Meijer Incorporated History

Address:

2929 Walker Avenue N.W.
Grand Rapids, Michigan 49504-9428
U.S.A.

Telephone: (616) 453-6711
Fax: (616) 791-2572

Private Company
Incorporated: 1934
Employees: 60,000
Sales: $6 billion (1997)
SICs: 5411 Grocery Stores; 5141 Groceries--General Line

Company Perspectives:

At Meijer our goal is to offer our customers the best possible value on the products and services they desire, and to do so more effectively than anyone else. To achieve our goal, we begin with these beliefs: we believe in upholding the dignity and self-respect of our Meijer people, guests and vendors; we believe friendliness and cleanliness are essential; we believe fairness and honesty require us to fully weigh all viewpoints, and keep the promises we make; we believe we should be an asset to the communities we serve; we believe change is always with us, and meeting change requires a combination of new ideas, common sense and empowerment; we believe profitability is not only a vital yardstick of progress, but an essential ingredient of a healthy enterprise. We are convinced these beliefs apply equally to each of us as individuals and to all of us as a company. By adhering to them, we will earn the trust of our customers and build a future for Meijer associates.

Company History:

Meijer Incorporated, according to Forbes magazine,"is one of the 15 largest growing private companies" in the United States; it is the country's fifth largest discount retailer, according to Discount Store News. The company operates 117 supercenters in Michigan, Ohio, Illinois, Indiana, and Kentucky. The company also owns and operates four office centers, two divisions of property services, and more than ten distribution centers. What makes Meijer such an overwhelming success is simple: its stores are open 364 days a year, 24 hours a day; each store has 40 departments, which sell more than 120,000 products; and one can buy almost anything at a Meijer store--from applesauce to flour to pants to lawn furniture to zinc oxide. Customers also can get prescriptions filled or shoes repaired.

Meijer entered the wholesale shopping segment in 1992 with the development of SourceClub, warehouse-shopping designed for the individual shopper, as well as the more traditional targeted customers from small businesses and affiliated groups. In business since 1934, Meijer has created up to 10,000 private-label brands.

Early History

Hendrik Meijer emigrated from The Netherlands to the United States in 1907, settling in Michigan. In 1914 he opened a barbershop, expanding it to a double storefront by 1923. When the Depression hit, Meijer had trouble finding a tenant to rent the new space in his Greenville, Michigan location. He decided to open a grocery store, hoping to cover the building rent and operating costs from store profits. With $338.76 of goods bought on credit, Hendrik Meijer opened his food store in 1934, competing with a grocer across the street as well as more than 20 competitors in town.

With his son Frederick, born in 1919, Hendrik Meijer traveled as far as necessary to find the best goods for his grocery at the lowest prices available. In keeping with the needs of the 1930s United States, Meijer's goal was to help customers of his Thrift Market store save money. To speed shoppers' progress through the store, Fred built a space designed to display 12 hand-held baskets. Above the baskets was a handwritten sign inviting customers to take one and help themselves. This "self-service" innovation of 1935 increased the number of customers Meijer could serve, thus aiding the growth of the business. By 1937 Hendrik Meijer had doubled the size of his original store.

Growth and Expansion: 1940s to Mid-1960s

As the grocer across the street from the original Meijer store mowed his neatly kept lawn, Hendrik noticed the more trampled path to the front door of his shop with pride. In 1942 Meijer opened a second store. With the help of wife Gezina, daughter Johanna, and son Fred, Hendrik Meijer's business succeeded through the 1940s. In the 1950s the family built four new stores and opened a supermarket chain in western Michigan. After a fire leveled Meijer's first Greenville store, the company relocated to its present Grand Rapids, Michigan headquarters.

Meijer had more than ten stores in operation in Grand Rapids, Muskegon, and Holland, Michigan by the late 1950s. Trading stamps became popular in supermarkets across the country through the next two decades. Meijer, though offered a stamp program from some of the major vendors, declined. Then the company, with some trepidation, initiated its own Goodwill stamp campaign in 1956 at a cost of $10,000 a week. Although gross sales increased, overhead costs increased as well, keeping Meijer's profits steady.

