Meijer: Part 2

Meijer's strategy in its struggles with Wal-Mart and the changing food business has been to promote its private label brands, and impress shoppers with the quality of its perishables, which experts say equal or even exceed Kroger’s (the darling of the grocery channel). Critics say Meijer has further to go with its non-food products, which compare unfavorably with those from non-grocery retailers like Kohl’s or Target. Indeed Meijer’s perishables are credited with saving the chain when Wal-Mart moved into its Michigan home turf in the 1990s. Wal-Mart had an insurmountable edge in distribution, which Meijer could only counter by slashing expenses. Wal-Mart on the other hand couldn’t deliver perishables through its enormous distribution system that competed with the local company.

Despite lacking the capital or the ability to expand with new stores, the company has actually grown stronger from the competition, at least according to observers. The Wal-Mart business model is driven primarily by its non-foods model, allowing the two stores to compete in the same world. Another reason cited for Meijer’s success has been its relationship with its vendors. While many retailers dictate terms to their suppliers, Meijer gets high marks for working cooperatively with them, ensuring their financial goals and needs are met. The company says this results not only in better performance for its vendors, but in increased resources to suppliers and better product selection and options.

Meijer is controlled and run by a third generation of the founding family members: Hendrik “Hank” Meijer is co-chairman and CEO, while brother Doug Meijer is co-chair; and Mark Meijer serves on the board. Talks about selling the company are just rumors insiders say, with the family showing no signs of giving up control or cashing in their investment. In a striking change from many family-owned empires, Meijer has been run from the past three decades by outsiders in the role of president. The current president is Mark Murray (since 2006) who did not come out of the retail grocery business, but instead was a former budget director for Michigan’s government, state treasurer, VP for finance and administration at Michigan State University, and then president of Grand Valley State University outside Grand Rapids. The Meijer family picked Murray after conversations with people they respected and not because of his business resume. Instead of seeking retail experience, the family wanted someone to help them focus on core values and executing their strategic vision. Speculation around the state has Murray on a short list of candidates with the right stuff for being Michigan’s next governor.

To read Part One, click here

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