“We’d rather make five fast pennies than one slow nickel,” Ralph W. Ketner said when I interviewed him in 2006. 2007 marked the 50th anniversary of Food Lion, and Ralph W. Ketner, one of three co-founders of Food Town (later renamed Food Lion), is a North Carolina example displaying how entrepreneurial creativity combined with hard work and a willingness to take risks can produce financial success and public benefit.
Now 86 years old, Ketner still exhibits an innovative spirit that reveals how he managed to take a one-store operation in Salisbury in 1957 and turned it by retirement into a leading supermarket chain with approximately 800 stores. Ketner relinquished control of the reins entirely in 1991–the company is now owned by the DelHaize Group. (Sometimes I wonder how big the company might be today and how it might have kept prices even lower if Ketner, a pioneer in the grocery business, had led the chain into the 21st century.)
With his friend, Wilson Smith, and brother, Brown Ketner, Ralph Ketner in 1957 opened a grocery store in Salisbury. It was possible because, in addition to their $62,500, the three had called 250 Rowan countians to buy shares and convinced 122 to buy. During the next ten years the three embarked on an entrepreneurial adventure in which they saw only moderate growth (7 stores by 1967). Even so, Ketner worked hard and generated pioneering ideas: Prescriptions at Cost (PAC), buy-one-get-one-free, and selling gasoline to Food Town customers at absolute cost. And some not bad but not so good ideas: the purchase of $100,000 of Bi-Lo stock (if invested in Food Town, the amount would have earned $40 million).
In 1967, however, he risked everything and implemented a cutting-cost theory–lowering prices on all items to cut costs and to sell more items. To make a profit, Food Town needed to increase sales by fifty-percent by the end of 1968. To Ketner’s surprise, sales increased eighty percent. Ketner named the concept LFPINC (Lowest Food Prices in North Carolina), and the food price rebellion of the 1960s was born. Lower prices produced happy and repeating customers. That meant a happy Ketner, who considered customers first, employees second, and shareholders third; if all three were satisfied in descending order, Ketner believed that he, too, would benefit.
During the 1970s and 1980s, Food Town (named Food Lion in 1983) experienced almost exponential growth—35-percent a year until Ketner retired. Ketners’ innovative leadership prompted him to be the first to name competition in advertisements and to introduce forward buying and delayed dating. Meanwhile, Food Town/Lion battled government action such as local annexation of the warehouse in Salisbury and Federal Trade Commission policies that prevented Ketner from lowering costs.
Not only did Food Town/Lion benefit customers, it made stockholders millionaires. More than any other North Carolinian, many contend, Ketner helped create millionaires. Someone who bought $1,000 worth of stock in 1957, and held on to it, for instance, would have been worth $16 million in 1989. In fact, 31 original stockholders were millionaires by 1982.
In retirement, Ketner continues to be innovative. He has tried to increase homeownership among underprivileged families, but federal regulations prevented him from buying and selling homes at low cost and offering low-interest loans that made low monthly payments possible. In 1991, Ketner established the Ralph W. Ketner Employee Productivity Award to reward state and county government employees who found ways to cut the costs of running government. Ketner abandoned the state program because it prevented management from participating. The North Carolina County Association Award Programs has been a great success, however. Each year 10 county employees who display innovation in making county governments work more efficiently receive $1,000 each. According to Ketner, his $150,000 from 1991 to 2006 has saved the state of North Carolina and its counties approximately $38 million.
As evidenced by Ketner’s life, success stems from more than good ideas. More than hard work. More than risks. It takes all three.