Jitney-Jungle Stores of America, Inc. History

Address:

1770 Ellis Avenue, Suite 200
P.O. Box 3409
Jackson, Mississippi 39207-3409
U.S.A.

Telephone: (601) 965-8600
Fax: (601) 346-2187

Private Company
Incorporated: 1946
Employees: 17,500
Sales: $2.2 billion (1998)
SICs: 5411, Grocery Stores; 5141, Groceries, General Line; 5113, Industrial & Personal Service

Company Perspectives:

We value your business! That's why we make service and quality our top priority. And that's why we guarantee you that every product you buy at our stores will be the freshest, and every employee you meet will be the friendliest in town.

Company History:

Jitney-Jungle Stores of America, Inc., one of the largest, privately owned grocery chains in the nation, operates in six southern states: Alabama, Arkansas, Florida, Louisiana, Mississippi, and Tennessee. It is the largest retailer in Mississippi, its home base, where it enjoys a 25 percent share of the grocery market. Its 198 stores include Jitney-Jungles and Delchamps, traditional supermarkets, as well as Sack & Saves and Megamarkets, discount stores, and Jitney and Delchamps Premiers, more gourmet-conscious, upscale grocery outlets. Also included are 54 Pump & Save service stations and ten liquor stores. Although a private company throughout its long history, it has given serious thought to going public to facilitate its plans for greater expansion. As of early 1999, however, no definitive steps to effect the changeover had been taken by the company's owners.

The Early Years: 1919 to the Great Depression

Three cousins of the Holman and McCarty families from rural Carroll County, Mississippi, founded Jitney-Jungle in 1919 as a private company. William Bonner McCarty served as the company's first president, Judson McCarty Holman served as president of McCarty-Holman, the company's wholesale operation, and William Henry Holman, Sr. served as president of the retail operation. Throughout most of the history of Jitney-Jungle, these men and their descendants kept the ownership and control of the company within the two families.

Jitney-Jungle actually emerged from an earlier grocery business, the Jackson Mercantile Co., owned by William McCarty's father, William Henry McCarty. Before he died in 1910, the senior McCarty had hired Jud Holman as his bookkeeper. Jud and his brother William bought the business from the McCarty estate, enabling Will McCarty to go to law school. They operated branch stores in Jackson, which, by the end of World War I, they began converting to self-service, cash-and-carry operations after one of their charge-and-delivery stores ran into financial problems because of a railway workers' strike.

On April 19, 1919, under the new partnership arrangements, and guided by the principle that they would save their customers "a nickel on a quarter," the cousins opened their first Jitney-Jungle store as a cash-and-carry grocery. It was located in downtown Jackson, on East Capitol Street. The name came from a slang term for a nickel and a play on the word "jingling" in the popular catch phrase "jingling your jitneys in your pockets." Within a year the new store had made more money than all the other McCarty-Holman stores combined, which were soon either converted to Jitney-Jungles or phased out.

Near the first store was a Piggly-Wiggly, another cash-and-carry store. In 1920 Piggly-Wiggly brought suit against Jitney for patent infringement, claiming that it had exclusive rights to the cash-and-carry system. Finally, after Will McCarty proved that such a system pre-existed the founding of Piggly-Wiggly, the U.S. Supreme Court ruled in favor of Jitney-Jungle. The legal victory helped remove a significant barrier to expansion.

There were, however, significant risks involved in the changeover to the self-serve, cash-and-carry merchandising system adopted by Jitney. People who had always relied on credit purchasing did not always have money readily available, and the possibility of resentment toward stores denying credit to customers was very real. There was also the problem of "shrinkage," especially the losses incurred through shoplifting made easier by the self-service system. But folks adapted to the changes quickly, particularly women, who turned shopping at Jitney-Jungles into social outings. As a result, Jitney was able to begin its rapid growth, honoring McCarty's motto "expand or expire." In the early 1920s the company opened its first stores outside Jackson--in Greenwood, Yazoo City, and Canton, Mississippi.

New Triumphs in Difficult Years: 1929--50

Jitney fared comparatively well in the Depression, in part because the cash-and-carry system did not strap it with credit charges its customers simply could not pay. Still, to help its financially pressed shoppers, the stores did accept checks and managed an enviable record of receiving payment from customers who sometimes were not able to meet their obligations for several years.

Jitney also took an important step in 1934, when it opened its first real supermarket in Jackson. It involved a change of shopping styles, depending on parking lots and prototypes of the modern bag boy who would deliver packages of groceries to customers' cars. Jitney's first supermarket was the second such store to be air conditioned, and it included the first women's restroom in any of its stores, as well as other amenities, like chairs for children who had to wait while their mothers shopped. That first store served as a model for the company's other supermarket buildings.

