The Kroger Company

The Kroger Company is an Ohio based retailer and manufacturer of grocery products with over 2,000 retail outlets covering 24 states. There are ten Kroger Marketing Areas that report to Headquarters in Cincinnati, Ohio. The Michigan Kroger Marketing Area covers the State of Michigan with offices in Livonia. The Livonia office supports 83 retail stores in the state with local Marketing, Product Procurement, Personal Training, Merchandising, Market Research and Facility Engineering. The role of a Produce Buyer for Kroger requires many management skills.
The Buyer has to depend on many different individuals to get product from the field to the hands of shoppers. The individuals the Produce Buyer deals with includes people inside Kroger and outside organizations such as growers, distributors, brokers, jobbers and trucking companies. The Produce Buyer”s responsibilities include procurement of product, pricing of product, shipping of product, retail-merchandising direction, forecasting and evaluating department performance. The Produce Buyer needs to examine multiple items to develop the plan for getting produce to the consumer.
The first step is developing an Ad-plan to meet their sales and profit objectives. The design of an Ad-plan requires current knowledge of market conditions, competition checks, last year”s ad-plans, last year”s sales and movement reports, and sales meetings. Market conditions include product availability, seasonal products, quality of product, growing areas, and product and transportation cost. Analyzing the competition involves visiting competitors” stores and reviewing their advertisements from prior years.

Reviewing Kroger”s previous year advertisements assists in developing a base for an effective Ad-plan. The use of sales and movement reports supplies performance of the Ad-plan implemented for the same time period last year. The sales meeting involves the gathering of all merchandising directors and local VP”s to coordinate the process of developing an overall Ad-plan for the Michigan Kroger Marketing Area. The Ad-plan meeting is used to make adjustments and corrections to achieve the sales goals and objectives for the entire organization.
The Produce Buyer needs to make use of multiple forms of communication to perform their daily duties. The use of email and faxes are mechanisms to help facilitate the procurement process. Email is used to get market conditions from various parts of the country, transmit purchase orders, confirmation of orders, interoffice communication, store communication and vendor solicitations. Received faxes supply market conditions for the country, vendor solicitations, response to product recalls and survey orders.
The phone is used to contact stores about quality problems, receive detailed feedback from brokers, make product orders, schedule meetings, and locate late deliveries. The two key organizing functions a Produce Buyer would use to achieve projected goals are developing Sales Plans and Department Layouts. The Sales Plan and Department Layouts provide stores with information on where and how to display products and gives them ordering guidelines. This information is used to determine what to buy and how much product should be purchased.
The placement of product within a store has a direct effect on the amount of product that will be sold. Placing bananas on the end of a display piece will move better than if placed between apples and pears. The growing area would have a direct effect on the quality and appearance of the product that could result in an increase or a decrease in sales. If Florida”s strawberries lacked color, then the determination would be made to purchase from the colorful California variety to produce the needed sales.
The process of establishing standards, goals and targets, measuring performance and identifying deviations for the Produce Buyer are the guidelines for a manager to insure plans are carried out or modified to achieve the organization”s strategy. The sales plan is set by the Produce Buyer as a tool for the store produce department manager to use as a guideline to reach the target goals for the buyer. The sales plan supplies the necessary merchandising standards for the stores to help maximize sales. These include special product handling, ordering specifications, fruit layout and cross merchandising tips.
The buyer”s performance is gauged by monitoring product movement on a daily basis, by weekly sales reports that recap the previous week”s retail sales and profit and comparison of these figures to the set budget. The other gauge used is the shipment report to evaluate actual movement versus projected movement of the week. The sales plan requires adjustment when projected sales and profit are not met for the week. To compensate for not achieving the week”s targets the following week”s sales plan must be modified in an effort to meet the goals.
The Buyer uses a budget as a control tool to set goals for sales, expenditures, and profits. At Kroger, the Buyer strives to achieve both a sales dollar goal and a profit percent goal. These goals are set up in four-week increments called periods. There are thirteen periods in a calendar year. The first step in the budgeting process is to develop a sales forecast and sales budget. In the Kroger organization, each of the ten Marketing Areas” controllers are given a budget by the Cincinnati corporate office for their division.
The controller in turn requires that the Merchandising Director of each department submit a sales and rate for the entire year broken down by period. The directors need to consider economic conditions, competitors” actions, and seasonal fluctuations to ensure an accurate forecast. Once the Directors have completed their departmental budgets, they return them to the controller for their review. The controller will apply these budgets to the planned budget for the Marketing area and if needed, the Directors may be requested to fine tune their projections in a effort to meet the needs of the entire company.
It is the ultimate responsibility of the controller to ensure the Marketing Area stays on the correct path to return the expected results. The Buyer uses the budget set by the Director of the department as a guideline in planning, organizing, and controlling procurement activities. An operating report is issued at the end of each period, which summarizes the sales, revenues, and expenses and compares actual results to projected budget. The Buyer uses the operating report as tool in measuring performance.
The role of the Human Resources department at the Kroger company is staffing, compensation, performance, safety, training and development, and labor relations. Many of these functions can be applied to the role of a Produce Buyer in the organization. The job description for a Buyer is a collaborated effort between Human Resources and the Director of Produce Merchandising. The Human Resources Department acts as a filter in screening out applicants for the buying position who do not meet the minimum requirements of the position.
Training programs and workshops are facilitated by Human Resource personnel and are focused on strengthening a Buyer”s professional and personal growth. A Buyer”s Performance Review is normally administered by the Director of Produce Merchandising and then a copy of the performance review and objectives is reviewed and filed in the Human Resources office. The information on the Performance review is use to determine the promotability of a Buyer. Key information related to promotability is highlighted on a Successive Planning Chart in the corporate Human Resources office in Cincinnati.
The Planning Chart lists all management personnel in the company and is used to determine when an individual is ready to be promoted and to what position. This process is used when filling a vacant buyer”s position. A Kroger Buyer is faced with individual and group decision-making each day. Weather conditions, late truck arrivals, product quality, and product quantities can cause problems where a Buyer would need make a decision. In many of the cases, due to the highly perishable nature of the commodity, decisions need to be made quickly.