Meijer Traveled Long Road to Success

ELLIOT ZWIEBACH

Meijer Inc., one of the earliest pioneers of the supercenter format, was born 75 years ago because Hendrik Meijer's barber shop business was slowing down — and because neither A&P nor Kroger was willing to rent out the empty store next door.

Meijer Inc. founder Hendrik Meijer cut hair before he launched a business cutting prices.

Meijer had come to the U.S. from the Netherlands in 1907, at age 23, and after trying out several different professions he settled on being a barber in Greenville, Mich.

The Meijer family owned three buildings adjacent to his barber shop, two of which were rented out to a drug store and a restaurant, and one of which was vacant. In 1934 the family decided to convert the empty space into a grocery store of its own.

In a 2000 interview with SN, Frederik Meijer, Hendrik's son, recalled, “The three stores carried a mortgage of $7,000, but we couldn't afford to liquidate, because we wouldn't have been able to get even $4,000 for them in the Depression. And we couldn't interest A&P or Kroger in the empty store. But when a wholesaler offered to loan us some stock, we began operating under the name North Side Grocery.”

That store — which covered 1,470 square feet — opened on June 30, 1934, netting total sales of $7 in cash and credit at the end of the first day. Business picked up, Meijer recalled, with sales at the end of the first year averaging $35 a day.

Two years later Hendrik Meijer converted the grocery store to a cash-and-carry format because it allowed him to lower his prices; at the same time, he changed the store's name to Thrift Market.

According to a 1984 biography of Hendrik Meijer by his grandson Hank — the company's current co-chairman — some of Meijer's customers took the “carry” part of cash-and-carry too literally: When the store put out wicker baskets under a sign that read, “Take a basket, help yourself,” many customers took the baskets home with them!

Later, in 1936, Meijer decided to add weekly specials instead of everyday prices, which sometimes meant buying from the local A&P, Hank Meijer wrote.

In 1937 A&P announced plans to open a store in Greenville, prompting Meijer to expand his store by knocking down a wall and adding space from the property he owned next door.

“Self-service and the elimination of credit were cornerstones of his success,” his grandson wrote. “But only by enlarging the store could he achieve the sales volume that would enable him to keep his prices low enough to … challenge the A&P.”

Hendrik and his son, Fred, began visiting A&P stores in the area with a tape measure to figure out the space allocations, Hank Meijer said. By copying A&P's layout and opening three weeks before the chain, many of Meijer's customers thought A&P had copied Meijer's store, he added.

Meijer matched A&P price for price, regardless of what it cost him, the grandson reported, even selling a handful of items below cost. “That was a mistake,” the grandson quoted Meijer as saying. “But mistake or not, it typified his style.”

Meijer opened a second store in late 1942 in Cedar Springs, 15 miles west of Greenville, in a 5,400-square-foot former garage. Because a competing grocer already had the name Thrift Market, Meijer opened the new store under the name Meijer's Thrift Super Market.

A third store, built from the ground up, followed in Ionia, Mich., in August 1946.

In 1948 the family recognized the population growth in Grand Rapids and opened its first two stores there.

In 1949 Meijer adopted a cartoon figure of a little Dutch boy named “Thrifty” as its icon — a symbol it used for the next 30 years.

With the opening of a third Grand Rapids store in 1952, the family had half of its six stores there and more than half its sales, so it decided to move its base of operations to Grand Rapids.

In 1960 Meijer almost merged his company with Plumb's Ranch Markets, based in Muskegon. At the time, Meijer had 13 stores, with annual sales exceeding $15 million, while Plumb's 10 stores did $9 million.

Both companies were members of the Topco cooperative, both operated in Grand Rapids and both had their eye on expanding further into western Michigan.

They reached a tentative merger agreement, but the deal fell apart after a disagreement within the Meijer family that led his daughter and son-in-law to leave the business, prompting Hendrik Meijer to opt out of the merger deal.

A couple of years later, Hendrik and Fred Meijer attended a discount store convention, “and we got the fever,” the younger Meijer recalled.

The stores had been dabbling in nonfoods — carrying a small assortment of tennis shoes and T-shirts — after seeing the success Weingarten's in Houston was having with that category, Fred Meijer told SN.

According to Hank Meijer, “The final act of Hendrik Meijer's business life, and the innovation that became his legacy, was the marriage of a supermarket and a discount house in a single store.”

Partly out of a fear that discounters might begin operating adjacent to supermarkets — or worse, that they would add groceries to lure shoppers in with low food prices — Meijer decided to combine the two operations.

In October 1961 the company announced plans for the addition of an 80,000-square-foot discount store next to its 20,000-square-foot Store No. 11 in Grand Rapids. Covering more than two acres, Meijer called the new venture Thrifty Acres.

“Until Meijer entered the discount department store field,” his grandson wrote, “no one in Grand Rapids would have thought to buy lettuce and lingerie in the same store.”

Hendrik Meijer described Thrifty Acres as a “super general store [that combined] the self-service principle [for food] and an all-inclusive department store. The obvious advantages are less overhead and a subsequently lower price structure.”

Because it was short of money, the company arranged a sale-leaseback deal with a Swiss investment group; and to avoid cash flow problems, Meijer decided to lease out all the nonfood departments.

The company had a previous commitment to build a store in Muskegon, and it decided to add a discount store there and at a third location — with all three stores scheduled to open within a five-month stretch in 1962.

The first Thrifty Acres opened on June 5, 1962, with 18 checkout lanes, but sales were disappointing.

“It became the retail Tower of Babel, with no one agreeing on anything,” Hank Meijer wrote. “The magical touch that Hendrik and Fred had seemed to bring to the grocery business … was not automatically transferable. Instead, father and son staked their reputation and their fortunes on an institution they could not control at the crucial level of customer contract.”

With different operators in control of each department, he explained, the company was unable to correct deficiencies among the various lessees in stocking, service, cleanliness or pricing. Ultimately, Meijer decided to get rid of the lessees before the next two Thrifty Acres stores opened.

As the lessees left, Meijer personnel had to learn how to buy general merchandise categories with which they were unfamiliar. Hendrik Meijer said they would learn by doing. “Just give the customers the kind of merchandise, services and prices you would like if you were the customer,” he said.

While the company struggled, Hendrik kept his son's spirits up. “Hendrik was a key factor in keeping Fred thinking we could make it,” an employee noted at the time. “It took a lot of guts. We were going deeper and deeper into debt. It was at the point of the company going down or turning it around.”

In his interview with SN, Fred Meijer confided, “Thrifty Acres could have bankrupted us. It was close to being a mistake, but it wasn't.”

By Christmas, with Meijer personnel running the entire store, sales picked up and kept accelerating — in time for Hendrik Meijer to recognize his success before his death in 1964.

As the expanded format became more successful, Meijer tried other ventures — moving into Ohio in 1981 with the acquisition of Twin Fair, a company that operated supercenters and conventional discount stores. Most of the stores were closed or sold and replaced by full-line Meijer stores.

In 1984 Meijer dropped the “Thrifty Acres” logo in favor of simply putting the Meijer name on the stores.

Ten years later Meijer expanded into Indiana, moving into Kentucky in 1995 and into Illinois in 1996.