Safeway’s Karl Schroeder hasn’t always been a West Coaster, but he has always been involved in the grocery business.
Schroeder, president of the Pleasanton-based company’s Northern California Division, grew up in New York—the son of an Air Force veteran who, upon emerging from World War II, opened a corner store.
“We, for part of my life, lived above the corner store in upstate New York,” Schroeder says. “It can’t get much more typical than that. It was, literally, a corner store.”
Schroeder helped out at his family’s store during his younger years and, at age 16, got a job at a local IGA. After high school, Schroeder headed west with friends and came on board with Safeway in Arizona in October 1976. He was just 18 years old.
You might say the rest—with a lot of hard work—is history. Schroeder has been with Safeway for nearly 40 years and has led its Northern California Division since 2004. Following the company’s merger with Albertsons, which is expected to be finalized in January 2015, Schroeder will serve as SVP of corporate merchandising, running the merchandising half of the marketing and merchandising organization.
As a 2014 inductee into Shelby Publishing Co.’s Food Industry Hall of Fame, The Shelby Report recently sat down with Schroeder in his office at Safeway’s headquarters to chat about his long career in the business, what has helped him find success, his family and his pastimes.
Tell us about the corner store your parents owned and more about your early involvement in the grocery business.
I think the store had eight feet of service meat. My parents had Boxers (dogs), so there would be two Boxers running in and out of the meat department, which now would violate 10 health laws. I did that for a while and, when I was 16 and in high school, my parents had the conversation about, “Hey, you need to go get a job.” I’d always sort of had the work ethic of mowing lawns and shoveling snow—a pretty blue-collar upbringing, thank God.
Anyway, there’s a connection there. My father retired. He spent the last part of his life as the ABC guy for the county, for liquor licensing, so he was kind of connected to the restaurant business and still a little bit in the grocery business. He knew a guy who owned an IGA and had me ride my Stingray bicycle over there. The guy had a meat packing plant as well. This was 1974, you know—I had long hair, an earring. I had no clue what was going on. I go to this meat packing plant. It’s all these tough-looking guys on forklifts and (the owner) comes in to interview me. He looks like he just committed murder on his smock from cutting meat and talks about my dad and says, “I understand you need a job.” The grocery advice he gave me…he said, “I have two rules if you come to work for me in my store.” I said, “OK.” Now, remember, I had just turned 16. He said, “Don’t mess with my wife and don’t mess with my cash.”
I worked there through high school, and then the plan coming out of high school was to join the Air Force for music. I played drums and percussion from fifth grade on and had auditioned, taken the test and taken the physical and was set to go into the Air Force and go to music school. Then my duty would have been playing in military bands…
I graduated from high school and got a call from the recruiter. I think I graduated like June 20 and it was like July 4 or 5 saying, “Hey, we’re backed up.” I was supposed to leave in three weeks, but there were no openings in the school of music until whatever the date was, like next year or whatever. So I could go in and do something else or I could defer…Long story short, I opted not to go in and paint outhouses in Milwaukee or whatever choice two was. A couple of guys that I knew just from banging around in high school, in the jazz band together, one of them said, “I have a relative in Arizona. I’m going to go there and stay for a couple of weeks and see what it’s like.” So we drove across country. I think I had 250 bucks. I sold my drum set in New York, bought a drum set when we got there. I lived in a house with four other guys, owned by a guy who’d just gotten divorced.
That wasn’t the most focused period of my life. I liked Arizona and thought I should probably get some money, and the first place I went to apply was Safeway. I’d never been in a Safeway before, but figured I’d worked in an IGA. I was still 18. This was October 1976, after high school graduation. Quite honestly, in my own head, I was panicked. I had a plan (to go into the Air Force) and everyone was going away to college and now I didn’t have a plan. So college was kind of banging around in my head, but I don’t remember having a conversation with my parents about college. I remember, “Here are your options: Army, Air Force, Navy, go,” which in my family was a very honorable thing to do. All my uncles had been in the military; not a lot of money for college, I think.
