How Can Publix Improve?

Discussion
Oct 02, 2006

By George Anderson


Publix is recognized as one of the strongest retail grocery chains in the United States. From the outside looking in, it appears as though the employee-owned operation makes the right decisions for itself, its workers and customers as consistently as any company in the grocery business.


The Ledger newspaper recently asked a variety of supermarket industry watchers what they believed Publix could do even better to remain at the top of the competitive heap for the near future.


“It’s hard to find a lot to criticize with Publix,” said Lorrie Griffith, editor of the Southeast edition of the Shelby Report. “I think they have found their niche — that’s not to say they couldn’t do a little bit of work on pricing. I don’t think people walk into Publix expecting to find prices like they do at Wal-Mart, but I do hear of some people balking at Publix’s prices with other economic conditions now, like high gas prices.”


Mark Hamstra of Supermarket News, said Publix needed to “remain vigilant in terms of their price perception in the market, and the store-level execution in terms of service, because there’s no telling how strong Winn-Dixie might be when they finally come out of bankruptcy.”


Wal-Mart continues to expand in markets where Publix operates, said Mr. Hamstra, and it is moving into categories such as organic foods that directly compete with the supermarket chain.


Burt Flickinger, managing director of Strategic Resource Group, said Publix should increase its investment to quickly open new stores in Florida on the state’s West Coast and in its Panhandle region. The chain currently operates 643 of it 883 supermarkets in its home state.


Mr. Flickinger also recommended Publix look outside Florida to open more locations in states such as Alabama and South Carolina. Of the 883 supermarkets Publix currently operates, 28 stores are in Alabama and 37 are in South Carolina. The company also has 162 Georgia stores and 13 in Tennessee.


“This would be a key time for Publix to capitalize and show companies that are expanding aggressively into the market that Publix is going to defend the fortress with vigor in its key markets,” said Mr. Flickinger.


Ron Margulis, managing director of RAM Communications and RetailWire BrainTrust panelist, said Publix should drill down in its analysis of the shopping and purchasing behaviors of its most profitable customers. A more thorough understanding, he said, would empower Publix to focus on tactics such as incentives or personal attention to keep customers coming back to the store to spend.


“It’s about providing them with the right products at the right time, and promoting those items and services that will have the greatest positive impact on the way they shop,” he said.


Discussion Question: What can Publix do to improve? Do you agree with the assessment of industry-watchers quoted in the article?

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16 Comments on "How Can Publix Improve?"


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Dr. Stephen Needel
Guest
15 years 7 months ago

I’m not sure Publix needs to do much of anything – and I disagree with Ron – I don’t think the Publix shopper (at least in Georgia, where I live) is coming for the promotions. I think they are coming for the quality of the perishables (deli, meat, produce and, especially, bakery). So they don’t balk at the price and aren’t hunting for bargains – they like the quality and the service. They need to keep it up.

David Livingston
Guest
15 years 7 months ago

About 5% of Winn-Dixie’s stores actually do quite well. I would suggest Publix wade into Winn-Dixie, deliver the knock out punch, and acquire their better stores such as those in the protected areas of South Florida and areas of Mississippi and Louisiana where Winn-Dixie is comping up 30-40% as a result in population shifts since the hurricane.

Ryan Mathews
Guest
15 years 7 months ago

I agree with Al, to a point. It’s all about fine tuning. I’m not so sure they can’t handle all the projects they have on the table and more. To Burt’s point, I disagree a bit. The one thing they shouldn’t do is expand past their rational trade boundaries. Expanding for expansion’s sake just is never a good idea.

Ron Margulis
Guest
15 years 7 months ago

I was not suggesting that Publix use the data solely for promotions. If Publix customers are “coming in for the quality of the perishables,”and they are, the data will reinforce that and should drive the retailer to stress those departments in all marketing activities. My point is that shopper data will tell Publix how trends are changing and allow them to be where the customer wants them to be in terms of the way they go to market.

