened. Kroger Grocery & Baking Co. was incorporated in 1902, with 40 stores in operation and $1.7 million annual sales, roughly the annual business currently done by a better than average Kroger store. Two personality factors strongly influenced the early evolution of the Kroger empire. Barney Kroger had a salty tongue and expressed himself with vigor and enthusiasm. Possessed of these traits, he naturally saw first-hand the impact of words and pictures on the public. When the original delivery wagon, painted red with fancy gold lettering, attracted local attention, young Barney replied to a friend who called it a "circus wagon," this way: "Good. If you noticed it, so will other people. It's good advertising." Ever since, Kroger stores have been active advertisers. After buying out his partner in the first store for $1,500, Barney Kroger was free to use his own judgment. He started running food ads in Cincinnati newspapers, shocking some of his competitors into trying the same stunt. These ads were big and quite similar to the typical 1957 advertisement for food stores. The one-store business grew into a chain I and B. H., as the big boss came to be known around the expanding organization, would i buy a whole carload from a salesman, cut ; down the profit per item and run a big news ' paper ad. Again competitors were shocked, ' and again they tried the same tactics. After the 1902 incorporation, B. H. started looking beyond Cincinnati's borders, A CHAIN OF 1,476 FOOD-SELLING PALACES KROGER'S merchandising empire can be described in two ways, each accurate but neither completely descriptive. • Kroger is an organization of 1,476 retail stores staffed by 36,807 employes and executives, and outranked in the food-chain field by only A&P and Safeway. • Kroger is a service enterprise owned by 26,621 shareholders who have 3,827,307 shares of stock that earned $4.41 each from the profit on 1956 sales of $1,492 million. In its role as third largest food merchandiser in the world, Kroger is committed to local autonomy. Top policy and objectives are drafted by Joseph B. Hall, president, and a cluster of eight vice presidents. From there on it's up to the divisional managers, who hold local vice presidential rank in most cases and operate business groups that gross anywhere from $20 to $150 million a year. A division in itself is a big business, essentially area in character. Each division has a distribution center supplying its stores. Most operational decisions are made at the division and local levels, where the facts are known by officials close to community needs and habits. A division merchandising session, including grocery, meat and produce men, will make the buying and selling decisions for the week. It's their responsibility to sell the merchandise, including Kroger's own products, which last year reached $130 million. Division headquarters at a Kroger store cluster looks a lot like the main office of a medium-sized corporation, except it's probably busier. In St. Louis, for example, Robert A. Hughes, a merchandiser of many years' experience, runs the 110-store business as division vice president. Under, around and in general proximity to Vice President Hughes — except when they're in the field, and they often are — will be found a manager of operations, grocery merchandiser, meat merchandiser, produce merchadiser and finally a manager of advertising, sales promotion and public relations. Like other chains, Kroger is weeding out small stores and replacing them with strategically placed supermarkets, often on a lease basis. In the last five years the chain has opened 448 new stores, remodeled 296 and closed 1,058. It has spent $69.5 million for new stores and equipment. Another 89 outlets were acquired by absorbing the Henke & Pilot, Krambo and Big Chain groups. In 1956 store area was increased over a million square feet. Last year $41.9 million was spent for new stores, distribution centers, warehouses and other facilities, compared to $25.8 million in 1955. The 1957 outlay will run about $46 million, a pace that will be continued through the rest of this decade. Stockholders shared in $17 million net income in 1956, a 19% gain over 1955. Sales in that period rose from $1,219 to $1,492 million, a remarkable 22% gain that Mr. Hall said was due mainly to "increased tonnage, since prices of food products increased only about 3%." Despite the tendency of Kroger and the other food chains to lease rather than build, a new project in Toledo, Ohio, is catching the eyes of merchandisers. Here Kroger has bought Swayne Field, home of the Toledo baseball Mudhens, and the centrally located ballpark will soon become a shopping center, with Kroger having a big market and leasing space to other retailers. It takes a lot of goods to stock the shelves of 1,476 stores and the current Kroger retail inventory runs $94 million, equal to about 25 days sales. Total assets were $259 million in 1956, $230 in 1955. Page 124 • May 6, 1957 Broadcasting • Telecasting