Can Local Grocery Stores Become International Chains? – 3

In the first three articles of the series I previously wrote under this title, I delved into the history of retail to help readers understand the history of global grocery retailing. I emphasized the importance of learning about American food retailing and tried to convey, with different examples and phenomena, the periods that paved the way for today’s supermarket chains. In this fourth article, which continues the series, I will attempt to fulfill my earlier promise by presenting the “pioneers” of the industry, American entrepreneurs and companies that played a key role in shaping modern grocery retail, chronologically and as clearly as possible, sharing their unique true stories. As I emphasized earlier: “one person changes, everything changes!” Therefore, it is useful to grasp some important details about these key figures.

In the United States, there were “General Stores” in city main streets and on street corners, as well as in towns, selling daily groceries like bread, milk, and canned goods alongside non-food items. In 1859, George Gilman founded the A&P (Great Atlantic & Pacific Tea Company), giving birth to the first “grocery chain.” Naturally, other ambitious and well-capitalized individuals followed suit by acquiring existing stores or opening new ones. However, Gilman’s company remained the largest retail chain in the U.S. until 1975. Operating a grocery chain was especially challenging in those times due to logistics. These small stores, with limited space and inadequate storage, required regular restocking—a task not everyone could handle. Independent, scattered single-store grocers, who made up the majority of the market, depended on traveling salesmen and wholesalers who visited them with carts full of diverse products. One such traveling salesman, a young man named Aaron Montgomery Ward, noticed that grocers in rural villages and towns sold to farmers at very high margins due to two main reasons: first, grocers rarely had large inventories and negotiated prices with almost every customer; second, grocers extended credit to their farmer clients, essentially selling on account (familiar, isn’t it?). In 1872, Ward founded Montgomery Ward & Company, launching a mail-order system. He published catalogs featuring visual drawings and some photographs of products, mailed them to thousands of farmers and grocers, collected orders by mail and delivered the products while collecting payment. Unlike local grocers, Ward did not negotiate or offer credit; he sent the catalog widely and free of charge, allowing customers to see and imagine how products could be used and he succeeded. By 1883, the catalog had grown to 240 pages with 10,000 items. Later, Ward lobbied for the U.S. Postal Service’s rural “Free Delivery” service to facilitate a future “parcel post system” (which would begin in 1906) to ship products affordably in addition to free letters and catalogs.

In 1886, a 23-year-old Richard Warren Sears, working at a rapidly expanding railway company, received a shipment of gold watches from a Chicago manufacturer. The local jeweler, Edward Stevenson, refused the delivery. Sears saw this as an opportunity, bought the products at a good price and sold them at a profit to colleagues at other stations. Enjoying this business adventure, which earned him more than his annual salary, Sears secured a larger supply and appointed friends as sales agents. Within six months, he had amassed a fortune. In 1887, together with his watchmaker friend Alvah Curtis Roebuck, he founded Sears, Roebuck and Co., a company that would leave a mark on American history. That same year, they moved the business to Chicago and published their first mail-order catalog featuring watches, diamonds, and jewelry. Over the years, leveraging the postal service’s free rural rail delivery, the company expanded into selling nearly every type of product. In 1896, Sears released its first general catalog, becoming the first serious competitor to Montgomery Ward & Company. By 1900, Ward’s total sales reached $8.7 million, and Sears’ $10 million, as both companies competed for dominance for much of the 20th century. By 1904, Ward was sending three million catalogs annually, each weighing 1,8 kg. By 1916, Sears, Roebuck and Co. mailed more than 50 million catalogs annually, each containing detailed illustrations of products and descriptions (many written by Richard Sears himself until his 1908 retirement). The early 20th century was the golden age of mail-order, and Ward and Sears became an American tradition. Over time, this culture evolved into TV shopping channels, phone orders and eventually online commerce.

Between 1872, when Montgomery Ward launched its catalog system, and 1887, when Richard Sears started his mail-order business, another retail legend emerged in 1883: Bernard Heinrich “Henry” Kroger. The fifth child in a family of ten, Kroger faced hardship early. During the 1873 U.S. economic crisis, his father went bankrupt and young Henry, a 40-kg frail boy, worked for a harsh employer far from home. After surviving malaria and a grueling 60 km walk home, Kroger’s reflections on this journey would shape both his life and the history of grocery retail. He began as a traveling sales representative for Great Northern and Pacific Tea Co., selling tea and groceries door-to-door. After moving to Imperial Tea Co., he eventually turned around a failing store, generating $3,100 in profit (about $100,000 today). Upset by uncooperative employers, Kroger opened his own grocery store in 1883. Kroger became a pioneer of many retail innovations. From 1895, he ran extensive advertisements in local newspapers, featuring detailed price lists by product category, emphasizing savings. By 1897, Kroger’s ads appeared regularly in Cincinnati newspapers, sometimes taking full pages, a marketing approach unmatched at the time. In 1901, he added a bakery to a larger store, selling inexpensive bread and increasing foot traffic, thus enabling cross-selling—the first diversification strategy in food retail. Kroger also introduced the first product price tags, prepaying suppliers to offer lower consumer prices, launched the first loyalty & reward points program and in 1902 established a factory producing jams, preservatives and extracts—becoming an early private-label pioneer. Some Kroger-branded products captured over 25% of market share. Kroger was the first to sell fresh meat in-store, acquiring Shapell, Nagel & Co. in 1904, adding 11 stores and meat processing facilities. Like many grocers, he offered home delivery, taking orders by phone and personally ensuring prompt delivery using his fleet of carriages and over 200 horses. By 1912, he replaced his fleet with 75 automobiles, becoming the first to use cars for delivery. Kroger also established America’s first in-store quality control lab in 1921, pioneering scientific consumer research.

While A&P launched the grocery chain model in 1859, Montgomery Ward (1872) and Sears, Roebuck and Co. (1887) developed mail-order retailing. With Kroger joining in 1883, both retail chains and mail-order businesses fueled America’s already eager market. What was happening in Europe during the same period, where traditional markets and individual sellers dominated trade? In the next article, we will explore Europe’s emerging supermarkets and later, U.S. retail companies founded between 1920–1960, their founders, and key figures who shaped history, allowing us to fully understand today’s global food retail ecosystem.