Ralphs Grocery Company – A Tale of Opportunity Cost

EARNS KROGERThis little story of Brand Ambassadorship took place early this week, when my wife went to the Ralphs market near our home in Manhattan Beach, CA. It was a quick trip to pick up some almond yogurt, something we eat regularly and that Ralphs always stocks. Her thorough search of a newly reorganized refrigerated section revealed that the yogurt was nowhere to be found.

Just then, the store manager (aka Chief Brand Ambassador) was passing by. My wife stopped her and asked about the almond yogurt. She told my wife that she didn’t know anything about that department but would find someone who did and send her over. Soon, the manager returned with another store employee who began the conversation by immediately telling my wife that she knew nothing about that department or about almond yogurt. She then turned away and began straightening containers. My wife turned back to the manager and asked if there was anyone in the store who could help her find out about the yogurt. The manager’s answer? “I have no idea.” Then she walked away.

Here is a list of products that my wife was purchasing regularly from Ralphs and will not be buying from them in the future: dairy products; organic produce; seasonings; various canned items; cheeses; flowers; greeting cards; and cleaning products. It’s called opportunity cost ­– the cost of NOT realizing what should have been a sure-fire transaction or event. It does not appear on any financial statements or management reports. It’s the cost of not experiencing a strengthening of one’s Brand.

The Fred Meyer Group acquired Ralphs in 1994 for $1.5 billion. Fred Meyer, in turn, merged with Kroger in 1998. Kroger currently has 2,424 stores in 31 States. That’s a challenging environment in which to turn everyone into a great Brand Ambassador. Challenging but not impossible. The grocery business is intensely competitive and operates on razor-thin margins. I have talked to senior supermarket executives who have told me that in their industry, people would kill their own mothers for an extra ½% profit. Seems like training people to become good Brand Ambassadors would be less traumatic.

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