CEOs OF THE YEAR

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CEOs OF THE YEAR

By Jennifer Acevedo - 01/02/2013

We've devoted our cover feature to honor four executives–from three banners–who we feel exemplify the best of the best, retail's top CEOs. At Kroger, David Dillon has leveraged a focus on customer-centered innovation to industry-leading growth. At Whole Foods Market, co-founder and CEO John Mackey along with co-CEO Walter Robb keep core values like healthy eating and sustainable agriculture front and center, all while delivering sales approaching $12 billion for fiscal 2012. Dollar General's Richard Dreiling has taken his heritage brand's promise to help customers save time and money and connected with a new generation of value-conscious consumers. The organizations led by these individuals are distinctly excellent, yet each has found its success as a result of the direction and vision of these men.

CEO OF THE YEAR

David Dillon
Chairman and CEO, Kroger

Q: Kroger has achieved 36 consecutive quarters of positive identical supermarket sales and strong earnings performance as well. Where do you expect the company to be three years from now? And what's your long-term vision for the company?

A Building relevant and personal connections with each customer is the essential ingredient in our industry-leading 36 consecutive quarters of positive identical supermarket sales growth. Looking ahead, we see incredible opportunities to connect with customers in increasingly meaningful ways. Our confidence is reflected in our increased long-term earnings per share growth guidance of 8 percent to 11 percent and our commitment to deliver a higher dividend over time.

Q How will you accomplish that?

A Our plan includes targeting capital expenditures to grow our business in new and existing markets, leveraging dunnhumby insights to solve varied customer needs, through both traditional and digital channels and continuing our share buyback program. This is what we believe will grow Kroger and create more value for our customers and shareholders, and we are bullish about our future.

Q Kroger has been at the forefront of customer-centered innovation. How has this helped you to address changes in the marketplace, such as growing competition from alternative channels?

A If there is one truth in our business, it is that in order to stay relevant we need to keep changing and improving. Innovation always begins with the customer first. So when customers told us they did not like waiting in long lines to check out, we developed a solution that gives us confidence to promise a faster checkout at Kroger. Today the average amount of time a customer waits in line to check out is about 30 seconds now compared to more than four minutes in the past. It is finding solutions to customer needs like this–sometimes in big ways, sometimes for an individual shopper–that differentiates Kroger from our competitors.

Q How will you meet shifting population trends, such as the growing ethnic sector and the aging of the population?

A I often tell our associates, "I am not the target customer." I try to see the world through the lens of our diversity of customers, and we work hard as a business to do the same thing. Kroger is well-positioned to serve changing populations thanks to our world-class customer data insights. Dunnhumby data helps us to identify stores with heavier groupings of Hispanic shoppers today, for example, and this helps drive merchandising decisions.

Q How do you motivate your workers?

A Everyone wants to matter, to be in a position to contribute to be heard. That is why inclusion is one of Kroger's core values.

Q: What do you consider your greatest accomplishment?

A Oh that's easy. I have three great children and six perfect grandchildren. I can't think of a greater accomplishment than that.

I am proud to be a grocer, and even prouder of the work our more than 350,000 associates do to make the day better for our customers, every day, in our stores. We work in an industry that allows each of us to impact lives for the better, both individually and collectively, in deeply meaningful ways.

CEO's OF THE YEAR

John Mackey
co-founder and CEO

Walter Robb
co-CEO, Whole Foods Market

(Editors' note: As co-CEOs, Mackey and Robb share the top CEOs designation. Retail Leader sat down with Mackey for this interview.)

Q Based on your most recent financial reports, you've enjoyed a stellar year with very strong earnings, revenue and cash flow despite a difficult economy. How have you accomplished that and why is Whole Foods outpacing so many of its competitors?

A I think the food retailing business is rapidly evolving. What you see are the conventional supermarkets continuing to lose share. They were the markets that really grew in that post-World War II environment where there were three television stations and you had mass advertising for mass brands. They tried to be one-stop shopping. That was their mantra, one-stop shopping.

Then Walmart came and took that to its next logical extreme of very low prices and large selection. But that left a real opening for the industry to evolve and to segment into these more specialty retailers. So Whole Foods is doing well, but so is the whole segment.

And Whole Foods is continuing to get better. We're continuing to innovate; our stores are better than they used to be. We execute better; we're more creative than ever. We are continuously improving. I use the analogy of a nephew or a niece that you might have that lives 1,000 miles away, so you don't get to see them that often. When you do see them, you realize, "Wow, you've really grown. You've really changed." Our stores are continuously changing as well. We're always making them better; we're always evolving them. That continuous improvement gives us an advantage.