The store was close to (Arizona State University) in Tempe, so it was a blast of a store. Most of the people working there were students and all of the customers were students. I was that age, just a fun crew to be around. I actually met (my wife) Aurelia there. Aurelia was shopping when I was bagging groceries and I started taking the occasional class, a community college class, a class at ASU and then got a little more serious with Aurelia.
I think starting at the bottom, like cleaning bathrooms and emptying trash, it did leave an imprint on me. OK, you got a job, but is this really what you want to be doing? Probably a similar story to anybody that goes through that. I’m going to apply myself and see if I can get a better job. And education certainly seemed a way to get there. I don’t mean this in a bad way, but it was noticeable, at least in the store where I worked, it seemed like there were college students who work and then leave to go get a real job or there were the people who stayed that didn’t have any education and they seemed sort of limited. It certainly wasn’t that clear to me at that time, but I think that did kind of drive me.
Your store manager, or store director, in that store wasn’t trying to groom you or give you advice and say, “Do this and do that?”
The first three managers I worked for got fired. But the third one taught me a lot about the business of retail and pennies.
I see this a lot when I have the opportunity to chat with the folks at USC about setting goals. I got married at 22, a very positive thing, started having kids and, as I got into management with Safeway and took on the responsibility, I didn’t have in my head a clear-cut goal other than, “You cannot get fired. This is the path you’ve chosen. You’ve got people relying on you.” I think I learned over that period of time that I liked approval, so it was almost more having people saying you’ve done a really good job that fueled it rather than, “Hey, we’ll give you more money,” even though I was trying to survive, and I learned a little bit about myself in that. I also think having the ability to think like an owner, even though I’m not the owner; being responsible for the store, even if it was a night shift or whatever, helped. I remember learning a lot about leadership not so much by what I did but by watching other people who you could tell had good leadership traits and we got a lot done; or did not have good leadership traits and we threw cherry tomatoes at each other all night long. I learned a lot on the night shift; had a lot of fun, though. That’s one of the things, at least back then, it’s better now—it’s not really a glamorous industry when you come in at that level, but I just remember how much fun we had. It was a great store.
I had the opportunity to work for a lot of different people. Back then, we got two loads a week in a store rather than now when you get them every night. I needed the money, so there was a summer when I worked loads every night as a night crew person trying to get through school. I slept through a lot of classes. I worked in four or five stores a week some weeks so I could see a lot of different operations. I think in hindsight I soaked up a lot of stuff that was helpful. I wound up getting promoted to store manager and I managed seven stores in Arizona, a stint at USC in the middle of that, but I don’t think I was thinking beyond the four walls of a store by any stretch. I mean, I was a good manager. I’d open up stores. USC (the Food Industry Management Program) created an explosion of perspective.
USC was a very good experience and maybe a similar imprint to coming from New York to Arizona without a lot of cash…At one point, it was like, if I want to go back to New York, I’ve got to get more money—back when you got dressed up to go on a plane. At USC, at the time, you found your own way, you paid your own rent, the company paid your salary. But we had our first home in Arizona and we rented it (when I went to USC). The people who wanted to rent it said they’d need the furniture…so we moved (to California) and (only) took the kids’ cribs and beds. My wife and I slept on the floor in an apartment in Downey. It was a townhouse, which, again, knowing what I know now, we could have bought a mattress for 20 bucks, but it just seemed like we didn’t really need it… Yeah, we slept on the floor for the whole time I was at USC.
