2011 Power 50: No. 15 Fred Morganthall

After successfully leading Harris Teeter through one of the worst recessions in the nation's history, Fred Morganthall will now seek to apply his leadership skills in his new role as chairman of Food Marketing Institute.

The chain, a division of Matthews, N.C.-based Ruddick Corp., has demonstrated a strong performance throughout the economic downturn, under the management of Morganthall, its president.

“I think he's an exceptional leader for the industry, and I say that because Harris Teeter appeals to such a wide demographic,” said Chuck Cerankosky, an analyst that follows Ruddick at Northcoast Research, Cleveland. “Even though many of the stores appear upscale and in superb operating condition, the strength in perishables, including the quality of those foods, attracts a wide demographic.”

By closely monitoring data from the chain's VIC loyalty-card program, Harris Teeter was able to adjust pricing and promotions to remain in line with customers' needs. The company focused on retaining customers and on driving unit sales of product, rather than strictly focusing on dollar volume, Morganthall told an audience at North Carolina State University earlier this year.

“Even though we're emerging from the recession, we're still not seeing much of a change in consumer confidence,” Morganthall said at the event, according to a report in the Charlotte Observer. “When we poll shoppers, only 1% say they are going back to their old spending habits. So we have to change.”

The 202-store chain saw same-store sales growth of 1.81% through the first half of the current fiscal year.

At the same time, Harris Teeter has been able to keep expenses under control and manage an expansion effort as one of the few traditional chains growing in new markets. The company, despite slowing its pace of expansion slightly, has continued to open new stores in Northern Virginia and the greater Washington, D.C., area.

“I think Harris Teeter is a well-disciplined organization, when you look at how they have metered their dollars as the economy has dwindled, and when you look at how they have handled price competition, the financial results speak for themselves,” said Cerankosky. “It's been an impressive performance by a food chain that saw its two big bank employers, Wachovia and Bank of America, go through a very traumatic period. I think other chains would have fared much worse.”

Morganthall began his industry career at Procter & Gamble before joining the retail and wholesale side of the business at Spartan Stores in Grand Rapids, Mich.

At FMI, he chaired the Industry Relations Committee under former FMI Chairman Steve Smith, and is credited with bolstering the association's relationship with Grocery Manufacturers Association during that time.

In an interview with SN earlier this year about his new role at FMI, Morganthall said one of the reasons he has remained closely involved with FMI has been the association's strength in government relations.

“I am not very good at it, but FMI is,” he said. “I felt the need from our company's standpoint to be a part of FMI's overall work that they do with government relations.”