Donnelly joins team supporting the Restock Kroger plan

CINCINNATI — Kroger Co. said Tuesday that Fred Morganthall will retire November 30 as executive vice president of retail operations. Morganthall will be succeeded by Kroger’s executive vice president of merchandising, Mike Donnelly, who on November 1 will assume responsibility for both operations and merchandising as executive vice president and chief operating officer.

Fred Morganthall

Donnelly will become one of three vice presidents leading Kroger’s key lines of business and supporting Restock Kroger, the recently unveiled plan to redefine the company’s focus to food products and the grocery experience.

Helping Donnelley drive execution of the plan will be Mike Schlotman, who serves executive vice president and chief financial officer, and Chris Hjelm, who serves as executive vice president and chief information officer.

“Kroger is fortunate to have a leadership team that combines deep experience with creative new talent as we strategically reposition the company through our Restock Kroger Plan,” said Rodney McMullen, Kroger’s chairman and chief executive officer.

Morganthall is retiring after 31 years of service to the company, and 44 years in the food industry.

Mike Donnelly

“There are few people in our industry as widely respected as Fred,” McMullen said in his statement. “He worked tirelessly to establish the Harris Teeter brand and, after our merger, to help position Kroger for future success. We’ve all benefited from Fred’s passion for grocery retail and operational excellence. We are grateful for Fred’s distinguished service and many contributions to Kroger and Harris Teeter, and we wish him and his family all the best.”

Morganthall began his career at Procter & Gamble Co. in 1973. His career in grocery retail began in 1978 at Spartan Stores in Grand Rapids, Mich., where he was responsible for grocery, frozen and dairy purchasing as well as general merchandise and beauty care. In 1986, he joined Harris Teeter as director of grocery merchandising.

Morganthall served in a number of executive management positions at Harris Teeter, including vice president of merchandising, vice president of distribution and vice president of operations. He was promoted to president in 1997. Under his leadership, Harris Teeter grew and firmly established its identity as a retailer that provides exceptional customer service and in-store experience.

After the 2013 merger of Kroger and Harris Teeter, Morganthall was named Kroger’s senior vice president. He was promoted to his current role in 2015. Morganthall has been an active leader in industry organizations, including serving as chair of the Food Marketing Institute. In 2016, FMI honored him with its most prestigious leadership recognition, the Sidney R. Rabb Award.

Donnelley began his career at Fry’s Food Stores in California in 1978. He advanced to several leadership positions at Fry’s, including district management. He was named vice president of merchandising for Fry’s in 1995 and promoted to president of the Fry’s division in 2000. He has served as Kroger’s senior vice president of drug/GM, president of the company’s Ralphs division, and senior vice president of merchandising before being promoted to his current position in 2015.

“Mike and his team will help us redefine the food and grocery experience for customers and drive sales,” McMullen said. “By bringing merchandising and operations together under Mike’s leadership, we will build synergies between our teams and accelerate our efforts to establish a truly seamless customer experience.”

In unveiling the Restock Kroger, McMullen said the plan builds on the retailer’s strengths, and strategically repurposes the company to accelerate its customer-centered efforts in order to create shareholder value.

“We understand that today’s marketplace is shifting rapidly. Kroger’s success has always depended on our ability to proactively address changes by focusing relentlessly on our customers,” McMullen said. “We have the scale, the data, physical assets and human connection to win. Combining our food expertise and data analytics uniquely positions Kroger to create new and highly relevant customer experiences, delivered both digitally and in stores.”

Kroger said the strategic plan would be fueled by capital investments, cost savings and free cash flow.

Restock Kroger is expected to generate $400 million in incremental operating margin by 2020.

Restock Kroger has four main drivers:

• Redefine the food and grocery customer experience. The company expects to win with customers by accelerating its digital and e-commerce efforts, applying its customer data and personalization expertise through 84.51, its data analytics subsidiary, to even more aspects of the business, building on the growth of its proprietary Our Brands portfolio, and continuing to invest in “smart” pricing aimed at retaining customers.
• Expand partnerships to create customer value. Kroger intends to utilize more of its capital to fund technology and infrastructure upgrades, and to create alternative revenue streams.
• Develop talent. Kroger intends to accelerate its high-performance leadership culture through talent development, training and a rebalancing of pay and benefits.
• Live Kroger’s purpose through social impact. For example, the company introduced its Zero Hunger Zero Waste plan last month to end hunger in the communities in which it operates and eliminate waste in the company by 2025.