Dierbergs Markets Inc. Business Information, Profile, and History

Company Perspectives:

"What are the needs of our customers?" Dierbergs continues to ask that question today as the company builds new stores and updates existing ones.

History of Dierbergs Markets Inc.

Dierbergs Markets Inc., based in Chesterfield, Missouri, operates 21 upscale supermarkets in the St. Louis area, including one in Illinois. Dierbergs is known as an innovator, the first supermarket in the country to establish an in-store cooking school, and the first in the St. Louis market to offer video rentals, a full-service FTD florist outlet, and in-store banking. Dierbergs is well known for the quality of its produce, meat, seafood, and deli departments, and has consistently ranked high in customer satisfaction surveys. The chain is family-owned by the Dierbergs, with a third generation now in charge and a fourth generation assuming leadership positions.

Roots Dating Back to 1854

Dierbergs traces the start of the business to 1854 and the opening of a general store on Olive Street Road in Creve Coeur, a village located near the rapidly growing Mississippi port town of St. Louis. This business would come into the hands of the Dierberg family in 1914 when William Dierberg bought it. He was born around 1880 and originally started out as a blacksmith. After serving his apprenticeship he ran his own shop in the St. Louis vicinity in University City, circa 1900. He then moved his family to a more rural area known as Lake. Here he was situated near a general store owned by a Mr. Zierenberg called the 18 Mile House (many establishments from an earlier period took their name from the distance they stood from the Mississippi River). When Zierenberg decided around 1910 to return home to his native Germany for a year-long visit, Dierberg agreed to give up smithing and take over the management of the general store for him. When Zierenberg returned to the United States, Dierberg did not resume the blacksmith trade. Rather, he moved to Creve Coeur to run the general store, which was owned by a man named H.M. Koch. A few years later, in 1914, Dierberg bought out Koch and laid the roots for today's Dierbergs chain of supermarkets.

The store was located in a building known as "Creve Coeur House," which also included the 14 Mile House hotel and the Creve Coeur Farmer's Bank. Dierberg ultimately bought the hotel and became president of the bank (which would grow from a single rural branch into an institution with $4.2 billion in assets and more than 130 offices spread across four states). In 1929 Dierberg quit the grocery business to pursue other interests and turned over the operation to his sons, William Dierberg, Jr., and Fred. (The elder Dierberg would die in 1945.) A year later the brothers moved the business to an adjacent location on Olive Street Road, opening a 3,500-square-foot store. During the 1930s, like other grocery stores of the day, it made the transition from orders being filled by clerks to self-service, a concept pioneered by Clarence Saunders and his Piggly Wiggly stores. The Dierbergs operated at this new location until 1960, when they moved the business elsewhere in Creve Coeur. A year later a third generation became involved in the business when the son of William Dierberg, Jr., Robert J. Dierberg, went to work for the store. It was not until 1967 that Dierbergs opened a second store, which was built some four miles away from the first. This was a major step for the family business and a harbinger of what was to come: The new store was much admired for its modern design and was named "Store of the Month," by the trade publication Progressive Grocer. (It was also during this period that Robert's brother, Jim, took over the presidency of Creve Coeur Farmer's Bank and started to grow that one-location business into First Bank.) In 1969 a cousin, Roger Dierberg, who gave up an engineering career at McDonnell-Douglas, joined the business to help in the expansion of the Dierberg supermarket business.

Third Store Opening in 1976

Dierbergs opened its third store in 1976, a 51,000-square-foot unit in Oakville, south of St. Louis. At the time, it was regarded as one of the finest supermarkets in the United States, and would usher in a decade of rapid growth for Dierbergs, which expanded its offerings as well as the number of locations. In 1978 Dierbergs opened its first in-store cooking school at the Manchester site. The concept proved so popular that the company expanded it into a multimedia operation over the years. Eventually there would be four strategically located in-store cooking schools. Not only did Dierbergs hire a staff of professional home economists, it brought in well-known chefs, cookbook authors, caterers, and restaurateurs to teach classes, which were conducted in professionally equipped kitchen classrooms. Topics included such areas as regional cooking style, ethnic foods, appetizers, heart-healthy cooking, and complete meals. Class sizes were also limited to 20 or less, providing ample opportunity for individual attention. Moreover, the schedule offered a lot of flexibility, with day and evening classes, and single sessions or extended courses available. Classes were also available for children, or for groups such as co-workers, birthday parties, and gourmet groups. Out of the cooking school came a quarterly recipe magazine, Everybody Cooks, and ultimately a CD that covered 15 years of the publication's most popular recipes, numbering more than 1,900 recipes. In 1986, in a related development, Dierbergs teamed up with the Missouri Baptist Medical Center to launch an information program, Eat Hearty, to help customers select and prepare heart-healthy foods. In addition, Dierbergs tagged store shelves with a red heart logo, calling attention to products that fell within guideline levels for cholesterol, fat, saturated fat, and sodium. Dierbergs, in 1991, transferred its popular Everybody Cooks concept to television. The company purchased a primetime slot on KMO-TV in St. Louis to broadcast a 30-minute cooking show. Receiving strong ratings, "Everybody Cooks" is now broadcast four times a year, offering expert tips, recipes, and food ideas for holidays and entertaining.

