The Kroger Co. (KR), Wal-Mart Stores, Inc. (WMT): The Store That Helped Build the Suburbs

On this day in economic and business history …

One of the most important economic trends in postwar America was suburban sprawl — the spread of families further from city centers, to two-car garages and half-acre yards instead of two-room apartments. Two business developments were vital to the spread of the suburb: the shopping mall and the supermarket. The first supermarket was the brainchild of grocery innovator Michael Cullen, and it first opened its doors in the New York City borough of Queens on Aug. 4, 1930. King Kullen, as that supermarket was known, took a sledgehammer to the grocery-store paradigm of the era.

Cullen had worked his way up through the ranks at The Kroger Co.
(NYSE:KR) since 1919 and was intimately familiar with the shortcomings of small, specialized grocery stores, with employees serving customers over the counter. These stores lacked their own meat, produce, or bakery departments, which made the family grocery excursion into quite the drawn-out affair. Self-service groceries had been attempted as early as the 1910s at Piggly Wiggly stores, but this was a far cry from the expanse of the modern supermarket.

Cullen decided to go big and go broad — the first King Kullen was to incorporate self-service, size, and an integration of different departments to provide its customers with discounts only available thanks to its high-volume operations. It was designed to generate 10 times the sales volume of the The Kroger Co. (NYSE:KR)s Cullen had worked for, and Cullen advertised the supermarket as “The World’s Greatest Price Wrecker.”

The strategy worked. Shoppers loved the convenience of having all their food needs under one roof, and they loved the volume-driven savings even more — no small concern in the early days of the Great Depression. Within its first five years, King Kullen had expanded to 17 locations, and was doing $6 million in annual sales, equivalent to about $100 million today. The privately held chain now operates 42 locations on Long Island, but it’s far from alone.

The grocery industry was always important to the American economy, but its adoption of the supermarket model has had a profound impact on both the industry and on the rest of the nation. Today, the grocery industry produces over $1 trillion in annual revenue in the United States, with supermarkets accounting for roughly $560 billion of that total. There are approximately 36,000 supermarkets scattered across the country, and more than 29,000 of those are part of chain businesses.