The Charlotte Observer has an interview with 90-year-old Ralph Ketner, the founder of Food Lion, in which he assesses the company he retired from in 1992 as well as retailing trends in general.
Excerpts:
On organics and other specialty items... “There are people who are willing to pay for the organic items and better selections and so forth, but I would rather cater to 80 percent of the people than I would to the 20 percent who want certain things. I'd say, ‘Go somewhere else and buy it’.”
On Food Lion since his departure... “After I left in 1992, we had 1,017 stores. Our goal at that time was 2,000 at 2000. We planned to open 900 stores in the next eight years. We'd opened 318 in the last three years I was with the company, so it was not an unreachable goal.
“But after I left - it's a funny thing. They didn't think we should sell stuff below cost. One-sixth of everything I sold was sold for less than we paid for it in carload lots. If we bought $10 million worth of Gerber baby food, we sold it one jar at a time for $8.5 million, 15 percent below cost. You can't take percentages to the bank, you take dollars to the bank.”
On shopper loyalty programs... “If I were still running Food Lion and still had the lowest prices, then no, I wouldn't want it. There's a cost to getting that information. If you're catering to the person primarily because you're gonna take care of them and give them groceries at the lowest price possible, they're coming back next week. I don't need to know what color shirt they were wearing or how much cereal and what brand they bought. All I want to know is they bought it at Food Lion. I'm narrow-minded that way.”
Excerpts:
On organics and other specialty items... “There are people who are willing to pay for the organic items and better selections and so forth, but I would rather cater to 80 percent of the people than I would to the 20 percent who want certain things. I'd say, ‘Go somewhere else and buy it’.”
On Food Lion since his departure... “After I left in 1992, we had 1,017 stores. Our goal at that time was 2,000 at 2000. We planned to open 900 stores in the next eight years. We'd opened 318 in the last three years I was with the company, so it was not an unreachable goal.
“But after I left - it's a funny thing. They didn't think we should sell stuff below cost. One-sixth of everything I sold was sold for less than we paid for it in carload lots. If we bought $10 million worth of Gerber baby food, we sold it one jar at a time for $8.5 million, 15 percent below cost. You can't take percentages to the bank, you take dollars to the bank.”
On shopper loyalty programs... “If I were still running Food Lion and still had the lowest prices, then no, I wouldn't want it. There's a cost to getting that information. If you're catering to the person primarily because you're gonna take care of them and give them groceries at the lowest price possible, they're coming back next week. I don't need to know what color shirt they were wearing or how much cereal and what brand they bought. All I want to know is they bought it at Food Lion. I'm narrow-minded that way.”
- KC's View:
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I don’t want to be disrespectful to a 90-year-old man who has forgotten more about the retailing business than I am ever going to know. But “narrow-minded” is right.
Ralph Ketner never had to compete with Walmart. Never had to compete with Aldi. Never had to compete with Amazon.
The simple fact is that there is far more competition out there today than ever before ... and the fight to be lowest-priced is almost unwinnable. No matter how low you go, somebody else can go lower. At some point, it seems to me, you have to have something else other than low prices ... you need to be sharp on pricing, but you’d better have another quality, product, or service that distinguishes you in the eyes of the shopper, that gives you a differential advantage.
Then again, what do I know?