Dierbergs continued to add new stores in the St. Louis area, and by 1985 had a slate of ten. In 1978 the company opened a store in Manchester, Missouri, followed a year later by a store in Southroads. Dierbergs was especially active in 1980, adding two new stores as well as relocating the 1960 store that had replaced the original Creve Coeur store bought by the founder in 1914. The Mid Rivers store was opened in 1983 and three more stores followed in 1985: Lemay, Bogey Hills, and Florissant. During this period of expansion, Dierbergs also grew its reputation for high quality and innovation. In 1980 Dierbergs introduced its first pharmacy, which evolved into a significant facet of the company one-stop shopping approach. In the mid-1980s Dierbergs added salad bars and takeout food to all of its locations. The stores also introduced floral shops and a video center that offered movie rentals. To build loyalty, Dierbergs created its Customer Club, which gave members a check cashing card as well as the right to rent movies. The club also mailed out a quarterly newsletter that included recipes and scores of special coupons. The Creve Coeur store, in 1987, became the first of four locations to feature a European bakery, offering authentic specialties prepared in facilities separate from the regular bakery. Pastries included éclairs, vanilla Napoleons, Florentine cookies, and fresh fruit tarts, as well as cakes such as ambrosia, Grand Marnier, hazelnut, white chocolate, and raspberry supreme.

Dierbergs reached a turning point in the second half of the 1980s when the company decided to create a new prototypical supermarket, eschewing the successful design features of the previous ten years--homey wallpaper, rustic wooden beams, and chandeliers. In November 1987, Dierbergs opened its 11th store, a 74,000-square-foot unit located in north St. Louis County. According to Progressive Grocer, the new store featured "painted walls, neon lights and modern spotlight fixtures that create a look Miami Vice would be proud of." In addition, the new store reconfigured certain departments--the deli, bakery, and floral shop--in order to accommodate popular services such as video rentals, salad bar, and takeout food. With a leaner look and less ornamental trappings, the new prototype was able to provide more space to value-priced products. In addition, the extra space allowed the new store to offer a seating area in front of the store, a self-service beverage center, and a blood pressure machine in the pharmacy area for customers to use. Moreover, by adding an 11th store Dierbergs now qualified as a chain. Despite being a small chain, Dierbergs was able to flourish in the St. Louis area, where such giants as Kroger and A&P had failed in their attempts to crack the market. To close out the 1980s, Dierbergs added the Market Place store in 1988 and Mackenzie Pointe in 1989. Also in 1989 Dierbergs replaced its third store in Oakville with one in Telegraph.

As Dierbergs moved into the 1990s, the chain, and the family that owned it, approached a watershed moment. According to the St. Louis Business Journal, "The Dierberg family was faced with a difficult problem in 1993, when it had to bring an outside executive into the family-owned grocery chain for the first time. The younger generation was not ready to take on the task of running the company, and the older generation wanted a capable executive to ease the generational transfer." In August 1993 Dierbergs hired 43-year-old Darryl Wikoff to succeed Robert Dierberg as president of the chain. Dierberg would stay on as chief executive and chairman, while his cousin Roger assumed a new position, that of vice-chairman. Both continued to be highly involved in the running of the operation. Wikoff had 23 years of experience in the supermarket business, all of which was with the ten-store, Nebraska-based Baker's Supermarket Inc. His tenure at Dierbergs, however, would be relatively brief--just three-and-a half years. In April 1997 he resigned, and Robert Dierberg once again took over the presidency. But by now a fourth generation of the family--Robert Dierberg's son, Greg Dierberg, and his daughter, Laura Dierberg-Padousis--was becoming more involved in the running of the business.

Unveiling a New Prototype in 1996

In 1996 Dierbergs introduced another new prototype, this one in Brentwood, Missouri. During this period, in an effort to cut down on the volume of intercom pages, Dierbergs experimented with a zone paging system and ultimately settled on a wireless phone system, so that managers and key employees could be contacted immediately, and discretely if necessary. In one case, a store director was able to use her wireless phone to call for help when a customer was struck with a heart attack and she did not have to leave the person's side. The wireless phones would ultimately be rolled out to the entire chain. By September 1998 the chain included 16 stores and was generating estimated sales of $450 million.

As it entered the new century, Dierbergs continued to expand and innovate. Dierbergs added stores in Fenton and Brentwood, which helped the chain realize a substantial growth in sales, from $550 million in 2001 to $575 million in 2002. Dierbergs added the popular Krispy Kreme doughnuts to its bakeries and by 2003 added them to all locations. In that year, all stores also added U-Scan self-serve checkout areas to better serve customer needs. The chain grew to 20 stores and expanded across the Mississippi River in 2003 when Dierbergs opened a store in Shiloh, Illinois, entering St. Louis's Metro East area. Dierbergs and other area supermarkets also faced some labor issues in 2003 as members of the United Food and Commercial Workers Local 655 and management negotiated a new contract, following the June expiration of the previous contract. In September Dierbergs, Schnuck Markets Inc., and Shop 'n Save Warehouse Foods Inc. reached a tentative agreement, only to have union membership decisively reject the deal. The union members then voted to strike on October 7, choosing Shop 'n Save as the immediate target. In response, Schnucks and Dierbergs locked out their union employees. (Dierbergs' Illinois store was not affected.) The two sides were brought back to the negotiating table in late October and by the end of the month they were able to hammer out an agreement that union membership voted to accept.

In 2004 Dierbergs opened its Wildwood store and announced that later in the year it would open a second supermarket in Illinois. With a solid reputation for quality and customer service in the St. Louis market, there was every reason to believe that Dierbergs would continue to make significant inroads east of the Mississippi.

Principal Competitors: IGA, Inc.; Schnuck Markets Inc.; Shop 'n Save Warehouse Foods Inc.

Chronology

• Key Dates:
• 1914: William Dierberg buys a general store in Creve Coeur, Missouri.
• 1929: Brothers William Dierberg, Jr., and Fred Dierberg take over the business.
• 1967: A second supermarket opens.
• 1976: A third store opens.
• 1987: Dierbergs qualifies as a chain with the 11th store opening.
• 2003: The first Illinois store opens.