That, I think, motivated me to say, “You know, I’ve got this great opportunity,” and I was an accounting class shy of a community college degree when I went to USC. They let me in (with) Dr. (Jim) Stevenson; you know he’s managed a bunch of stores. I was so intimidated the first night we stood up and had our bios read. Driving home I said to Aurelia, “This is the worst mistake ever. Other people already have four-year degrees. I don’t belong here.” I think maybe that drove me to work extra hard, and I had the opportunity to give the address at the end. It was the second time in my life that I’d worn a rented tuxedo. The first time was my wedding, so I was like a fish out of water—what with 500 industry execs or whatever. I had something at the beginning of the presentation I was going to give that I thought was funny and we were driving there and I said, “My worst fear is that I stand up there and say something thinking it’s funny and it’s not funny” and there 500 people are staring back at you and I hear crickets. My wife was saying, “Then don’t say it.” So I’m sure that’s all I thought about. I didn’t eat the dinner. I didn’t drink anything because I was so nervous. Anyway, I got up behind the podium. Dr. Stevenson introduced me and I said it, something about consolidation or whatever, and the noise from that many people laughing at once startled me so badly that I started to fall over—like it caused me to rock backward, and I grabbed the podium and the podium actually rocked and I almost fell over backward. But it sort of calmed me down once that happened, and I said, “You know, I can do this.”
USC was a good experience and then I went back to Arizona and managed two districts there, but then I had the opportunity to come here (to California).
Bruce Everett would be somebody who I spent half my career working with or working for, and Bruce and I were visiting stores. I was a DM (district manager) and he was a retail op, VP of operations, and he said, “Have you ever thought about doing something more than district manager? You should think about going to another division at some point and getting the experience.” I said, “Sure, I’d do that.” Well, a week later, he calls and says, “Hey, I want to pick up some guys who are going to interview for your district from Seattle. You’re going to California.” And that’s kind of the way he said it. My initial thought was, “What did I do wrong? Why are you trying to get rid of me?” He said Steve Burd is now going to be the president, and it’s in the area that he operates in. It was a very lateral move. I probably lost money by coming here. I got more pay (around $6,000 more a year), but the cost of living here is so high. I had a number of people saying, “What? Are you out of your mind? Why would you do that?” But I wound up in a high-profile area and met Steve Burd and he was just kind of coming into Safeway. I wouldn’t say he was trying to figure out the grocery business because he’s a brilliant guy, but I think he was trying to figure out what’s really going on—so he would be either out in my stores a lot or he’d call me a lot and say, “What do you think of this?” or “what do you think of that?” And it’s kind of how I met him and wound up interacting with him a little bit.
I was here for a couple of years and then had the opportunity to go to Hawaii and run our stores in Hawaii. Next to USC, it’s probably the best sole business experience I’ve ever had. You’re almost 3,000 miles away from any supervision, and probably in most chains, but in Safeway at the time as a district manager you’re kind of just executing what the plan is rather than making your own calls…There was nobody checking to see if I’m out on a Saturday, so if I got out it’s because I actually thought I could have an impact or was trying to follow up on something—rather than doing what I think somebody else wanted me to do. It really did teach me to run a business. It was just a really good experience, really nice folks—a long way from New York.
It’s kind of like the island syndrome, literally, because you’re on an island and that’s your world.
Yeah, in a good way, though. Because you’re making decisions, you are absolutely, in that case, the face of Safeway. If you’re not doing the right thing, you feel responsible for making all of Safeway look bad, plus you’re really working hard to build your team. In Hawaii, there were people who worked in stores on Kauai and that’s the only Safeway store that they’ve ever been in. There’s no “I’ll just borrow from down the street.” It’s the only store there. You really do learn to develop people and teach them the business. You do everywhere, but it just became so apparent to me there. It also became very apparent about competition. If there’s us and one competitor on an island and our produce department’s sales are down I’m guessing theirs are probably up, so can you out-operate? And in some cases, in some departments, yes; in some departments, no. It taught me the value of looking at markets in a sort of micro-look, micro-strategy.
