May 13, 2015
For Publix, success comes down to its owners
You probably have seen numerous studies showing that Publix is among the places Americans most like to shop for groceries. Last year, Harris published a poll in which Publix was ranked as the top regional grocer in the South and Market Force recently released a study that ranked the chain second nationwide to Trader Joe’s. The reason for Publix’s success can be traced to one key factor — its employee owners.
As a recent piece on The Miami Herald site points out, the chain’s founder, George W. Jenkins Jr., believed that if workers had a stake in the company they would be more conscientious in their duties and dedicated to taking care of customers. Today, employees own the largest block of the company’s shares at 30 percent.
"Our associates have skin in the game and, as owners, they take pride in taking care of the customers whose loyalty and dedication make our company successful," Publix CEO Ed Crenshaw wrote in an email to the Herald. "It is what differentiated us as a business and has continued to bring generation after generation of associates — and customers — through our doors."
Photo: Publix Facebook page
Not surprisingly, Publix is also ranked among the best places to work in retail. According to the career site Glassdoor, 78 percent of workers would recommend the chain as a place to work to a friend. Eighty-seven percent approved of Mr. Crenshaw as CEO.
- The power of Publix: Market battles for dominance as it expands – The Miami Herald
- Trader Joe’s, Publix, Aldi Top Grocery Brands – MediaPost
- Working at Publix – Glassdoor
- Consumers are not happy shopping in stores, especially Walmart’s – RetailWire
- Usual suspects top regional grocers list – RetailWire
Discussion Questions
How important is employee ownership to Publix being Publix? Is Publix a special case or do you think employee-owned companies are always stronger than those not owned by workers?
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If it motivates the employees to do well (and the shopping experience at Publix in Atlanta compared to Kroger or Walmart is much better), then that’s important. Keep in mind, it’s not employee-owned — they just have a piece of it. I think there’s more to it. Lots of companies have employees owning a large stake but are not known for their customer experience.
In the case of Publix, employee ownership is an important factor. I have been shopping at Publix for over 30 years now, since we moved to Florida. Employee ownership in this case means consistency. The people working there feel as if they have a stake in your, the customer’s, satisfaction. They want you to be satisfied and return. The manager of the store we frequent recently retired as did the meat department manager. Both had been there since the store was opened over 30 years ago. Where have you ever seen this before except in a “family” owned business? It reminds me of the theme song from the TV sitcom Cheers. ” … where everyone knows your name.” Go often enough and someone in each department will recognize and speak to you.
I don’t know if it’s employee ownership or just good sound retail practices, but Publix does some things really, really well.
There are other things it does not do so well.
Certainly private-label brand and employee ownership are unrelated, but the other items might well be.
The last thing worth pointing out is that there is a Publix every 30 to 40 blocks in South Florida. In some communities this might seem excessive, but in South Florida, it’s a necessity. You just can’t drive 100 blocks with frozen food in the summer. In fact, when I take a field trip to Trader Joe’s (40 minutes away) I bring a cooler. And for obvious reasons, those trips don’t happen as often as the six block drive to Publix.
So overall, at least where I live, Publix just has the retail basics down. I think employee ownership is a piece of a very big puzzle that has been well put together.
I am a regular shopper at Publix and can say first hand that their store associates are a tremendous asset to the Publix brand. More to the point, it is how they are used and how many associates Publix uses that truly makes the difference. Unlike some of their competitors, managers are almost always on the floor interacting with shoppers. Publix also does an unusual amount of day-stocking, placing associates in the aisles to help shoppers find items on their lists. Their stores are always full of green-clad helpers. Labor expenses be damned (or so it would seem).
I do not regard Publix as the most progressive or innovative food retailer out there, but they are very good and VERY consistent from store to store. They are not the cheapest, nor the biggest, nor do they have the most massive perishable departments. I can only surmise that the commitment they make to their associates through training, advancement and ownership is the major reason they win big.
I think employee ownership is the key to Publix’s success and I don’t think it is an isolated example.