In 1961, with 14 supermarkets in operation, Meijer decided to drop the stamp program. According to the owner, there was neither profit nor reputation to be gained from doing what nearly all other retailers were doing at the time. With a thorough campaign planned, Meijer began a series of advertisements designed to promote its singular position as a supermarket that maintained a strong customer base simply by offering below-average prices. Beginning with a week-long newspaper series, Meijer ran ads with no identification to spark the interest of readers. A picture of a baby and the statement, "It's about time somebody wakes up!" was followed with another infant photo and the words, "Nobody, but nobody gets nothin' for nothin'." In the following Sunday paper, Meijer identified itself and announced that it was closing stores the following Monday to lower hundreds of prices. Banners urged buyers to "Save U.S. Green Currency--Redeemable Anywhere for Almost Anything!" Finally, Meijer revealed its plan to drop stamps. When shoppers arrived at Meijer on Tuesday, they found shelves lined with a profusion of tags listing "Typical Stamp Store Price" as compared with "Meijer No-Stamp Price." The company continued its barrage, with circulars detailing price lists, comparing as many as 540 items with competitors' prices. While the competition offered double- and triple-coupon savers, Meijer nonetheless increased its market share as a result of the campaign it waged to keep its image as a different kind of supermarket.

By 1961 Meijer had 14 supermarkets in the Grand Rapids area, with more on the way. In 1962 the company opened its first Thrifty Acres Discount Department Store, a combination food/retail item store similar to a hypermarket that had opened in Belgium the previous year. Within two years Meijer had three Thrifty Acres built, with two more in the planning stages. These large capacity discount markets vastly increased Meijer's lead in the retail segment. The growth of Meijer was overshadowed, however, by the death of founder Hendrick at age 57 in 1964. Fred continued expansion after his father's death, building Meijer's reputation as a low-cost retailer.

From State to State: 1960s-80s

Extending further into Michigan through the late 1960s, Meijer entered the Ohio market as well. The Meijer one-stop shopping theme, which the company claims to have pioneered, gave the customer a chance to buy these items in addition to food, checking all of the following merchandise out at one counter: garden and pet supplies, small appliances, jewelry, sporting goods, clothing, and home fashions. Growth remained steady through the 1970s. Meijer had more than 20 stores open, some set up with gasoline pumps as well. Though Meijer planned to build more retail/gas station combination stores, its plans were stalled by a 1978 law prohibiting a business from selling both gasoline and alcohol unless it was in a village, town, or municipality with a population less than 3,000.

By the 1980s the hypermarket was a concept destined to remain. On the national scene, retail giants like Kmart and Wal-Mart dominated; locally, competitors increased advertising and low-price wars. As more and more stores increased their square footage and challenged Meijer in the discount retail segment, the company had to carve out its niche more aggressively. There was no way around it; Meijer increased advertising dramatically. In 1984 the business bought 880 inches of page space in the Grand Rapids Press; by December 1985 Meijer had increased space to 2,800 inches.

The company introduced in-store delis, bakeries, and fresh meat and fish departments in the mid-1980s, promoting the changes under the slogan "Rediscover Meijer's." An example of the low-price wars was the December 1985 scuffle over banana sales. Meijer advertised them at 14 cents a pound. When an independent offered bananas for 11 cents, Meijer countered with a ten cents a pound offer. Another competitor planned on selling the fruit for five cents a pound. The goal was to get more and more customers in the door, the price of bananas being simply a sideshow. As Grand Rapids market owner David Daane, quoted in the January 20, 1986 trade journal Supermarket News, commented: "You know what they say in the grocery business: One guy jumps off the cliff and the others follow." Important to note is how Meijer resembled its competitors in strategy, and when, and if, it differed from them.