I came back here as VP for retail operations and managed both sides of the division here, and then I had the opportunity to go in to the corporate office, sort of on project, working for Steve Burd, and Larree Rendee at the time was doing labor. It was back when, within the conventional food industry, the Walmart threat led to a little labor dispute in Southern California…and then I was working on healthcare costs; even back at the time, Steve was trying to figure out why our costs are so much higher than everybody else. Being that close to Steve and really Steve’s team would absolutely be a period where it was so insightful just to see how they thought.
You were involved in developing the healthcare policy at Safeway with Steve?
I would say I was involved with the idea of it. At the time, we didn’t get much past how does the pharmacy world operate? How do we get billed? So I was kind of doing two things at the same time—one was related to labor contracts, one was related to healthcare, and it was to say what’s our costs in the different divisions or the different contracts, and if you could have the perfect scenario, the best of every contract from a business standpoint, or the best of every healthcare, how would that look? Quite honestly, it quickly moved to labor, once the strike hit. So 10 years later, they started a healthcare company and he’d (Steve) introduce me by saying Karl’s project was to solve healthcare and he couldn’t figure it out so we promoted him to division president and got somebody in who could do it.
That was a big part of Steve’s legacy, really, was this healthcare initiative.
The first thing he asked me to do was to go and find out more about our pharmacy business and how it worked, but it did get derailed a little bit. So I worked with him in the corporate office and Larree for about two years, and I never decorated my office. The office in between his office and the elevator, I never even put a picture of my family in there. Finally, after a couple of months, he asked, “Aren’t you going to move in here?” and I said, “Nope, because when you have a division ready I can be there that night.”
He called me on a Saturday and said, “I have an opening in the Eastern Division. How would you feel?” I said, “I can be there Monday.” He said, “I’ll give you a ride. You don’t have to take a commercial flight.” Interesting, he and I were having a conversation; we’re flying in and he said, “I have to introduce you tomorrow and I just want to make sure I’ve got your story straight—how old are your kids?” and this and that. And he said, “By the way, what’s your education?” and I told him. At the time, it was a community college degree and USC and I never finished beyond USC. I thought about it for a minute in the plane and I said, “Why?” And he said, “Well, it’s just a good way to introduce you, but I wouldn’t have guessed; I thought you had a college education.”
I had a great experience in the Eastern Division—cool place to live. Washington, D.C. Great vibe. Again, a stretch, but I felt like it went very, very well. I lived there for a couple of years and then NorCal came open and it’s a good division and closer to the action here with Safeway, so I had the opportunity to come back here.
And one of the things I learned from Steve is—actually it confused me when I first saw him do this—I’d hear him in the hallway ask somebody a question…then maybe an hour later he’d come in my office and ask me the same question. So I’d answer. Then I’d hear him ask somebody else the same question. And I thought, “Well, he must not believe my answer,” but what I learned is he’s actually trying to a) validate what somebody else has said and b) learn who’s going to tell me what’s really going on. That flight where he asked what my education was, I mean we’re literally wheels coming out here, coming in for landing, and I said, “Is there anything you want me to do differently? I recognize you’re promoting me and we’re having a good conversation here.” And he said, “The only thing I always want you to do is just be honest with me, tell me what’s going on. I can’t solve problems if I don’t know.” And I’ve noticed there’s a reluctance to tell people above them in the organizational chart bad news. I’m not sure why. Maybe it’s human nature…
Have you adopted that sort of philosophy in your management style?
I think I learned the value of building trust as a result of working with Steve because there’s a lot of people I like working with. I don’t mean this in any (negative) way, but there are some people I trust more than others in business—you just get a sense and a feel, but I think I learned I feel more comfortable about my relationship with people that are working for me if I feel like we trust each other, and I’m sure they like it more, too.
That brings us to today.
Today, we’ve got the new company (pending the completion of Safeway’s merger with Albertsons) being put together, which we’re still in the early stages of but I think we’re going to have a terrific company. I think it’s been a very thoughtful approach. I can’t really say anything beyond that because the deal’s actually not even done yet, but I would say…I’m so impressed with the execs that I met from Albertsons with how respectful they are of each other. There’s just a great focus on trying to do the right thing and build a great company. It’s kind of exciting to be a part of that.