Hy-Vee was also an early entry into the ESOP market and for years enjoyed great success for all the same reasons Publix does.
That said, let me offer a caveat to my answer by noting that employee ownership is not an automatic guarantor of success. A firm has to still be well managed, in touch with its customers and ahead of its competition to succeed.
Generally employee-owned companies are much stronger. Especially in the grocery business. However you need to have an honest management team because there have been some sad failures. Hy-Vee, WinCo, Riesbeck’s and Woodman’s, to name a few, have employees with a cult-like devotion as do many of their customers. However you don’t have to be employee-owned to achieve this. HEB, Costco, Wegmans, Trader Joe’s, and Market Basket are grocers that have put the employee first, almost to the point of overindulgence.
The truest apples-to-apples way to judge consumer acceptance is sales per square foot. All of the above mentioned companies are well above industry norms, so do the math. Publix has run Delhaize and Albertsons out of Florida and drove Winn-Dixie into bankruptcy. Kroger knows they would never get off the ground going to Florida. Instead of getting hurt by Walmart, Publix just got that much stronger.
George Jenkins’ simple and effective belief in permitting people to earn a stake in the game has been a significant contributor to Publix’s consumer, store and shareholder success. The transition to employee ownership (ESOP) opportunities is a testimonial to successfully bringing people together in building a stronger company.
For those who haven’t walked the store, had the pleasure of asking an associate a question about where an item is located and having them walk you to the product, or observed the associates working together, know that Publix is continuing to make the culture work. From appearances and experience, they are not taking the importance of strategy, execution and culture for granted. They are on top of it each and every day.
As the great Satchel Paige pointed out, “Don’t look back. Something might be gaining on you.” Publix is aware of what is taking place around them, seeking new solutions to stay ahead and marching forward with their game plan.
Commitment to the company and its success partnered with rewards related to company success are an important ingredient for a company’s success. Publix makes this work. It is a special case because they make it work. Their particular circumstances enable the criteria stated above. The criteria are not special. The execution is.
I had the pleasure of working with Publix at my first ad agency job and let me tell you, this attitude shines through at the corporate level too. They act and support each other like a family and they are hands down the most customer-focused company I’ve ever worked with. They won’t even do special loyalty programs that may make some people feel less important than others.
Having grown up in Florida near headquarters, I’ve also been a loyal shopper my entire life. The energy and feel of their stores has remained consistent across time and borders, yet I can still encounter faces at my hometown store that have been there over 30 years. That’s something to aspire to you just can’t fake: Genuinely caring about the right things and incenting your employees to follow suit.
I don’t live in an area with Publix, so my experience with the stores is minimal. I did however work in a company for many years that employees owned upwards of 25 percent of. It was a huge factor in how people thought about the company and their work.
Of course they are better, however, I believe that Wegmans is the best ever and they are not owned by employees. It is a combination of training/teaching, executing and checking on results that’s important.
Employee ownership has two advantages. First, employees are focused on the customer, understanding that the more customers purchase the more the employees make. Second, employee ownership makes Publix’s ranking very high as a good place to work. Like anything, if employee ownership is poorly set up and executed, the results will not be great.
Just having employee ownership by itself is a positive factor, but poor management can easily undo the gains. Note Walmart took the step of informing employees of how the store and company was doing. This is not employee ownership, but is a good attempt is getting them involved. All things being equal between two firms, employee ownership will win out.
Publix isn’t perfect, but about as close as I have seen a supermarket operator get. Note that just like in the above photo, cashiers really do stand in front of their registers if there isn’t someone at their checkout, to let you know there is no waiting. Publix is so ubiquitous in South Florida, and so good, that I hadn’t been in a Winn-Dixie in a long time (there also aren’t that many of them). But, I was surprised to see how nice the one I recently visited was, and how helpful the employees were. Maybe Publix rubbed off on them, or it could be BI-LO’s influence.
I’ve also noticed that Walmart seems to have stopped running those ads comparing prices with Publix. Perhaps they realized price isn’t the reason shoppers go to Publix.