Al McClain
Guest
Al McClain
15 years 7 months ago

To me, Publix is like a championship team that just needs continuous tweaking and fine-tuning. The only thing that concerns me a little bit is whether they are trying to do too much. Some of the supply chain projects they are working on include supplier scorecards, improving order accuracy, reducing damage, auto replenishment, a vendor portal, etc. They are testing or launching at least four new formats (Sabor, Greenwise, Liquors, Pix) as well as Apron’s cooking schools in several stores.

Not that they can’t do all of the above and more, but I think they need to prioritize what’s really important as they battle the big guys, especially Wal-Mart.

Stephan Kouzomis
Guest
Stephan Kouzomis
15 years 7 months ago

All the points mentioned to check off are valid, but pricing.

Publix relies on consumer shopper friendly service, its culture, exceptional marketing skills, employee program, its outstanding forward thinking strategies, and Executive Management to excel and pursue all opportunities in and outside the grocery, meals, catering, gas, flower, and liquor businesses. Publix is so on top of its understanding of the shopper and its core consumer that no supermarket operation does it as well. (Wegmans, Sheetz, Harris Teeter are a close second. And Food Lion is beginning to become a marketer and shopper friendly operation.)

Who else has this list of superiorities? Forget W-D, Wal-Mart and any competitors who may venture into Publix land that includes nine states!

What else can we say about Publix? But, Bravo!!! And, Hmmmmmmmmmm

Len Lewis
Guest
Len Lewis
15 years 7 months ago

I’m afraid I have to disagree with Stephen. I think companies have to constantly do more of everything.

In Publix’ case, and this is certainly not a criticism, I think the focus should be on aggressive but reasonable growth in new stores and remodels. Also, they should continue looking at new formats — not only in terms of demographics, but in size.

John Rand
Guest
John Rand
15 years 7 months ago

I love Publix; they have done a lot of things right, but let’s not fall into the trap of failing to see them clearly.

They have expanded outside of their Florida home base and results have not been all that sterling. Check the shares in Atlanta – Kroger is beating them, and Publix will have difficulty growing in a three way race with Kroger and WMT with their current offering.

Prices are high and their ability to target and adapt to new markets seems to be limited. Their technology is not all it should be and their ability to engage suppliers in meaningful ways is limited by their refusal to share data and insights.

Publix already decided to grow outside of FL – and they have a lot to offer, don’t get me wrong – but so far it has not been anything like the triumph it needs to be for Publix to become a more regional or even national player.

Mark Burr
Guest
15 years 7 months ago
Wasn’t it a philosopher that once said, either grow or die? Well, maybe it wasn’t anyone so prophetic, but it’s true; at least it’s worth pondering. So what is growth? Does it mean additional locations? Does it mean additional formats? Does it mean expanding beyond your base geographical boundaries? Well, it could mean all of those things plus more. Yet, it doesn’t have to mean any of them. If Publix never expanded beyond its current base number of stores, could they remain as successful? Could they maintain and grow their customer base? I say, yes to both. So growth doesn’t always mean the typical. It can mean simply expanding your offering to the extent that you continuously meet and exceed your customer’s expectations. It can mean that you can gain an even greater share of their wallet and continue to do so. It can also mean that you can and likely will gain additional customers. It’s not necessary to become national or even a greater regional. It is, however, necessary to continue to evolve and… Read more »
Eliott Olson
Guest
Eliott Olson
15 years 7 months ago

Trying new store concepts seems like forward thinking, but is it really? One would think that if their new stores are so great that they could maximize their return by a more rapid expansion of their winner. Do they recognize an inherent weakness in their existing store model? If so, they would be smarter to fix it rather than replace it. They got where they are because of employee execution, not because of proprietary merchandising techniques. If they lose employee execution because of too many store models, or employee harmony because of competing or unprofitable models, they could lose it all.

