The Origins of 12 Supermarket Chains
From the days of home delivery to streamlined self-service stores, here are the stories behind 12 supermarket chains.
After 12 years as a clerk and manager for Safeway stores, Joe Albertson decided to open his own business. In 1939 Albertson formed a partnership with two other men, including fellow Safeway employee L.S. Skaggs, and used his life savings and a $7,500 loan from his aunt to open the first Albertsons Food Center in Boise, Idaho. According to the Encyclopedia of Entrepreneurs, the store featured a fresh bakery, an automatic doughnut machine, one of the first magazine racks in the country, and double-dipped ice cream cones called “Big Joe” that cost a nickel. Albertson, who made a $10,000 profit in his first year, opened two more stores in 1940 and surpassed $1 million in sales.
One of the world's largest discount grocery chains was founded as a modest shop in Germany in 1913 by the mother of Theo and Karl Albrecht. The brothers took over their mother’s small business after World War II and began shaping the company into what it is today. By choosing not to spend money on advertising and opening small, no-frills stores with a limited selection of goods, the Albrecht brothers were able to offer lower prices than their competitors. ALDI opened its first store in the United States in southeastern Iowa in 1976 and initially carried only 500 products. Today, the company boasts more than 1,000 stores with a greater selection of products in over 30 states.
3. Food Lion
In 1957, former Winn-Dixie employees Ralph Ketner, Brown Ketner, and Wilson Smith opened the first Food Town supermarket in Salisbury, North Carolina. A decade later, the trio's empire had only grown to seven stores, so the company began using giveaways and promotions to lure customers. That year, Ralph Ketner reportedly spent three days in a Charlotte motel analyzing Food Town’s sales. After crunching the numbers, Ketner determined that the company could slash prices on 3,000 items and still turn a profit if sales increased by 50%. The strategy sparked rapid growth and prompted the introduction of a new slogan: LFPINC—Lowest Food Prices in North Carolina. “Our bumper stickers, highway signs, everything zeroed in on LFPINC, and each year we continued to cut prices, and it just fed on itself,” Ketner told Fortune in 1988. When Belgian supermarket chain Delhaize purchased a majority stake in Food Town in 1974, the company prepared to open stores in Tennessee and other neighboring states. During this expansion, Delhaize decided to rebrand the store for several reasons, not the least of which was that Tennessee already had an established chain called Food Town. Ketner lobbied for Food Lion since Delhaize’s logo featured a lion, and the change would only require switching two letters in the name. From 1977 to 1987, the chain opened more than 400 new stores.
Barney Kroger used his life’s savings of $372 to open his first store, The Great Western Tea Company, in downtown Cincinnati in 1883. By 1902, Kroger had opened 40 stores and incorporated his chain as the Kroger Grocery and Baking Company. Less than 20 years later, the company had grown to more than 5,000 stores nationwide. Kroger’s stores featured bakeries and were among the first to combine meat markets and grocery stores under one roof. He advertised regularly in newspapers and started a private-label line of goods, including sauerkraut and pickles made by his mother. Kroger retired in 1928, but the company continued to grow and remained a pioneer in the industry. In 1972, Kroger was reportedly the first grocery retailer to test an electronic scanner. Today, Kroger boasts more than 2,500 stores in 31 states and sales of more than $100 billion.
5. Piggly Wiggly
Clarence Saunders changed the way that people shopped for groceries when he opened the first Piggly Wiggly in 1916 in Memphis, Tennessee. Traditionally, a customer would present a list of groceries to a store clerk, who would gather the goods off the shelves while the customer waited. Saunders’ first store featured shopping baskets and open shelves that enabled customers to shop on their own. Time described the stores as cafeteria-groceries. The origin of the Piggly Wiggly name is unknown. When asked why he chose the name, Saunders once replied, “So people will ask that very question.” Saunders lost more than $3 million after attempting to corner the market on Piggly Wiggly stock and left the company in 1923. In 1937, he opened Keedoozle, the first fully automated grocery store.
