Cullen's letter

Michael Cullen writes the president of Kroger

Michael Cullen's experience and knowledge as a previous Kroger store manager aided him in creating an innovative approach to selling groceries to the public. Cullen had observed the food patterns of the 1930s and saw that the Great Depression ignited a need for affordable, fresh foods. So, in 1930 Michael J. Cullen sent a letter to the President of Kroger asking to own a new type of store. He wanted to excite buyers by offering the foods they desperately needed at never before seen prices. Cullen believed they could change how people bought groceries by buying in bulk and setting up a large store with tons of variety. Despite Kroger's lack of interest, Michael Cullen was so convinced of his idea that he resigned from his management position to move to Long Island, New York, and started America's first supermarket. Here we will discuss Cullen's business plan and why it was able to sell the low-priced foods America desired in the 1930s.

"Nobody in the world ever did this before. Nobody ever flew the Atlantic either until Lindbergh did it." -Michael J. Cullen

cullen's strategy

"I want to sell 300 items at cost.

I want to sell 200 items at 5% above cost.

I want to sell 300 items at 15% above cost.

I want to sell 300 items at 20% above cost." -Michael Cullen

Michael Cullen's business plan relied on the public's belief that he offered his prices at an all time low. His plan had him selling 300 items at the buyer's cost, lowest you can find anywhere. He then would have items priced slightly or much higher than cost. In this business model he advertises the low costs, bringing in customers who would end up later purchasing pricier items in store. Cullen planned to buy in bulk. He would run a large store that could keep items in house, reducing a price of a warehouse. His plans kept overhead low by creating a high demand, limiting advertisement costs and storage demands.

lowest prices on the market! (example)

Cullen's business plan relied on the publics desire for vegetables and meats. Using the appearance of low prices, the public would have confidence to spend their dollar on his well stocked grocery and meat departments. He kept up with public demands. Since the Great Depression caused high prices for nutritional, high fat items like milk, Michael Cullen proposed price manipulations to fit these demands.

He writes the example, "I could afford to sell a can of milk at cost if I could sell a can of pea and make 2 cents." Cullen purposely advertised the high demand milk at a never-seen-before low price while pricing the peas, at a higher cost to make the difference. By playing into food demands and patterns brought by the Great Depression, Michael Cullen believed he could bring in large crowds that were excited to sweep the shelves.

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