The Harris Teeter Journey to 5 Percent: A Conversation with Fred Morganthall
McMillanDoolittle and The Stores Consulting Group kicked off an inaugural, invitation-only webinar series with a conversation with industry veteran Fred Morganthall, former President of Harris Teeter and EVP of Operations at Kroger. Leveraging over 40 years of food retail experience, Fred Morganthall discussed the journey growing Harris Teeter’s operating profit from 2% to over 4%, an upper bound in the industry, and the key areas retailers will need to focus on in the future.
Grocery industry leaders were invited to attend the fireside chat, where Morganthall discussed the company’s efforts to reduce shrink, restructure their upper-level management and training protocols and refresh outdated store formats. Throughout this process, Harris Teeter established a longstanding relationship with both McMillanDoolittle and The Stores Consulting Group as the teams worked to fine-tune Harris Teeter’s growth strategy. Morganthall also offered his future-focused perspective on the importance of developing a compelling in-store experience, building a strong management team, and investing in home shopping tools.
Looking to the Future, Fred Morganthall Highlights Key Areas of Focus for Grocery Leaders:
Create an Exceptional Customer Experience
The seasoned grocery veteran cited the in-store experience as the primary determinant of winners in brick-and-mortar retail. With digital commerce on the rise, for the customer to leave the comfort of online shopping they need, and want, to be wowed! Fred offered several actionable practices for creating a meaningful store experience:
- Have a go-to-market strategy that resonates with your customer. The Harris Teeter team leveraged focus groups as a unique opportunity to listen to customers and use their feedback as a resource to ask more questions and identify growth opportunities and pain points within the business.
- Evaluate business productivity: ask yourself if you have a cost structure that allows you to invest in what the customer wants.
- Don’t let your core stores suffer at the expense of new investments: In addition to prioritizing opportunities for new store formats and investments in e-commerce, make sure your existing store formats remain current. Specifically, Morganthall cites stores that haven’t been remodeled in the last 5-10 years lag behind their newer counterparts.
Invest in Home Shopping
COVID-19 was an accelerant of e-commerce growth, with 10 years of growth occurring within the first 10 weeks of the pandemic. Morganthall emphasized the importance of grocers investing in home shopping, particularly as major grocery retailers such as Kroger and Walmart continue to refine their e-commerce strategy. He advised grocers to invest in some form of home shopping technology, whether it’s BOPIS or home delivery; however, he warned not to do so at the expense of creating an exceptional in-store experience for the customer, as in-store purchasing is still providing 80-90% of sales.
Build your Bench
With nearly three decades of experience building out the Harris Teeter team, Morganthall implored grocery leaders to create a team that can grow to take on the next role and foster a culture of longevity. This includes creating a strong HR team, specifically including an HR leader as an essential member of a senior team. Diversity was another element that should be indispensable when building a team; Morganthall stressed that it can’t merely be a mention, but rather must be a true commitment across all levels of an organization. He cites having a strong team with high retention rates as one of the best cost-saving measures he’s observed over his career.
As labor shortages continue to plague all industries, the fireside chat included advice for driving employee retention in a competitive market undergoing wage war conditions. First, he suggested looking at company pay structure from a generational perspective and implementing a flex-based salary model to appeal to a variety of age groups. From a culture standpoint, Morganthall emphasized the importance of upper-level management letting employees know they’re valued. This positive reinforcement is essential in creating the culture of longevity discussed previously, and one he, himself has fostered within Harris Teeter during his 29-year tenure with the banner.
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