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Thursday, 11 April 2013 22:45

Break the Rules - 'Monstrous' Grocery Stores

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Michael J Cullen was born of Irish parents in 1884.  At 18 he was working as a clerk for the Atlantic & Pacific Co., moving on to general sales manager at Mutual Grocery and Kroger Stores. He had natural marketing flair and far reaching ideas that led to his idea for mass merchandising - selling high volume at low profit margins.  Ring any bells relative to grocery shopping today?

When he was working for Kroger, in 1930 (he was 46 years old), he wrote an enthusiastic letter to Kroger president Bernard Kroger asking for a meeting to discuss his ideas for the business. In his letter, Michael Cullen claimed that he could boost both sales and profits by building what he called "monstrous" stores--stores that would be four times the size of the standard grocery store and that would offer goods at discount prices. Kroger wasn't interested and didn’t answer the letter.  He hadn’t the vision to develop his Company and couldn’t understand someone who had.  He wouldn’t break the rules.  Feeling upset, Michael resigned his position to open his own super-sized store in Queens, New York.

Michael's letter to Kroger had outlined a plan to locate stores in low-rent warehouse districts, and to cut prices so low shoppers wouldn't be able to resist coming. His model was to sell about a quarter of the store's inventory at cost to draw in customers, who would then buy other, higher margin goods. He proposed cash sales, no deliveries and large car parks. Michael had proven this concept many years earlier in a small grocery store in West Frankfort, Illinois. By underselling a local A&P store in certain key items, Michael's store turned an extraordinarily high profit of $15,000 annually. And at a time when grocery stores still kept the bulk of their goods behind counters staffed by clerks, Cullen introduced customer self-service. His store design eliminated the need for counter clerks by locating the goods on large shelves within easy reach of shoppers. In his proposal, Michael suggested that this new type of store could achieve 10 times the volume and profits of the average Kroger or A&P.

When Kroger ignored him, Michael found another backer. He quit his job and moved his family to Long Island, where he launched his concept. Michael leased a vacant garage at 171st Street and Jamaica Avenue in Queens, near a busy shopping district. The store, called "King Kullen", was opened on 4th August 1930.  He had just broken the rules.

Success was instantaneous. People came from miles around. To the public, King Kullen was more than a convenience - King Kullen meant affordable food and gained recognition as the "World's Greatest Price Wrecker."

By 1933 he had eight "monstrous" grocery stores in the New York metropolitan area, averaging over $1 million each in annual sales.  By 1936 there were 17 King Kullen supermarkets doing approximately $6,000,000 annually.  In 1936, although Michael Cullen died suddenly, just 6 years after opening his first store, King Kullen continued to grow and expand through the leadership of his wife and the support of family members.  In fact, he didn’t just break the rules, he was writing new ones.

A year later, in 1937, the Kroger president re-appraised himself and called Michael Cullen "the one man with the vision and confidence to build what is today the modern supermarket industry."

King Kullen is notable for its title of "America's First Supermarket", and is recognised as such by the Smithsonian Institution. The chain is still owned by the Cullen family. More recently, former New York City Councilman Jack Muratori served as a King Kullen executive.

King Kullen were leaders in employee relations and innovators for their time (1930’s & 40’s) for providing insurance, holidays and wage increases.

As their website says, In the annals of merchandising history, Michael J. Cullen's story stands out as one of vision, courage and tenacious perseverance.  Like the best of the innovators from our nation's past, the contributions he made to society during his lifetime continue to affect us to this day.  Today, three generations later, King Kullen is still family controlled and operated, remains a leader in the supermarket industry and is recognized by the Smithsonian Institute as America's First Supermarket.”

Some interesting questions & comment for business owners and managers:

  • It is interesting to note that we should encourage innovation and input from our staff.
  • Sometimes, when we make a decision (or ignore something), we can have a consequence.  Remember every action has an equal and opposite reaction.  And in Krugers case, not doing something created a huge competitor for him. This was also a situation here in Ireland when the RDS decided not to reduce the cost of hire of the RDS to the Irish Kennel Club for their annual show.  In response, the Irish Kennel Club built their own show centre near the airport.
  • If you have the vision to start a business, follow it through. Evaluate it, check its feasibility and if you’re happy with it, start it.  A simplistic outlook, I hear you say, and I agree with you.  But what I’m trying to get across here is, as Nike says, just do it.
  • If you have the vision or desire to develop or extend your business, set up a franchise, create something new, then just do it.  Take some time out to creatively review the situation. If you wish, hire a consultant to help you, like The Synergy Group, and think outside the box, think differently, don’t be conventional and think from a new perspective.
  • Break the rules.  Don’t necessarily follow others.
    Richard Branson broke the rules when he started Virgin Atlantic to take on the might of BA, Pan Am and American Airlines. 
    Anita Roddick broke the rules when she started the Body Shop. 
    Benetton broke the rules when it came to advertising. 
    Spanish architect Gaudi broke the rules on what a building should look like. 
    Michael Cullen broke the rules on what a grocery store should be like.
  • From within the your industry, can you find a way to break the rules and be innovative?  Can you find a way to be the next King Kullen of your industry?

Talk to The Synergy Group for advice.

Read 17573 times Last modified on Wednesday, 17 April 2013 18:23
Robert Tallent

Bob is a Management Consultant, Mentor and Trainer. He is also an Entrepreneur from 1983 to the present day. Between 1983 and 1995 he ran four businesses with a turnover in excess of £1m. As well as having an Honours Degree in Business Studies, he is also an Industrial Engineer and managed a large department in a multinational with large budgets and responsibilities.

He studied to become a Management Consultant, Mentor and Trainer and setup The Synergy Group in 1995.

He has a huge range of business and management experience in practically every industry.

Call him privately on +353(0)87 232 6927

or email him on bob@synergy.ie

Main land line is +353(1) 821 5189

Website: www.synergy.ie
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