Kroger plans Pick ‘n Save upgrades in 2017
A year ago this month, The Kroger Co. completed its purchase of Roundy’s Inc. and proceeded to spend about $50 million remodeling its grocery stores in the Fox Valley and Madison.
Now it’s Milwaukee’s turn.
“We’ll spend well over $50 million starting to remodel the stores in Milwaukee in 2017,” Kroger CEO Rodney McMullen told the Journal Sentinel last week. “We’ll continue to expand the Metro Market concept as well.”
By virtue of its purchase of Milwaukee-based Roundy’s last year, Kroger is the grocery market share leader in Milwaukee, with about 40% of the market. In Wisconsin overall, Kroger has about a third of the market.
Outside Wisconsin, Kroger holds the No. 1 or 2 market share in Los Angeles, Atlanta, Houston, Phoenix, Seattle, Denver, Dallas, Cincinnati, San Diego and Charlotte, N.C., among others.
McMullen leaves no doubt that the company intends to increase its share throughout Wisconsin.
“Absolutely,” McMullen said. “Milwaukee and the state of Wisconsin. We want to make sure we get a foundation in place and get our base business growing.”
There’s a lot riding on Kroger’s performance in Wisconsin. The company employs more than 13,000 people in the state. Of those, about 7,500 work at 60 stores in metro Milwaukee and at the former Roundy’s headquarters in downtown Milwaukee.
Roundy’s, which is now a wholly owned subsidiary of Cincinnati-based Kroger, also has a commissary in Kenosha and a massive distribution facility in Oconomowoc. Roundy’s itself has two divisions: the Wisconsin division and the Mariano’s division, which is focused on Chicago.
Kroger is continuing the process of revitalizing the Pick ’n Save brand after it surrendered market share for several years amid intense local and national competition from the likes of Sendik’s, Woodman’s, Wal-Mart and Meijer.
“In the Fox Valley and Madison, all the stores that weren’t already operating as Pick ’n Save stores are now operating under that banner,” McMullen said. “We had two different brands in the market and we converted all those stores to Pick ’n Save. That’s really the name we will use in Wisconsin other than, obviously, the Metro Market stores.”
Metro Market is an upscale, often urban, store concept that includes a variety of higher-end products and detail-obsessed service that mimics Roundy’s successful Mariano’s stores in Chicago.
McMullen says market share is gained and maintained one customer at a time.
That’s a big job for Kroger and McMullen. Kroger employs 431,000 people who serve about 8.5 million customers each day across 35 states. The company operates nearly 3,000 retail food stores. It had fiscal 2015 sales of $109.8 billion. It operates 38 food manufacturing plants and 17 dairies.
“It is one person, one interaction at a time that makes all the difference,” McMullen said. “If we ever lose sight of that, then that’s the beginning of the end.”
As CEO, he considers instilling that customer service ethic into the company’s DNA a primary responsibility.
“I always view one of my jobs is to help make sure every one of our associates understand how important they are to our customers’ lives every day,” McMullen said. “Just a smile or being able to go out of your way just a little bit to help them can mean so much more than what our associate understands. Just helping our associates understand how important they are to other people, I view that as one of my major jobs.”
McMullen, 55, grew up on a farm in northeastern Kentucky and has spent more than 37 years at Kroger, starting out as a part-time stock clerk in 1978 while he was attending the University of Kentucky. He became CEO in 2014.
He said Kroger had been looking to buy Roundy’s “off and on for probably eight to 10 years.”
“Things just hadn’t aligned with what Roundy’s wanted to do and what worked for us,” McMullen said. “This was the first time it really aligned.”
If anyone can succeed in Milwaukee and Wisconsin, it’s Kroger, said Jim Hertel, senior vice president of Willard Bishop, a suburban Chicago food retail and production consultancy that is part of Inmar Analytics.
“There’s a saying in our business that retail is detail, and getting a whole bunch of little things right adds up to a much bigger success than a few big ideas that don’t get executed well,” Hertel said. “What I think is particularly notable about Kroger is the excellence with which they execute across such a large enterprise and the clarity of thought with which they approach the fundamentals of their business.
“When you stop to think about doing that across a $100 billion organization, which is closing in on 3,000 grocery stores, and to have something that big to have executed as well as they have, that’s just a helluva job and a helluva feat that they did it.”
Measured by revenue, Kroger has quietly grown to become the third-largest retailer in the world, behind only Wal-Mart and Costco.
The competitive mix and what some say is the over-stored nature of Milwaukee’s grocery market is not lost on McMullen.
“There is always going to be a lot of storing in retail,” he said. “If you offer the customer something unique … and then we have prices where you don’t have to pay a premium for that, what our experience has been is there is always room for the retailer that is able to provide that kind of experience for customers.”
Successfully executing that strategy also creates jobs.
“So far we’ve added, in the state of Wisconsin, about 1,000 jobs in the past year. I know some of those people we have hired will become store managers. Some will become vice presidents. Some will become presidents of our divisions,” he said. “So we know that it’s a place where you can come for a job and it can become a career.”