Kroger Prepares for Post-Dillon Era

To say we were surprised would be a bit of an understatement, when we learned of Dave Dillon’s coming retirement just as we were about to hit “Send” and whisk our October issue off to the printer.

The news that Dillon would be passing the CEO’s torch to president/COO Rodney McMullen at the end of the year was completely unexpected, especially in light of all of Kroger’s accomplishments in recent years and others – like the merger with Harris Teeter – yet to be consummated.

True, Dillon’s influence over the company he has led for a decade will still be palpable, as he continues on as chairman of the board, at least until the end of 2014. But why give up the big chair now?

Perhaps it’s Dillon’s confidence in the incredibly talented team that he and McMullen have recruited and nurtured to make Kroger a seemingly unstoppable force in the grocery-selling arena, one of the few equipped to go head to head with the juggernaut that is Walmart and not find itself gasping for air. Or maybe it’s a desire, despite the knowledge Kroger is being left in more than capable hands, to go out while he’s on top, in the eyes of industry observers, his colleagues and even his competitive peers.

Still, it makes one wonder how Kroger’s incredible momentum – the company will have had 10 years of consecutive quarterly growth by the time Dillon removes “CEO” from his business cards – might be impacted when the guru steps off the summit.

Neil Stern, senior partner with Chicago-based retail strategy firm McMillanDoolittle, called the announcement “a bit of a stunner, since the assumption would have been that Dave would continue until at least 65,” another three years from now.

“Dave Dillon spent the last 10 years building a culture of excellence within Kroger. It was never about Dave Dillon but about the goals of the company - Customer 1st - and how they would achieve them,” Stern tells PG. “I think that they've built that culture to the point where Rod McMullen and the rest of the organization will continue to follow that plan. Replacing legendary CEOs is never easy (think A.G. Lafley at P&G or Terry Leahy at Tesco) but Dave Dillon has built an incredibly strong foundation at Kroger.”

Burt Flickinger, managing partner of the New York-based Strategic Resource Group, says Dillon’s legacy “is that he is both a great leader and teacher; thus, Rodney McMullen and both the Kroger corporate and operating company teams will continue Kroger’s strong success.”

Much like Dillon has worked well with Kroger’s team leaders, Flickinger says McMullen will continue to work well with all the division presidents, like Bruce Lucia in Atlanta, Bruce Macauley in Columbus, Bryan Kaltenbach at Food 4 Less, Russ Dispense at King Soopers, Mike Ellis at Fred Meyer, Donna Giordano at Ralphs and Joe Fey at QFC – all part of the collective team with whom Dillon has consistently and unselfishly shared the gold stars for Kroger’s success.

“Additionally, McMullen works well with Kroger’s strong team at corporate,” Flickinger says, “as well as in the operating companies, where Kroger has an excellent depth and range of team talent in buying/merchandising and operations.”

Furthermore, as exemplified by Kroger’s outstanding support for and participation in PG’s Top Women in Grocery awards program, “the exceptional women executives at Kroger are a key company, competitive and consumer advantage in winning against formidable foes, ranging from Walmart to Walgreens,” Flickinger adds.

“Like the legendary football coach Paul Brown [a founder of Cincinnati-based Kroger’s hometown Bengals], Dave Dillon’s legacy is all the exceptional coaches, leaders and teachers developed during his time as Kroger CEO,” Flickinger declares. “These people will continually develop others, as well as Kroger, after Dillon led Kroger from being ‘good’ to ‘great.’”

Maybe one of those “exceptional women” will take over as COO when McMullen moves up – perhaps Lynn Marmer? Kroger’s group VP of corporate affairs, she was Kroger's first female officer and among the company’s highest-ranking  executive women.

With Dillon’s near-press time announcement, it became even more fitting that Progressive Grocer, for the second time in five years, has chosen to honor Kroger as its 2013 Retailer of the Year – an honor the grocer rightly deserves for its growth achievements, solid financials and longevity (130 years and counting), as well as for the company’s continued strides in shopper experience, sustainability and talent development.

We profile Kroger in our October 2013 issue – congratulations to everyone who’s working hard to make the Kroger Family of Stores one of the best in our business!