The Consumer's Temple
Yeltsin at a Randall's in Clear Lake TX
They have been credited with creating America’s middle class and blamed for obesity and global warming. They sparked innovations like the bar code, frozen foods and fresh year-round produce. They popularized self-service–and with it mass merchandising and competitive pricing. They created a culture of instant gratification and that uniquely American being: the smart shopper.
Supermarkets are a daily testimonial to the transformative power of capitalism. Few 20th century innovations have had such an impact on the way we live. In his autobiography, former Russian President Boris Yeltsin described his first visit to a Houston supermarket this way: “When I saw those shelves crammed with hundreds, thousands of cans, cartons and goods of every possible sort, I felt quite frankly sick with despair for the Soviet people.”
Before 1930, most staples required separate, daily trips to the butcher, baker, produce stand and milk man. Mom-and-pop grocery stores generally carried only one brand of any specific item and products were selected by a clerk behind a counter. In rural areas, grocers dispatched so-called huckster wagons to the country to sell canned goods and prepared foods, and customers were dependent on when these wagons arrived and what they carried.
The process was erratic, labor intensive and costly. In 1930, Americans spent 21% of their disposable income on groceries. By 1940, that percentage dropped to 16%. Today, that figure is less than 6%–thanks to innovations in food distribution, mass merchandising and price competition that began in the 1930s.
“Supermarkets made it possible to achieve economies of scale at a lower cost to consumers,” says Leslie G. Sarasin, chief executive of the Food Marketing Institute. “Americans were able to spend more of their disposable income on cars, education, clothing. They effectively created America’s middle class.”
The ’30s get a bad rap these days–as if the decade was nothing more than a bleak parade of dust bowls, breadlines and homeless men. But the decade also held the dawn of a new consumer-driven economy. Supermarkets led the way to affordable pricing, overwhelming variety and convenience.
Michael J. Cullen is credited with inventing the supermarket. In 1930, Cullen, a branch manager for Kroger Grocery & Bakery Co. in Illinois, addressed a letter to headquarters outlining a revolution in food retailing. He foresaw stores “monstrous in size” that operated 80% of their business on a self-service basis.
He suggested locations three blocks from town centers to reduce overhead and accommodate parking space. Cullen anticipated greater use of the automobile and home refrigeration would allow customers to abandon daily trips to the butcher, baker etc., in lieu of weekly trips to the supermarket–where everything could be purchased under one roof. By doing more business than a hundred neighborhood stores, Kroger could sell groceries at rock-bottom prices.
“Can you imagine how the public would respond to a store of this kind?” Cullen wrote to Kroger’s vice president. “It would be a riot. I would have to call out the police and let the public in so many at a time. I would lead the public out of the high-priced houses of bondage into the low prices of the house of the promised land.”
When Kroger ignored Cullen, he resigned and on Aug. 4, 1930, he opened the world’s first-ever supermarket, King Kullen Grocery Co. , in Queens, N.Y. His slogan, “King Kullen, the world’s greatest price wrecker,” enticed thrifty consumers. His motto, “Pile it high; sell it cheap” was simple–and effective. [ I think that was Sam Walton's motto too. ]
Within two years, Cullen was operating eight markets and generating $6 million in sales ($76.4 million in 2009 dollars). When he died in 1936, there were 17 King Kullen markets operating throughout the Northeast. Cullen’s first real competitor, Elizabeth, N.J.-based Big Bear opened its first self-service supermarket on Dec. 4, 1932. That first year, Big Bear grossed $3.8 million in sales ($48.4 million in 2009 dollars).
Meanwhile, Cullen’s old bosses at Kroger kicked themselves. In 1933, William Albers, Kroger’s former president, left Kroger to open Albers Super Market in Cincinnati–the first store to use the word “supermarket.” That same year, Kroger built its first 75-space parking lot around one of its stores. Soon supermarkets were cropping up from coast to coast. By 1939, there were 4,982 supermarkets in operation.
So began the era of consumer choice. Self-service unleashed mass merchandising. No longer at the mercy of wholesalers to get their products on shelves, food manufacturers went directly to the supermarket–and the consumer–to get their brand noticed. Manufacturers vied for shelf space and lower prices. The market for food packaging and advertising exploded. As early as 1932, the food industry ranked second among manufacturers in annual expenditures for national magazine ads.
“Human food requirements and preferences have undergone revolutionary changes,” C.M. Chester Jr., president of General Foods, told Forbes Magazine in 1930. “The American factory worker is now better fed than were the kings of the 18th century.”
http://www.forbes.com/2009/04/30/1930s-advertising-innovation-business-supermarket.html |
