The recession, of course, was tough on grocers. Several filed for bankruptcy or closed dozens of stores, many in the neighborhoods that needed them most.

At the same time, those rough years dished up some glory days for food retailers. When times are tough, people eat at home.

Yet as consumers grow more confident, those patterns are shifting, and grocers are struggling to keep up. They mine shopping data to send coupons, worth as much as $10 off a $50 purchase, to customers they want back. They offer healthful meals, cooked and ready to go, looking to lure folks out of restaurants. They hype interactive computer and smartphone programs that email exclusive deals to loyalty-club members. And they've lowered prices hoping to keep customers happy and away from such discounters as

and

, which are entering the grocery market.

Portland-based

, a subsidiary of

in Ohio, is doing the same dance and, since mid-December, longtime employee

is at the lead.

Fred Meyer Stores

Owner: The Kroger Co., based in Cincinnati

Local headquarters: Southeast Portland

Stores: 134 in four states, including 52 in Oregon

Employees: 33,000, including 14,188 in Oregon

Payroll last year: $400 million in Oregon

Gust, 59, who started as a parcel clerk at Fred Meyer in 1970, was

, and the Northeast Portland resident has big plans for the retailer in coming years. Some seem natural, others are quite out of the Fred Meyer mold, but all are designed to keep the grocer competitive in an increasingly competitive market.

"There are no secrets in this business. All you have to do is see what's working at a competitor is go to their store and stand and watch," he said. "I may not have a lot of original ideas -- hopefully I do -- but it's more about how we take those ideas that are really cool and hip and how we scale those over a company that covers four states."

Here, Gust spoke with The Oregonian regarding his plans. His answers have been edited for brevity.

You've been with Fred Meyer for 42 years. What are some of the biggest changes you've seen in the grocery business during that time?



I was just having a conversation with the president of Kroger, and we were reflecting about when every item in the store had to be hand-priced by someone with a marker or some kind of handheld printer. How far we've come. I remember when the first Fred Meyer store opened with scanners in it, maybe 1977 or 1978.

We were fortunate enough that we had someone in the early 1970s who saw that health food was going to be important to customers in the future. They talked the leadership at that time into getting into the natural foods business, and look where that's led us. I'm still not sure where the top end of that is. It just continues to be more and more important, and we look at who our competition is and know it's not going to slow down.

At Hollywood (as part of an $18 million remodel of the Northeast Portland store), we just about doubled the footage for our natural foods department, and yet I was there and it's apparent we need to go back and reallocate more space if we're going to serve people the way we want to. That's what's on their lists.

Lynn Gust was promoted to president of Fred Meyer Stores in mid-December and now faces and ambitious first few years that includes rolling out new, smaller-format stores, a more interactive web site and more finely tuned customer service in his existing stores.

As you take the helm, do you have any course-changing plans for Fred Meyer in the near future?



We are looking at different strategies. As I've mentioned in the past, we are way behind on our e-commerce offering. Now that's apparent to everybody, and you're going to see us move a lot faster on that.

On another one, I will give Wal-Mart a lot of credit for working on these smaller stores to get infill between their big boxes. It's tough to find 20 to 30 acres to build a Fred Meyer or a Walmart anymore. So if there are opportunities for us to do some infill between our stores, you will see more of that.

You may see us looking at something that's significantly smaller than you've ever seen before from a Fred Meyer. We're trying to put the store in a neighborhood with offerings that are absolutely right for that neighborhood, not a bunch of things that aren't important to those customers.

One of the most important things this year is that every store will be given the tools to identify when customers are telling us where we're not succeeding in their store. We have access to a ton of information, either through syndicated data or what we collect from our shoppers. And we've finally gotten to a point where we can give that information to store directors, managers and associates and say, "Here are areas that it appears that, for whatever reason, we're not satisfying (customers)."

Why is that last strategy so important for you?



If we step back, a year and a half ago we were at a point where we'd known for a long time that Kroger was not acting like a $100 billion company; there was a lot of redundant work being done.

For instance, when it comes to buying Tide laundry soap, it doesn't make sense to have 17 Tide laundry buyers across the country. We should have one who's really, really good at it. We finally figured it out and began acting like a $100 billion company, but as we started down that path we took our eyes off our ability to be that nimble local grocery that we've all been so proud of being.

By the numbers

5.7 percent

Portion of disposable income the average consumer spent on groceries in 2011

$120

Amount the average household of four spent on groceries each week in 2012

8.6



Number of trips the average consumer made to the market each month in 2012

$491.2 billion



Total 2012 supermarket sales, not including Wal-Mart Stores Inc.

No. 2



The Kroger Co.'s sales ranking among U.S. groceries, behind only Wal-Mart. Kroger has 2,422 supermarkets in 31 states, including Fred Meyer and QFC in Oregon.

Source: U.S. Department of Agriculture, U.S. Department of Treasury, IBISWorld U.S.

We recognized that and have made some changes in the authority structure at Fred Meyer and other divisions so that we can get things done quicker that are important to the customers who are shopping in our stores.

As such giant retailers as Target and Wal-Mart take a more solid step into grocery, especially in the Pacific Northwest, what must Fred Meyer do to keep and expand its market share?



If I'm going to look at the best price operator, I would have to give

kudos as what they've been able to do. They've helped make us better, price-wise, for a long, long time. While Wal-Mart is not an insignificant player, price-wise, we haven't seen a lot of differences in what they're bringing than where WinCo already was.

As for Target, the model is obviously a lot different. We count on the food store, attracting the grocery customer who we know will buy the rest of the goods we sell. Target is the opposite, their food is the incremental purchase that wasn't on their customer's list.

Along with those big players at one end of the spectrum, you have natural foods operators such as Whole Foods and locally based New Seasons Market at the other. How do you handle competition on that front?



When I talk about good competitors, I put

near the top of that list. What they have done to identify the Portland customer and how to connect with them is incredible. I have nothing but respect for them.

Having said that, one of things we have done, but not called out as much, is the local connection we have had for years and continue to have. That's one of the things you will see us do more of. Even

out of Austin (Texas) does a terrific job at letting its customers know where the food they're buying is from.

That's a little bit more of a challenge with 133 stores doing the volume we do. We could tell you that we're buying from

(farmers based in Clackamas) today and maybe we'd buy out everything they have in their fields, and tomorrow it would be someone else. It's a challenge we have to get by.

What has surprised you the most over the past year when it comes to how Fred Meyer customers, or grocery shoppers on the whole, shop?



Our customers, especially our Northwest customers, consider themselves foodies. They're more interested in fresh and different menu options, and it's exciting. People are starting to cook again; I was afraid we were going to have a generation behind us that were going to give it up, but that's not what we're seeing.

We're also seeing a more European way of shopping. People are coming in and leaving with smaller baskets, but we're seeing them many more times a week. They're picking up what they need for today and tomorrow. It varies by store, of course, it's not something you see at rural stores. But Hollywood and Hawthorne (in Southeast Portland) stores a mile or two from where most of their customers live, it's certainly been very apparent.

That's one thing

does a very good job of: You come in, and it's kind of a treasure hunt. You never know what you're going to see. That's one thing we're going to work at being better at this year.

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