W h y s o m e c o m p a n I e s m a k e t h e
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| 68 Jim Collins Burger, Mr. Hartford continued to be the dominant force on the board for nearly twenty years. Never mind the fact that he was already As the brutal facts about the mismatch between its past model and the changing world began to pileup, AP mounted an increasingly spirited defense against those facts. In one series of events, the company opened anew store called The Golden Key, a separate brand wherein it could experiment with new methods and models to learn what customers wanted It sold no A&P-branded products, it gave the store manager more freedom, it experimented with innovative new departments, and it began to evolve toward the modern superstore. Customers really liked it. Here, right under their noses, they began to discover the answer to the questions of why the were losing market share and what they could do about it. What did AP executives do with The Golden Key They didn't like the answers that it gave, so they closed AP then began a pattern of lurching from one strategy to another, always looking fora single-stroke solution to its problems. It held pep rallies, launched programs, grabbed fads, fired CEOs, hired CEOs, and fired them yet again. It launched what one industry observer called a "scorched earth policy" a radical price-cutting strategy to build market share, but never dealt with the basic fact that customers wanted not lower prices, but different The price cutting led to cost cutting, which led to even drabber stores and poorer service, which in turn drove customers away, further driving down margins, resulting in even dirtier stores and worse service. "After awhile the crud kept mounting" said one former AP manager. "We not only had dirt, we had dirty Meanwhile, over at Kroger, a completely different pattern arose. Kroger also conducted experiments in the s to test the superstore By 1970, the Kroger executive team came to an inescapable conclusion The old-model grocery store (which accounted for nearly percent of Kroger's business) was going to become extinct. Unlike AP, however, Kroger confronted this brutal truth and acted on it. The rise of Kroger is remarkably simple and straightforward, almost maddeningly so. During their interviews, Lyle Everingham and his predecessor Jim Herring (CEOs during the pivotal transition years) were polite and helpful, but a bit exasperated by our questions. To them, it just seemed so clear. When we asked Everingham to allocate one hundred points across the top five factors in the transition, he said "I find your question a bit perplexing. Basically, we did extensive research, and the data came back loud and clear The supercombination stores were the G o o d to Great 69 way of the future. We also learned that you had to be number one or number two in each market, or you had to exit Sure, there was some skepticism at first. But once we looked at the facts, there was really no question about what we had to do. So we just did Kroger decided to eliminate, change, or replace every single store and depart every region that did not fit the new realities. The whole system would be turned inside out, store by store, block by block, city by city, , state by state. By the early s, Kroger had rebuilt its entire system on the new model and was well on the way to becoming the number one grocery chain in America, a position it would attain in Meanwhile, AP still had over half its stores in the old s size and had dwindled to a sad remnant of a once-great American Download 3.69 Mb. Share with your friends:
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