Will Publix conquer Virginia?
Reports out of Richmond and the area around the nation’s capital tell the same story: Publix is looking to move into Virginia in a big way, and the employee-owned grocery chain is not looking to hide the fact.
Last month, the Richmond Times-Dispatch reported that Publix had signed a lease for a 49,000-square-foot store in Henrico County with plans to open the location at some point during 2018.
Publix will be making its way into the area at the same time that Ahold is looking to sell 19 Martin’s Food Markets in the Richmond market. The decision to sell is a preemptive move by Ahold to try and gain approval for its proposed merger with Delhaize, which operates Food Lion stores in the area. While Publix prefers to pursue growth organically based on past history, several reports have suggested that the company may be considering a bid for some of the Martin’s properties to expedite its entry into the region.
According to the Washington Business Journal, Publix has hired a broker in northern Virginia to scout for locations in the region around the nation’s capital. As it migrates north from its Florida base into the Washington, DC area, Publix may find itself greeted by Wegmans, which has been expanding down the coast from its Rochester, NY home.
- Publix ‘looking aggressively to grow’ in Richmond market as it plans first store in Henrico – Richmond Times-Dispatch
- Martin’s reportedly selling its 19 stores in the Richmond area as part of merger – Richmond Times-Dispatch
- Publix making first push into Greater Washington – Washington Business Journal
Photo: Publix
Discussion Questions
How will Publix’s entry into Virginia affect the various grocery markets within the state? Do you think it is likely that Publix will pursue Martin’s as a means to move into Virginia more aggressively than originally planned?
Poll
BrainTrust
Dr. Stephen Needel
Managing Partner, Advanced Simulations
Adrian Weidmann
Managing Director, StoreStream Metrics, LLC
We asked the same questions when Publix moved into a crowded Atlanta market years ago. The bottom line — Winn-Dixie lost big time, Bruno’s few stores closed up shop, Harris-Teeter failed and Ingles has departed the metro area and become a rural chain. We would expect the same thing to happen in Virginia: Walmart, Publix, and Giant survive, Safeway loses, Food Lion loses where they compete with Giant and a Publix comes in.
Publix, my favorite grocery chain, is going into Virginia the same way they have expanded elsewhere. They are slowly and methodically moving north in to areas where they stand the best chance of succeeding. None of this buying out failing chains and trying to convert the area. If the existing location is strong and the footprint of the space acceptable, Publix will negotiate for the location. Their approach appears to be working successfully as they migrate up the coast.
First, Ahold would be CRAZY to sell off stores to a top notch operator like Publix who would be a difficult competitor. It would be like selling the hen house to the wolf. Ahold will want to sell to a competitor like Haggens that will flop. Too bad A&P is gone. Ahold should follow the example of Albertsons on the west coast and find a patsy. Publix is no patsy. Publix has purchased other grocers’ properties but not often.
I think Publix will take advantage of mediocre competitors in the Richmond area and grow organically.
Publix is a formidable player that will change the retail landscape in Virginia and maybe even further north. Publix did not invest in a huge distribution center in the Carolinas to stop at the Virginia border. Publix will continue its competition with Harris Teeters as well as the other major mid-Atlantic food retailers.
Although Publix’s expansion has tended to be accomplished via organic growth, its 2013 purchase of Bi-Lo stores in the Carolinas indicates its willingness to acquire locations in an effort to have significant market presence. While I do not foresee them purchasing all 19 Martins on the block, I do see them “cherry picking” the ones that fit Publix’s market profile.
Who would brave enough to buy the Martins stores knowing Publix is coming? Selling to Publix is not really an option because it was Publix that pretty much exterminated Delhaize-owned Food Lion and Sweet Bay right out of Florida. If Publix opens in Richmond, it will probably end up looking like Atlanta where you would have Publix and Kroger as the conventional competitors while all the rest tumble. The rest of the market would be filled in by Walmart, Target, Aldi, Whole Foods and other specialty stores. This is going to be happening in the Carolinas as well which is the reason Delhaize threw in the towel to join forces with Ahold.
Albertsons is in a buy anything mode and I would expect they will be interested in these stores. We can all guess how that will go. All those customers who were upset that Ahold destroyed Ukrops haven’t seen anything yet until they see a high priced, understaffed, no self checkout, and poor selection Albertsons or Safeway.