Break the Rules

'Monstrous' Grocery Stores

Bob Tallent - The Synergy Group

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 ambition which led to his idea for mass merchandising - selling high volume at low profit margins.

When he was working for Kroger in 1930 (he was 46 years old), he wrote an enthusiastic letter to company 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 which 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, Cullen resigned his position to open his own super-sized store in Queens, New York.

Cullen's letter to Kroger had outlined a plan to locate stores in low-rent warehouse districts and to cut prices so low that 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. Cullen 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, Cullen'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, Cullen 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, Cullen found another backer. He quit his job and moved his family to Long Island, where he launched his concept. Cullen leased a vacant garage at 171^st Street and Jamaica Avenue in Queens, near a busy shopping district. The store, called "King Kullen", was opened on 4^th 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 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 and 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. 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 and comment for business owners and managers:

It is interesting to note that, as managers, we should encourage innovation and input from our staff.
Sometimes, when we make a decision (or ignore something), it can have a consequence. Remember every action has an equal and opposite reaction. And in Kruger’s case, not doing something created a huge competitor for him. This was also the situation here in Ireland when the RDS decided not to reduce the cost of hire to the Kennel Club for their annual show. In response, the Kennel Club built its 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. 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 print 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 print?