In February of 1987 Meijer marched into the Columbus, Ohio market, claiming more than 20 percent of the shopping public with only one store open in the area. The company planned at least one more unit in Columbus, which was gaining other wholesale club stores as well at the time.

A major change in Meijer's practices occurred a year later when the company announced it would keep most of its Michigan and Ohio stores open 24 hours after March 7, 1988. A total of 43 of 46 stores were designated to be open round the clock, departing from the previous policy of closing Meijer stores for Thanksgiving, Easter, Christmas Day, and a half-day on Christmas Eve. Employees sent a letter to Fred Meijer, requesting that he reconsider the change and allow them the chance to spend holidays with families and friends. Meijer chose not to reverse the new policy, however.

In an effort to sell alcohol in its Michigan stores, in March 1988 Meijer pushed passage of a state bill to change the ten-year-old law prohibiting the sale of alcohol and gasoline from the same location. The bill would allow gas pumps on a site where liquor was sold provided the shopping center had 50,000 square feet of space or an inventory of at least $250,000. Opponents included the Associated Food Dealers of Michigan and the Package Liquor Dealers Association. The latter group stated that the bill was discriminatory and served the interests of the big chains only.

Meijer had reason enough to compete at any level possible; by 1988 the company, still unknown outside its Michigan/Ohio retail segment, ranked number 42 in the Fortune 400 private companies. Fred Meijer, son of the founder, had an estimated wealth of more than $400 million. After 50 years in business, company sales were estimated at $2 billion. Meijer proved a serious challenge to any small retailers in its market and could even go up against the mega-retailers Kmart and Wal-Mart. In addition to its Meijer stores, the company owned 36 Sagebrush casual clothing stores, 16 Tansy women's clothing stores, and either owned or leased various in-store services such as postal stations and dry-cleaning units.

By year-end 1988 Meijer phased out its Sagebrush and Tansy facilities as leases expired. Meijer stores increased to 53, and the company put $20 million into the construction of its tenth distribution center, its largest to date, near Detroit. Since construction was delayed at the distribution center, a halt was called on the progress of four new stores slated for the Dayton, Ohio region, and one in Columbus. Four other store constructions, at the prototypical size of 225,000-250,000 square feet, were on target schedules. Two were in Detroit suburbs, one near Ann Arbor, and one in Springfield, Ohio, which could replace the Meijer store already there (49,000 square feet, one of the smallest the company operated).

A Meijer innovation in early 1989 was an electronic checking system. The Meijer 1 Card allowed customers to withdraw from their checking accounts automatically, with no paperwork or identification verification necessary. Patrick Gavin, vice-president of pharmacy, service, and retail technology, stated in the Grand Rapid Press that Meijer would be "the first in the world to set up a paperless software system through its cash registers." The company and banking institutions could save money, up to a total of $1.75 per check, on processing fees.

By mid-1989 sales for the entire Meijer chain were estimated at $65 million per week, bringing the annual sales figure to approximately $3 billion. Store sales were not the only indicator of Meijer's success, however; each new Meijer store cost $18 million to put up, and Meijer was opening up to five per year during the 1980s. The company researched expansion possibilities in new markets such as Toledo, Ohio, and both South Bend and Indianapolis, Indiana.

In keeping with its growth, Meijer decided to make a historical advertising shift, moving from Grand Rapids' Johnson & Dean to Southfield, Michigan-based W.B. Doner & Company. Near Detroit, Doner had national marketing expertise, something Meijer looked for in a changing marketplace. Johnson & Dean had had the Meijer account for 33 years, a record time period in advertising, producing 200 radio and 150 television ads per year. In Advertising Age, Patricia Strnad commented that, historically, "Meijer appear to have relied on copying other advertising ideas rather than creating new ones."