Let me ask you about the family.
Three sons and three grandsons. It’s probably like any parent. The work stuff running a division is easy. If I ever find myself biting my lip, it’s hoping that their lives turn out well and they do well. They’re old enough now that they’re all making good decisions. And they’re all local here, thank God, since we’ve moved nine times. They could have been strewn all around the country, which wouldn’t necessarily be a bad thing if it’s for the right opportunity. Cameron’s married to Lauren and they have three sons. Tyler lives in San Francisco. He’s in hotel management. Travis, he’s a communications major living with us and looking for the right job. He’s had jobs, but he’s looking for a job that he generally likes.
You have to talk about your wine making.
We have a one-acre vineyard, which is kind of like having a medium-sized boat from the standpoint of a wise investment. We grow the grapes on our property and it’s pretty—we’re on the hillside. Then we process it up in Napa, and we name each vintage after a family member. We’ve got six vintages in the bottles and two in the barrels. Aurelia was the first vintage, each grandson has a vintage, my mom and Aurelia’s mom have a vintage named after them. And then my daughter-in-law’s is in the barrels.
Any other hobbies?
We try to keep active. I like to run, more in the winter I do running events, and in the summer I cycle a bit more. We recently did a charity bike ride for the Arthritis Foundation, which was breathtakingly spectacular and also hard. Just a cool thing to do. Anyone who has the opportunity to do it, I would highly encourage it.
I’m glad you mentioned that. I’d be remiss if I didn’t ask about your philanthropic endeavors?
I’m active on four voluntary boards. I guess the two educational ones more than the others, so the California Business Roundtable…and the executive committee of Junior Achievement for the Bay Area and then rotating off the executive committee in a couple of years…And then the Arthritis Foundation was just to support a good cause. They sort of approached us about ramping up our interest and made us feel like we were the special ones. They’re just a great organization.
Are you not also involved with the Western Association of Food Chains (WAFC)? You were on the board of directors and you were president of the WAFC, so now you’re what?
I had been on the board of directors. I went through the chairs and was president and, I think for five years you’re on the executive committee. Great organization. I think WAFC and the Illuminators and the relationship there, of all the areas I’ve operated, from Washington, D.C., to Hawaii, and there are great organizations out there, but none of them have so many things clicking in the right direction as that relationship between WAFC and the Illuminators.
They become personal friends.
Yes. Good relationships.
One of the things you had mentioned in passing was sort of views on leadership. As I step back and look, and I’m sure it comes with I’ll say experience—it could be age—if you define wisdom as not just living longer but processing what happened to you and using that to be able to make good decisions going forward, I clearly learned the value of trying to be a good servant leader. I hope I am a good one, but I’m an aspiring servant leader. I’ll tie it in kind of with the conversation of education and how I learned that, which is…in 2012 I went back to finish my degree. I thought, as vain as this sounds, when I’m introduced at WAFC or whatever, it always just winced a little bit that there wasn’t a bachelor’s or four-year degree or Masters or whatever it was. So just kind of on a whim, I started making phone calls…
UCSF could not have been a better experience. I was far enough along in my career to say it was awkward would not be describing it right. The first night of class I went directly from here, before we were business casual, so I had cuffs on, blue custom suit, and I remember walking in and two minutes into it thinking, “They think I’m the professor, take your tie off when you go to class.” It was an English/writing class and she said, “OK, take out a couple pieces of paper and, no longer than two pages, write about your best educational experience,” which I immediately thought USC and then I thought, “Wait a minute, I have to write this…it’s been a while since I’ve written.” And that became a little intimidating because, when professors found out what I did for a living, they would ask the class a question and then look over at me, and half the time I’d have no idea—that’s why I was taking the class. They just assume you sort of know all the answers. Where I’m going with all that is it wraps back to servant leadership—my biggest concern on doing that was whether or not I’d have time to dedicate to it. So if I’m sort of half in and half out because I’m busy at work, am I going to wind up struggling through these classes and embarrassing myself? Without being totally conscious (of it) going into it, I wound up delegating more at work—VPs picked up extra stuff and, quite honestly, not only did I do very well at college but my results here got better. It wasn’t just delegating—it was what resources do you need for you to be successful…
I read a book by Donovan Campbell called “The Leader’s Code,” and it’s about a Harvard business school graduate who joined the Marine Corp. after 9/11, went to Afghanistan and, condensing the book down to a couple of thoughts here, was so freaked out about getting killed that he wasn’t really paying attention to the people he was supposed to be leading and finally had this calming experience one night in his bunk, doing the math in his head, statistically, saying, “I’m not going to live through this so my mission is going to be to help the people I’m responsible for live through it,” and it caused him to change how he leads…Rather than them serving me, what do I need to do to help them solve problems and take that from presidents to VPs to district managers to stores where they’re actually interacting with the customers. Maybe it’s a mindset, but I think it’s a really healthy way to think and it’s made me a better leader, far and away.
