"Amazing Race." "Fear Factor." "Survivor."Television reality shows are known for graphic depictions of people overcoming extreme challenges in real time in the public eye.So is food retailing.The largest conventional supermarkets in particular face all kinds of challenges across expansive operating regions. The biggest of these, Kroger Co., has managed to succeed in the spotlight by strategizing and
"Amazing Race." "Fear Factor." "Survivor."
Television reality shows are known for graphic depictions of people overcoming extreme challenges in real time in the public eye.
So is food retailing.
The largest conventional supermarkets in particular face all kinds of challenges across expansive operating regions. The biggest of these, Kroger Co., has managed to succeed in the spotlight by strategizing and improvising. This retailer has been named the winner of SN's 2004 Retail Excellence Award. (For a profile of Kroger and background on the award, turn to Page 16.)
Kroger was chosen based on industry input -- including formal nominations -- and careful consideration by SN editors. The feedback was consistent. Kroger has become a stalwart by building its game plan around the changing rules of competition. It has successfully battled Wal-Mart Stores, despite being handicapped by a costlier wage and benefits structure. It has proved its private-label prowess and store execution savvy. The retailer has taken leadership positions with pricing policies and use of loyalty data. It has built a highly effective hierarchy of store formats.
And it accomplished all of this in real time.
"Kroger represents the reality of this industry better than anyone," Neil Stern, senior partner of supermarket consultant McMillan Doolittle, Chicago, said in this week's story. "They're responding to real-world issues that every supermarket company in America faces every day, and they're trying to be innovative about solving them."
Kroger's continued success is by no means guaranteed in this tough retail environment. It has struggled to find the right balance between improving sales and protecting margins. It faces an economy that has not been kind to large supermarket companies.
Kroger operates in markets with formidable competitors, large and small. One of these is H.E. Butt Grocery Co. of Austin, Texas, last year's winner of the SN award. H-E-B is a privately held, one-state retailer known for its food merchandising passion and its intimate knowledge of Texas consumers, including Hispanic customers.
Kroger, in contrast, is publicly held and operates across multiple states. It is a product of many acquisitions over a period of years. Yet it manages to stay connected to a wide variety of consumers and geographic regions by practicing local marketing across many store banners.
There's another reason Kroger has been successful. It has made difficult, but often reasonable, decisions regarding conflicting demands on its resources. It has embraced local marketing while taking advantage of centralized back-office functions and economies of scale. It is trying to reduce the costs of customer service (among other costs) without slashing service levels.