Two months after Wal-Mart advertised its environmentally friendly stance, and at the same time as two unrelated supermarket chains in San Diego and Pittsburgh promoted similar concepts, Meijer initiated its environmental awareness program in late 1989. In-store posters, grocery bags, and shopping cart signs stated, "We Care About the Earth We Share." Videos, pamphlets, and other educational publications were slated for distribution as well. Grand Rapids-based D&W Food Center, a long-time Meijer competitor, had established an environmental program years before; the chain considered making its efforts more public in response to consumer interest in the issue.

Meijer awarded an advertising package to the Nappies biodegradable diaper manufacturer, Ontario-based Dafoe & Dafoe, in response to that company's efforts. While experts questioned whether the plastics used in the product were indeed biodegradable, Meijer countered by stating that the emphasis of its program was on consumer education. As quoted in Supermarket News, Meijer stated, "We're not interested in debating the specific merits of each manufacturer's claim. We're just trying to make it easier for customers to research these issues." The trade journal went on to observe that environmental issues would move to the forefront of retailers' agendas through the 1990s and into the next century.

The 1990s and Beyond

Early in 1990&mdash it had done 30 years earlier--Meijer once again led its peers in abandoning double-coupon promotions. Beginning in its metropolitan Detroit stores, Meijer dropped the promotion in February. Ryan Mathews, Detroit-based editor of the journal Grocery Marketing, was quoted in the Detroit Free Press, describing such campaigns as "the most senseless act of marketing that stores can engage in." Luckily for Meijer, the retailer was known for its excellent customer service. The company could then use advertising to emphasize that aspect of its image, rather than concentrate on prices only, as most competitors did. Drawing from founder Hendrik Meijer's steady, practical approach to retailing, Meijer's ad agency W.B. Doner & Company planned television spots based on that theme, with the slogan: "Meijer. The store built on common sense."

Meijer store openings planned included three in Michigan in 1990 and seven in 1991, with three planned for the Dayton, Ohio market and four slated for Toledo. Wal-Mart confronted Meijer in its own backyard, moving into the Ohio market with the construction of a new distribution center there. Industry analysts noted Meijer's traditionally loyal customer base as a hedge against the Wal-Mart presence. Digging its heels in, Meijer took advantage of the exit of retailers Ames and Hills from the Cincinnati area to reenter a market it had pulled out of in 1987. (After six years of operating eight stores offering general merchandise only, Meijer had sold its stores to Zayre, which Ames acquired in 1988. Both Ames and Hills filed Chapter 11 bankruptcy in 1991.)

Management changes in April 1990 paved the way for Fred Meijer's eventual retirement. His sons Doug and Hank Meijer were named co-chairmen, and Fred became chairman of the executive committee, with plans to work with senior management on the company's day-to-day operations. Other key executives included Mark Meijer, a member of the "Office of the Chairman," and Earl Holton, president and chief operating officer. Vice-Chairman Harvey Lemmen retired during the changeover.

The company continued growing through the early 1990s as a premier discount retailer in the Midwest, maintaining a low profile and high profit margins. With sales at $3 billion, Meijer led in the field of hypermarket supercenters. But Fred Meijer's vision of an expanding network of supercenters throughout the Midwestern United States was not yet achieved. During the mid-1990s the company established a supercenter on the north side of South Bend, Indiana, a state-of-the-art retail store with 40 departments and more than 100 products sold within it. Within a few years Meijer opened a second store just east of the city, designed with the same format and convenience for customers.

In March of 1998 Meijer opened its first store in Louisville, Kentucky, with four more planned to open during the next two years. The family's most risky expansion site, however, would be Chicago, where the company planned to open ten new supercenters beginning in 1999. Competing with such giants as Wal-Mart and Target, Meijer was preparing a sophisticated strategy to enter and capture this new market. One of its most innovative moves, an express self-checkout lane for customers with just a few items, was designed to attract people to shop at Meijer supercenters in Chicago.

Meijer is one of the fastest growing supercenter stores in the nation, and there seems to be no end in sight for continued expansion. Having reported revenues amounting to $6 billion in 1997, Meijer is clearly meeting the shopping needs of people throughout the Midwest.

Meijer Incorporated History

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