During World War II, despite such problems as food rationing, Jitney continued to expand. The supermarket had caught on, and by 1946, when the company's gross sales mounted to $7.5 million, Jitney finally incorporated. The move, which named the three presidents' wives to vice-presidencies, was in large part a strategic response to mounting tax liabilities, but because Jitney's customers were 90 percent women, it was also a good public relations move.

At about the same time, a new generation of McCarty and Holman family members began their association with the business. William Bonner McCarty, Jr. went on board after completing his Army service in World War II. A few years later William Henry Holman, Jr. followed, after completing his Army service in the Korean War.

Decades of Adaptation and Change: 1950--70

After Jud Holman's death in 1950, William Holman, Sr. took on the additional responsibility of managing the wholesale operations. Under his control, McCarty-Holman Co. would be transformed into a distribution and service warehouse for Jitney-Jungle stores. By the end of the decade, the company was sending its own refrigerator trucks throughout the United States to bring back fresh, top-quality produce for its Mississippi customers. As its own wholesaler, Jitney was able to keep costs down by eliminating wholesale jobbers. The result was that it could keep its retail prices lower and highly competitive.

Jitney responded to changes wisely, though sometimes reluctantly. A new fad of the 1950s was the shopping center, many of which had as their centerpiece a large supermarket whose customers might be attracted to the merchandise in other stores. Jitney-Jungle, in its home market, Jackson, opened the first such shopping center supermarket in Morgan Center, the city's first of its kind. Jitney also solved problems that plagued its operations. For example, in 1954, after years of being unable to make satisfactory arrangements with independent bakeries, Jitney bought a nearly insolvent bakery in Columbia, Tennessee and began making its own bread and other baked goods. It soon proved to be a very successful operation. But the company was less enthusiastic about another craze of the 1950s--the ubiquitous trading stamps. For a time the company held out, even in the face of pressure from customers who demanded them. Finally, in 1958, despite objections from the senior family members, Jitney relented, but with a solution typifying its independence: it created Associated Merchandisers, Inc., its own trading stamp company.

In 1962, after William Henry Holman, Sr.'s death, his son William, then executive vice-president of McCarty-Holman Co., began a five-year term as the presiding officer of the board. In 1967 he was elected president and served as CEO until 1998. In that period, Jitney continued its ambitious expansion, growing from a chain of 32 stores, all located in Mississippi, to a chain of almost 200 stores operating in Mississippi and five other southeastern states.

In the 1960s the most important step Jitney took was to join Topco, a national, cooperatively owned purchasing association that wielded as much purchasing power as the largest supermarket chains. The move made it possible for Jitney to purchase grade-A foodstuffs and related merchandise at competitive prices. The company also started expanding through the purchase of other franchises, starting with five stores located on the Gulf Coast. Over the next several years it would grow through strategic acquisition of other chains, some of which were operating outside Mississippi.

Another important move was first undertaken in 1965, when Jitney created a discount division that sold goods at the lowest possible prices while suspending the use of trading stamps. For a time, its discount stores operated in the same neighborhoods as the older Jitney-Jungles, which still gave the stamps, but the company eventually phased them out completely. It proved to be a good move, for in its first year of operations completely without the stamps, Jitney's sales rose a full 25 percent over the previous year.

By 1973, Jitney, with a payroll for 1,700 employees, was operating 38 food stores, five drug stores, and six gasoline stations. One of the stores, located in Jackson, just off Interstate 55 North, was a prototype for the future Jitney megastore, a giant food discount store that also included a pharmacy and gasoline service. With annual sales quickly passing $10 million, it proved to be the most worthwhile investment in Jitney's history to that point and encouraged the company to expand its operations in the super discount store market.

Expansion and New Ownership: 1980s and 1990s

Jitney continued a relatively slow expansion through the late 1970s and the next decade. It had by then purchased small grocery chains in other states, starting in the late 1960s with a purchase of five stores in northwest Florida. There was some slowing in the 1980s, when the Gulf Coast economy cooled down with the drop in oil prices. The financial backing necessary for a more vigorous expansion did not materialize until 1996, when the New York-based investment firm, Bruckmann, Rosser, Sherill & Co. acquired a controlling interest for about $400 million. Until that time, members of the Holman and McCarty families owned a controlling interest in Jitney and served as the company's chief officers. With the sale to Bruckmann, Rosser, Sherill & Co., Michael E. Julian, Jitney's president, succeed William Henry Holman, Jr. as chairman of the board. Holman, still the CEO of McCarty-Holman, was named chairman emeritus.