In 1872, 22-year-old bricklayer George Albert Ralphs lost an arm in a hunting accident and was forced to find a new occupation. Ralphs took a job at a grocery store in downtown Los Angeles and saved enough money to open his own store with his brother two years later. Ralphs Bros. Grocery provided lodging for farmers who came to Los Angeles to sell their crops, enabling its founders to establish a good relationship with some of their main suppliers. By 1928, Ralphs, had 10 cash-and-carry stores. As Ralphs grew over the next several decades, it opened bakeries, creameries, and floral departments in its stores. In 1978, Ralphs introduced a line of Plain Wrap products, an alternative to name-brand items. Today, Ralphs is the largest subsidiary of Kroger.
In 1912, Sam Seelig opened the first grocery store bearing his name in Los Angeles. By 1922, the Seelig’s chain had grown to 71 stores. When Seelig decided to leave the company to enter the real estate business two years later, a contest was held to rename his stores. "Safeway" - a reference to the chain’s cash-and-carry policy - was the winning submission. While many grocery stores at the time offered credit, Seelig’s did not, making it the “safe way” to shop and avoid falling into debt. Safeway’s 322 stores merged with M.B. Skaggs’ chain of 428 stores in 1926 and was first listed on the New York Stock Exchange in 1928.
Shaw’s traces its roots to Portland, Maine, where George C. Shaw opened a tea shop in 1862. In 1919, Maynard A. Davis, who owned a small chain of grocery stores in Massachusetts called Brockton Public Market (BPM), purchased the George C. Shaw Company. The two entities continued to grow over the next several decades, opening stores throughout New England. In 1978, BPM stores changed their name to Shaw’s Supermarkets to streamline the marketing and advertising efforts of the two companies, which formally merged one year later.
9. Trader Joe’s
Trader Joe’s began in 1958 as a small chain of convenience stores called Pronto Markets. In 1967, owner Joe Coulombe decided his stores were too similar to 7-Elevens, changed the name of his company, and opened the first Trader Joe’s in Pasadena, California. Coulombe stocked his stores with unique food items and attracted a strong base of environmentally conscious consumers by publishing the Trader Joe’s Insider Report, which included commentary on conservation issues and stories about the various wines the store sold. (The newsletter is still published today as the Fearless Flyer.) In 1977, Trader Joe’s introduced the first “Save-A-Tree” brown canvas bag, and in 1993, the company opened its first store outside of California. The first bottles of Charles Shaw, better known as “Two Buck Chuck,” debuted in 2002.
Charles Von der Ahe, who grew up in the grocery business as a delivery boy and clerk, opened his first store in downtown Los Angeles in 1906. Von der Ahe leased his storefronts to produce sellers and butchers, an idea that would lay the foundation for the first supermarket. By 1928, Vons had grown to more than 80 stores. Von der Ahe sold the chain in 1929, but his sons re-launched the business four years later and opened a supermarket that offered self-service produce, meat, and deli departments in 1948. The business expanded to 159 stores during the 1970s and experienced additional growth during the 1980s after being designated the official supermarket of the 1984 Los Angeles Olympics. Today, Vons remains prominent in Southern California as a division of Safeway.
Wegmans was founded in 1916 by John and Walter Wegman as the Rochester Fruit and Vegetable Company. Wegmans stores were incorporated as Wegmans Food Markets, Inc., in 1931 after the brothers opened a 20,000-square-foot store in Rochester that featured a cafeteria, meats, produce, groceries, dairy products, and baked goods. Over the next few years, Wegmans introduced refrigerated display windows, vaporized water sprays in the produce section, and homemade candy. Wegmans launched a line of private-label products in 1979 and opened its first store outside of New York in 1993.
12. Whole Foods
University of Texas dropout John Mackey and his girlfriend, Renee Lawson Hardy, opened SaferWay Natural Foods in Austin, Texas, in 1978. Mackey and Hardy lived in the store and bathed using the water hose from the Hobart dishwasher. Two years later, with some help from his dad, Mackey raised about $200,000 to expand his business. He and Hardy partnered with Craig Weller and Mark Skiles, owners of the nearby Clarksville Natural Grocery, to open the first Whole Foods Market. The store was an instant success and attracted a loyal following. While it carried a huge line of natural and organic products, Whole Foods differentiated itself from the handful of other natural food stores of the time by catering to vegetarians and carnivores alike and carrying refined sugar and eggs. The Whole Foods chain expanded to 10 locations, including Dallas, Houston, New Orleans, and Palo Alto, by 1990.