The Foundation of Today’s Retail Ecosystem – 2

As I have stated repeatedly before, “when one person changes, everything changes.” Visionary individuals enable those around them to broaden their own horizons. In the history of societies, there are indeed many examples of the “butterfly effect” and cascading change triggered by individuals. The period between 1860 and 1960 in the United States—during which the entire global grocery and food retail industry was profoundly shaped—can be seen as a direct result of the butterfly effect created by the ideas and efforts of different individuals. In this sixth part of the article series, in which we have been sharing information about the individuals and institutions that contributed to the development of the global food retail industry into its present form, I will talk about three important people.

In the first part of our article series, we mentioned that in Ferhan Şensoy’s play “Kahraman Bakkal Süper Markete Karşı”, staged in 1991, there is a character named “Michael King Kullen” played by Erol Günaydın. We also stated that this character is actually based on Michael J. Cullen, who lived in the United States between 1884 and 1936 and was the founder of “King Kullen,” the world’s first supermarket. Cullen was born in 1884 into a family of Irish immigrants. In 1902, at the age of 18, he joined The Great Atlantic & Pacific Tea Company and worked there for 17 years. In 1919, he moved to Kroger Stores, where he remained until 1930. Henry Kroger (as we explained in detail in the fourth part of this series) was an exceptionally innovative entrepreneur who pioneered many firsts in the grocery retail industry. Inspired by his employer Kroger, Cullen had, throughout his 28-year retail career, carefully observed changes in consumer habits and developed a deep understanding of the period’s evolving conditions. The American public was increasingly becoming a mass consumer society; moreover, almost every family owned its own car (In 1930, the United States had more automobiles than any other country in the world—23 million in total! This was equivalent to nearly 75% of all households.) Cullen found operating grocery stores in small, high-rent shops in city centers increasingly impractical. It was becoming a growing logistical challenge for the company to supply products to such retail points, and in order to boost sales, offering credit and providing home delivery services had become both exhausting and inefficient. In particular, fuel prices at the time were also very affordable; if people were given the opportunity to shop in a more independent store using their own cars, they would see it as part of a social experience as well, and the business model would certainly succeed. While working as Kroger’s regional manager in Southern Illinois, Cullen developed the idea of the “supermarket” based on these thoughts. In 1930, at the age of 46, he wrote a letter to the president of Kroger proposing a new type of store focused on “lower prices,” “larger floor space,” “cash-only sales,” “no delivery service,” “low rent costs,” and “ample parking.” There is a highly critical detail I must share with you here. Bernard Heinrich “Henry” Kroger had sold the company to a Wall Street banking consortium led by Lehman Brothers in December 1927. On January 31, 1928, he also stepped down as president of Kroger Co. Cullen’s letter was, as you might expect, left unanswered by the new management, which was not as visionary as the company’s founder, Henry Kroger. However, undeterred and firmly believing in his vision, Cullen resigned, confident that he could bring his idea to life, and moved with his family to Long Island to establish his own store. In Queens, New York, he rented an empty garage at the corner of 171st Street and Jamaica Avenue; it was just a few blocks away from a busy shopping district. On August 4, 1930, the King Kullen Grocery Company—widely regarded as “the world’s first supermarket”—opened its doors. The store carried approximately 1,000 different products, including automobile accessories and hardware items that were in high demand at the time.

The King Kullen supermarket achieved success very quickly; just as Michael J. Cullen had predicted, people were indeed coming from miles away. Cullen offered his customers a wide range of affordable and easily accessible food products. The chain grew rapidly in the price-sensitive environment created by the Great Depression, which had begun in 1929. King Kullen stores used large, old buildings (such as factories and warehouses that had closed and been abandoned at the time) located on the outskirts of densely populated areas, in locations with low rent. The facilities were simple, service was minimal, and the shelves mainly featured well-known national brands. The stores’ modest, low-cost structure aligned well with the expectations of customers during the Great Depression. To attract customers with automobiles and encourage them to make large-volume purchases, each store had a large, free parking area in front. By 1936, there were 17 King Kullen supermarkets generating approximately 6 million dollars in annual revenue. Cullen was planning a faster national expansion and franchising strategy. However, in the same year, at the age of 52, he suddenly died following an appendicitis operation; after his death, the company’s growth rate slowed down.

