David Dillon retiring as CEO, W. Rodney McMullen taking over

CINCINNATI -- The Kroger Co. will have a new CEO -- but not much else will change in January when Rodney McMullen takes over for David Dillon as the top boss of the nation’s largest grocery chain.

That was the view from inside and outside the company Friday, as Kroger announced a management succession plan approved by the company’s board Thursday. The press release can be found here : http://bit.ly/18fZh1W

Dillon will retire as CEO Jan. 1 but remain chairman until the end of 2014. McMullen will be promoted from his current job as president and chief operating officer into the CEO position.

“It is an orderly succession,” said Bert Flickinger, an oft-quoted retail expert and managing director of Strategic Resource Group, a New York–based consulting firm.

Flickinger said Kroger investors and customers should expect no strategy changes from the Cincinnati-based company, whose stock is trading at an all-time high. Shares were up a tenth of a percent to $41.03 in mid-morning trades Friday.

“David Dillon is a great leader. He’s also a great teacher,” Flickinger said. “So, Rodney McMullen will do very well.”

But tears were shed at 1014 Vine Street when Dillon announced the news to senior managers, said Lynn Marmer, Kroger’s group vice president for corporate affairs.

“There’s an enormous amount of respect for Dave. He is a leader that is deeply loved in the organization. So, I did see a few people with tears in their eyes as I walked around the building. But there’s also great excitement because Rodney is extremely well liked, well respected.”

Marmer said Dillon emphasized the strength of Kroger’s management team in his parting remarks, which makes Marmer believe the company is in for “a very smooth handoff” in in the months ahead.

Not only did McMullen help Dillon develop the strategy that has now led to 39 consecutive quarters of same-store revenue growth, he also shares a leadership style with Dillon.

“Rodney is a little more reserved and Dave is much more outgoing, gregarious might be the word. They have enormous respect for each other and they’re people who share some core values, including the importance of inclusion, getting ideas from other people, being open to feedback, being engaged in the business,” she said.

McMullen, 53, joined Kroger as a part-time stock clerk in 1978 and has been president and chief operating officer since 2009 and a Director since 2003.  He has held a variety of senior management positions including vice chairman; executive vice president of strategy, planning, and finance; and chief financial officer.

“I am honored to have this unique opportunity to serve our company and gratified by the board’s confidence in me." McMullen said Kroger's press release.

Dillon, 62, a 37-year Kroger veteran who has been chief executive officer since 2003, enthusiastically endorsed his successor.

“As Kroger implements its strategic growth initiatives, the time is right for the transition of leadership," he said. “Rodney has played a leadership role in every major decision Kroger has made for the past 25 years, including the development and implementation of Kroger’s Customer 1st approach as well as our current growth strategy. He is ready to be CEO.”

Flickinger agreed that McMullen is ready for the job, but he also praised Dillon as an act that's tough to follow. Flickinger said Dillon accomplished what some thought was impossible by competing with Walmart on price while growing its number of union employees.

Beyond that, Kroger’s innovations in the use of loyalty-marketing data, its prudent string of acquisitions and a continuing emphasis on reducing operating costs will stand as legacies for Kroger’s top executive.

“David Dillon is the best CEO Kroger has had since Barney Kroger retired,” Flickinger said.

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