The financial backing that resulted from the buyout enabled Jitney to begin a major expansion and refurbishing program, including moves into new market areas. Changes rapidly ensued. The most significant occurred in July of 1997, when Jitney acquired the Mobile-based Delchamps, Inc. in a merger scheme. Delchamps agreed to be purchased at $30 per share, for a total cost of $213 million. The buyout had an immediate impact on Jitney-Jungle's rankings in Forbes Private 500, moving it up from the 143rd spot it held the previous year to 59th in 1997. It was also the only Mississippi company to be featured on Forbes' annual list. Its total annual sales for the fiscal year ending in April 1998, which included receipts from the Delchamps stores, climbed to more than $2.2 billion. In a 12-week period ending June 20, 1998, the company reported an increase in sales of 58.7 percent over the sales of the same period in the previous year. This increase, according to CEO Michael E. Julian, matched the company's expected increase in revenue from the purchase of the Delchamps chain.

That purchase increased Jitney-Jungle's operation in Florida by 14 stores, in Alabama by 45, in Louisiana by 41, and in Mississippi by 17. Jitney divested ten of the Delchamps stores, however, selling eight in Mississippi and two in Florida to Supervalue. Additional selective Delchamps stores were closed after a careful analysis of their market share in their host communities and their financial histories. The Delchamps stores in Mississippi were converted to operate under the Jitney-Jungle name. The remaining stores operating under the Delchamps name were reorganized and restocked in accordance with the Jitney system. Jitney also closed Delchamps administrative offices in Mobile and its 635,000-square-foot distribution warehouse located in Hammond, Louisiana, a facility that Jitney planned to sell. Its operations moved to Jackson, Jitney's headquarters.

Changes also involved extensive building and remodeling. To handle the increased volume of produce, the company built a $7 million produce warehouse, expanding its 900,000-square-foot distribution warehouse by an additional 175,000 square feet. It also added full-service pharmacies to its Megamarkets and new food lines to its stores, with drastic reductions in the price of most of its merchandise.

Because it has expanded further into geographical areas beyond its Mississippi base, Jitney has created four separate regions with managerial teams sensitive to the distinct needs of their stores' customers. Jackson is the hub of the company's operations, where purchasing and planning is done, but each region has its own vice-president of human resources and loss prevention and a vice-president of sales and merchandising. The central region, headquartered in Jackson, includes the northern parts of Mississippi and Alabama down to Jackson and Birmingham. The southwest region, headquartered in Mandeville, consists of Louisiana, and the southeast region, headquartered in Mobile, covers the coastal areas in Mississippi, Alabama, and northwest Florida. The northern group, headquartered in Memphis, covers Memphis and Little Rock. According to Jitney's CEO Michael Julian, the company does not want "to lose the local flavor of these areas," while, at the same time, it endeavors to achieve maximum purchasing power through its centralized control in Jackson.

Current Strategies and Future Prospects

Jitney strives to be efficient so that it can remain highly competitive in a tough market. Many of its recent policies reflect that aim. For example, in October 1998 the company signed a contract with Illinova Energy Partners to streamline its utility accounting, an important improvement because utility costs are a major part of store overhead costs. But Jitney also strives very hard to make a positive impression on its sites' communities. It stresses the freshness of its foodstuffs and the friendliness of its personnel. It also offers its customers its popular Gold Card, which both simplifies checkouts and guarantees savings on select items. In addition, Jitney has given much back to its customers in the form of charitable donations to such agencies as the United Way. Through its Gold Card Community Gift Program, it has donated food, gift certificates, and direct financial aid to customer-designated schools, churches, and other charitable organizations.

The company also endeavors to stay abreast of national trends in supermarket services. In 1996 Jitney's in-store banking facilities were limited to ten of its 106 stores in Mississippi, but the service will be included in future expansion and remodeling of existing stores. In one of its Mississippi Jitney Premiere stores it has started experimenting with drive-through banking.

Jitney's current plans are to open at least five new stores per year and continue its remodeling program, an ambitious aim in the face of competition that is growing stiffer, even in Mississippi, its home base. Albertson's, the rapidly expanding Idaho-based supermarket chain, recently opened two stores in Jackson and announced plans for additional expansion in the state. That competition may force Jitney to go public, but plans to make that move considered in the fall of 1998 were deferred until a later, undisclosed date.

Principal Subsidiaries: Delchamps; Sack and Save (McCarty-Holman Company, Inc.); Foodway, Inc.; Megamarkets.

Jitney-Jungle Stores of America, Inc. History

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