Kevin Mahon
Guest
Kevin Mahon
15 years 7 months ago
Publix is vulnerable in four big areas. First, their produce selection and quality is only average. Second, they have allowed their prices to creep up and rely on BOGO sales to drive their price image; they no longer have “honest values” everyday. Third, the passion of their people for customer service is diminishing and finally deli sandwiches do not constitute a meal replacement strategy. I used to do 100% of my weekly shopping at Publix but now do only my fill-in trips. Whole Foods and Oriental Markets get my produce and perimeter business and Costco gets my stock up trip. I think Publix has nice clean stores; I don’t think they have a business model that anyone should hold up as a model for industry growth. They have had strong population growth and very weak competition in Florida; Wal-Mart has made huge strides in their markets. Their management team does not have the “killer instinct” like H-E-B and has proven they will not fight very hard to protect market share. Publix has the potential to… Read more »
Race Cowgill
Guest
Race Cowgill
15 years 7 months ago
I believe that one of the most common misconceptions in American business is that the most successful company is as successful as possible. It is understandable that we gradually sink into this idea; if we have never seen something done more successfully, isn’t it logical to think that maybe it can’t be? Publix has done an astonishing job in so many ways. I never want to minimize this fact. Publix may do practically everything better than anyone else. It is vital to recognize, though, that every single metric I am aware of that we use to determine the strength or success of a company is a COMPARATIVE metric (for example, every financial metric is meaningless as raw data — it only becomes meaningful in comparison with other companies in the industry). American business has NO standard metric that isn’t purely comparative or derives from comparisons with other businesses — American business has no “absolute” metrics. So let me mention one. Over the last 40 years, we have found no business in any industry anywhere that… Read more »
Richard J. George, Ph.D.
Guest
15 years 7 months ago

Lots of good input here that I will not repeat. The only point I want to make is that Publix recognizes that the greatest obstacle to business is success and complacency is something that they are not guilty of. It’s ironic that a company that is as deliberate in strategy and execution as Publix appears to be, is still capable of making timely strategic changes, e.g., Sabor and GreenWise.

They have made a fortune by “attacking themselves,” something most organizations do not do. Publix seems to be successful by following their customers. My advice – continue to stay focused.

Mark Lilien
Guest
15 years 7 months ago

By testing new concepts, opening new locations on a slow-growth basis in existing markets, constantly trying to improve itself without engaging in fad “flavor of the month” management tactics, and keeping its competent staff stable, Publix will continue to do well. Fast location growth and price policy changes will lead to instability. Concern about Winn-Dixie is certainly wasted effort. Some retailers don’t need coaching, management consultants or kibitzers. Like a compass whose needle reliably points north, Publix doesn’t need directions from well-meaning bystanders.

Odonna Mathews
Guest
Odonna Mathews
15 years 7 months ago

Consistency in delivering consumers service, quality products and value are the hallmarks to Publix’s success. Their reputation has been built over time and speaks for itself in the recent high ratings from Consumer Reports. They are a large chain but not afraid to experiment with new formats and ways to meet consumer needs such as their cooking school or the Apron’s meal program.

I agree that growth can come from new stores or from increasing the basket size of current customers. Continuous improvement is necessary in today’s competitive environment.

Michael Howatt
Guest
Michael Howatt
15 years 4 months ago
As a fellow associate of Publix Super Market, I agree and disagree with the comments made. I do agree that our prices are a bit high. But if you haven’t noticed, there really hasn’t been a supermarket chain that has been able to even out price and customer service. It always seems to lean to one side or the other. It is also crucial to Publix that they continue to expand into Alabama, Georgia, South Carolina and Tennessee. As of December 31st, 2006, Publix has a total of 892 stores open, the majority of those still in Florida. Publix will need to continue to open new stores and remodel existing ones (and quickly) if it is to have a significant market share in the states listed above. One note to mention though: Publix is extremely picky on where it builds its stores. We take on average around six months to a year to review demographics. We generally build stores in areas where there are numerous subdivisions and where we feel the community will grow around… Read more »
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