Q How will you meet shifting demographics and population trends, such as the rise of the millennial generation or the aging of the population?

A It used to be that everybody that shopped at Whole Foods was a convert. We had to convert them over from other food stores. Now we've got a second generation that grew up eating Whole Foods. So it's just kind of natural for them to come back to our stores, and they also identify with our purpose and our values and the fact that we're a very idealistic, mission-driven business. The millennial generation is that way themselves.

The baby boomers are aging and a lot of them are starting to clean up their acts because they want to be around to see their grandchildren, and they're seeing some of their friends get old and fat and sick. So a lot of them are trying to change their diets, and Whole Foods is a great place for them to come.

I think part of what sets us apart is that Whole Foods Market serves its niche of people who are trying to eat higher quality foods, healthier foods, and we just do that better than anybody else.

Q How often do you get out into the stores as a consumer as well as in a more official capacity?

A I'm vegan and I'm also a cook, so I do most of the shopping in our household. Our offices are above our flagship store, which is an 80,000-square-foot store, so I'm there all the time when I'm in town. But I also tour all of our stores regularly when I travel. I probably go on four or five store tours per year, where I'll take a region and I might see 10 stores on that tour. I probably get into 80 stores a year.

Q What do you consider the biggest future challenge for Whole Foods?

A It's not what many people think, which is that we're growing faster. It's true, we're opening more stores, but the most stressful growth a company will ever have is going from one to two stores. That's 100 percent growth. Right now we're growing our square footage at 7 percent.

I'd say our biggest challenge will be cultural.

We created more than 8,500 new jobs in fiscal 2012, but that's a lot of people that we need to train and "inculturate" into our values. If you want to have this conscious business, you need good leaders who really embrace the values of the company.

CEO OF THE YEAR

Richard Dreiling CEO, Dollar General

Q Dollar General has achieved impressive gains in both earnings and revenue this year. What's your long-term vision for the company?

A We will continue to be today's general store by delivering exceptional convenience and value to our customers. We have unique organic growth opportunities with our business model and our brand. In 2013, we expect 7 percent square footage growth again by adding 635 new stores and renovating or relocating an additional 550 stores. Our focus is on our small-box format, complemented by our Dollar General Market and our Dollar General Plus formats. We will keep our priorities where they belong: Helping our customers save time and save money every time they shop at Dollar General. That's our brand promise. I believe a promise made is a promise kept. So, my long-term vision for the company is simple: We will consistently deliver on our everyday low price in a convenient format, which will allow us to successfully grow our business and strengthen and expand our culture of serving others.

Q: How will you accomplish that?

A We will continue to work on serving our customers by focusing on the basics: better merchandising, improving our store layouts and planograms, enhancing our customer service and leveraging technology to improve our processes and drive efficiencies throughout our organization and supply chain. We need to get the right products to the right customers at the right price. We are making great progress in optimizing square footage productivity in our existing stores and improving our in-stock levels. We will reduce costs in ways that don't impact the customer's experience and help us keep our prices low. It boils down to consistently providing exceptional value, convenience and quality to our customers every day.

Q Dollar General has been expanding its consumables merchandise to drive traffic and revenue.  How is this strategy allowing the company to address changes in the marketplace?  

A Our philosophy is that we use consumables to drive the trip and nonconsumables to drive the basket. We will continue to expand our cooler doors and add more perishable products. For example, our introduction of beer and wine has been very successful. We're focused on being a low-cost operator in order to keep our pricing low for our customers. We continue to have a 20 percent discount relative to major grocers and a 40 percent price advantage over drug stores. So this is a major draw to our stores.

Q What do you see as the greatest obstacle to success? How will you overcome it?

A Perhaps our greatest obstacle to success is to avoid complacency. We've enjoyed a lot of success over the past five years, but we cannot and will not rest on our accomplishments. The competition is getting better. So are we. To stay ahead, we need to continually listen to the customer and serve their needs.

Q What do you consider your greatest accomplishment?

A Personally my greatest accomplishment has been a team effort with my wife, Ellen, who has been my partner for 34 years. Together we have raised two great kids who are both professionally successful and are making a positive difference in the community. Professionally, we've had a lot of success at Dollar General and that has also been a team effort. I've been fortunate to be surrounded by an excellent team here, and together we're successfully growing our business, serving our customers and making a positive contribution to the communities we serve.

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