Until 1937, all stores and markets around the world had one common object that limited how much customers could buy: the shopping basket. Once the basket was full—or, for some, simply became “too heavy”—customers would head to the checkout. In the United States, Sylvan Goldman, owner of the “Humpty Dumpty” supermarkets, which opened their first branch in 1934, overcame this limitation by inventing the wheeled shopping cart! He also made a special effort to introduce the wheeled shopping cart, which was used for the first time in his supermarkets, and to help customers get accustomed to using it. He even hired male and female models whose only job was to walk around the store all day pushing shopping carts! The world’s first wheeled shopping cart was actually very well designed from the customer’s perspective, as its two separate baskets could be detached and carried by hand when desired. However, from an operational standpoint, they took up a lot of space. This issue was later solved in 1946 by Orla Watson, who redesigned shopping carts to be telescopic, allowing them to nest inside one another.

Bernardo Trujillo was born in 1920 in Bogotá, the capital of Colombia, and studied law there. He had strong observational skills as well as an exceptional ability to communicate his findings and persuade others. After graduating from law school, he emigrated to the United States and began working as a Spanish teacher in Ohio. However, it wasn’t long before he crossed paths with a company called NCR, headquartered in Ohio. At the time, this company produced cash registers that made cash transactions in retail stores and supermarkets easier, allowing for the handling of change and the storage of different banknotes in separate compartments. Bernardo joined the company as a translator, providing interpretation for Latin and Mexican customers; however, his talent was quickly recognized. In fact, he was doing much more than interpreting for customers; he was explaining to store owners how supermarkets could be run more professionally by sharing “all the recent developments in food retailing”, as well as detailed insights into consumers’ everyday lives, along with his sociological observations. NCR’s management realized that the person truly convincing customers and selling the cash registers was not the American sales staff, but Bernardo himself. Because the statistics supported this reality: unlike meetings conducted with English-speaking American customers without the need for a translator, the sales meetings in which Bernardo participated consistently resulted in positive outcomes. Recognizing this, the company’s management made a highly strategic decision and launched a training seminar program for all its clients and even potential customers; the method Bernardo had personally applied was turned into the company’s marketing strategy. Modern marketing trainings related to retailing—and especially supermarket operations—were to be delivered, and afterward cash registers would be sold to the business owners who attended these programs. Bernardo trained approximately 11,000 people. In his seminars, he consistently emphasized the need to build supermarkets offering low prices and large parking areas. He defined many of the sector’s fundamental principles, including phrases such as “No parking means no business!” Many American retailers adopted his principles; so much so that, starting from the 1960s, except for densely populated areas like Manhattan in New York, nearly all supermarkets in the United States were designed according to Bernardo’s principles—as standalone buildings on separate plots of land, each with its own parking lot. Even French figures such as Denis Defforey and Marcel Fournier, Gérard Mulliez, André Essel, Bernard Darty, and Paul Dubrule attended his training sessions. To clarify, these individuals were the founders of Carrefour, Auchan, Fnac, Darty, and Accor Hotels, respectively. Today’s retail giants—including American Walmart and German chains such as Aldi and Lidl—were all founded in the same period, between the 1960s and 1970s, just like Carrefour in France. As you might expect, NCR Corporation (National Cash Register) sold hundreds of thousands of products to supermarket chains thanks to Bernardo’s strategy. Before his death in 1971, at a relatively young age like Michael J. Cullen, he had already begun to be referred to by industry leaders as the “Pope of the Supermarket” in the early 1960s, when he was only in his 40s. When trying to understand the history and spirit of grocery retailing and food retail in the world, it would have been impossible not to mention Bernardo or leave him out of the discussion.

With this rather long series, we have tried to explain the history of global food retailing by focusing on key turning points, important historical figures, and significant companies. I would like to thank everyone who patiently read the previous five articles, reflected on them, and shared their feedback. In our next article, we will now focus on Turkey and talk about our local supermarkets, which are the main subject we aim to explore. Stay with love and knowledge; see you next time…