You’ve been with Safeway for 38 years, most of it in some sort of leadership role.
It’s interesting to think about now, 38 years here with the same company—but it’s been 38 years with wildly different jobs and experiences in different parts of the country. I think what triggers that thought is that…having that opportunity that Safeway gave me, and, yes, I applied myself, I worked hard but somebody said, “Let’s take a chance and send him to USC…”
Because of the USC program and how much of an influence it was on your life, do you ask your people who are coming up below you to go back to USC or to go through the FIM program? Do you try to encourage that?
It’s beyond encouraging. We’ve changed it in Northern California, and Safeway for the most part does this as well. We won’t send somebody through USC unless we’re certain we’re going to promote them at least one step, likely two steps. Different from when I went through it…I was a store manager, I had no idea what my future was and I was so disappointed to go back out initially as a store manager because you come out of there thinking you can run a company. Our two district managers in waiting outside that door are both USC graduates…I have goals set for each district. We have 15 districts. We’d like to have one of you each year submit a name so we’re picking from 15 to get one.
One student per year in there?
Other than last year, I’ve had at least one student, I think, every year since I’ve been here. All of our VPs here have gone through (the FIM program) already. I think it was three years ago we actually had two students from NorCal and they were both part of the JMO program, the Junior Military Officer program. These guys were lieutenants or higher, saw active duty and we brought them in and kind of fast tracked them into management as we were thinking about who would benefit from the USC program in our industry…By the way, they’re both in corporate roles right now. They both have done very, very well.
[box]What others say about Schroeder…
“We commend The Shelby Report for recognizing Karl for his service to Safeway and the food industry overall. He is the consummate professional with legions of loyal friends and admirers inside Safeway and across the trade. Karl is as respected and valued for his deep knowledge of our business as he is for his collaborative leadership style.”
—Kelly Griffith, EVP of retail operations, Safeway
“It is always special for a teacher to have a former student achieve great success. Not only did the Food Industry Management program faculty at USC recognize Karl’s leadership ability, his fellow classmates elected him as their spokesperson for the Class of 1998. His leadership in Safeway and the food industry has been an inspiration to all that have known him, worked with him and taught him.”
—Dr. Jim Stevenson, director emeritus, FIM program, USC
“Karl truly lives his commitment to the industry in his actions and endeavors. He is an exceptional leader that invests a great amount of time and energy in developing people. As a graduate of the USC Food Industry Management Program 26 years ago when a store manager in Phoenix, his talents were obvious then when his class voted Karl the Class of 1988 Spokesman. The WAFC has benefited from his leadership as president chairman in 2011 and his ongoing participation serving on the executive committee. It is indeed a pleasure and honor to work with him.”
—Carole Christianson, COO, Western Association of Food Chains [/box]