Publix Supermarkets’ Position in the US Market

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Introduction: Overview of the Current Position in the Market

George Jenkins was a successful manager, who did not feel appreciated enough at his workplace and decided to open his own grocery store. The time Jenkins chose was unfortunate due to the economic impact of the Great Depression. However, despite all the challenges, the first Publix store started working in 1930. Almost a century later, Jenkins’ enterprise has grown into a multibillion-dollar company. Hitt et al. (2017) note that “by the end of 2016, revenue surpassed $34 billion and Publix operated 1,136 supermarkets located primarily in the southeastern United States, with this number reaching 1,161 by November of 2017” (Publix Supermarkets, para. 3). The supermarket’s revenue as well as the growing number of stores put it in a very lucrative position on the market. Although the food industry has transformed drastically because of competitive pressure, Publix remains one of the market leaders. The other successful supermarkets, which can also be referred to as Publix’s primary competitors, include Kroger, Lidl, Whole Foods, and others. Still, Publix continues to expand and assert its dominance in the southeast region of the US.

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When it comes to the modern conditions of the market Publix operates in, it is important to identify the trends related to customer attitudes and behaviors. Firstly, it is crucial to acknowledge that Publix operates in a highly saturated market of Richmond. The 21st century has led to a rise in the number of alternative locations for grocery purchases, including farmer’s markets and online. Digitalization has affected the industry since millennials no longer want to go grocery shopping, opting out of making purchases on the Internet. Some companies even launched meal kit subscription services like Blue Apron and Plated, which keep growing in popularity. Finally, the last trend, which is important to discuss is American consumers’ sudden obsession with health and the environment. The 21st century requires all businesses to engage in socially responsible initiatives. It serves the purpose of showing the public Publix’s core principles and beliefs, which are integral for the customers to find a company that shares their values. Finally, millennials have become much more aware of their health and diet in particular. These preferences affect consumer behavior, the assessment of which is crucial in order to run a successful grocery enterprise.

Key Strengths and Value Proposition

The main strength of Publix Supermarkets is the high level of service the company provides to its customers. The motto of the store is “Where Shopping is a Pleasure,” which demonstrates just how much Publix management prides itself in facilitating a great shopping experience for every customer. It is important to mention that the company “has ranked number one among supermarkets on the American Consumer Satisfaction Index for 14 straight years” (Hitt et al., 2017, Publix Supermarkets, para. 4). The store implements a 10-second and 10-feet rule, which requires employees to acknowledge the customer’s arrival in a department. Since most customers leave a supermarket because of the attitude of indifference of its employees, rules like this help to make people coming to Publix feel more comfortable and ensure the store’s service meets their needs. Publix also does not have a loyalty program because the management believes every customer should be treated equally. By employing these operational strategies, the company manages to differentiate itself from the majority of competitors, which often focus on lower pricing. While customers are motivated by an opportunity to save money, they are often willing to pay more for a pleasant shopping experience, which is why Publix Supermarkets continuously expands and generates revenue.

The other strength that defines Publix’s long-term success is its engagement with the trends. The store offers grocery delivery through Instacart and has an Online Easy Ordering service. The company has also invested in meal kit and meal takeaway initiatives. For example, Publix’s “Apron” product line “includes recipes with shopping information tailored to the store, cooking classes offered in the store in several locations, and now pre-made meal kits available in several 5 Publix locations in Florida” (Hitt et al., 2017, Publix Supermarkets, para. 14). In addition to the mobile ordering service, Publix also employs an Information Systems team, which includes “more than 1,000 technical professionals dedicated to maximizing the value of our company through the application of information technology” to keep up with the latest technological advances in the industry (Publix Asset Management Company, 2020). Therefore, it is apparent that Publix ensures its operations keep up with the trends.

The store creates the best possible working conditions for its employees. Publix “boasts strong employee satisfaction, as it has been one of Fortune’s 100 Best Companies to Work for in America for 19 straight years” (Hitt et al., 2017, Publix Supermarkets, para. 4). High levels of employee satisfaction, in turn, lead to better performance, higher productivity, and more efficiency in the workplace, which is why it is crucial for Publix to invest in facilitating the best conditions for its workers. In addition, unlike any of the company’s major competitors, it is employee-owned. In addition to having a positive impact on employee retention, employee ownership can increase corporate profits by as much as 4% (Simmons, 2016). The employee ownership plan helps to keep Publix workers engaged while ensuring there are no unions that can potentially threaten the Publix mission.

Another competitive advantage of Publix Supermarkets is its commitment to sustainability. According to a 2017 Harris poll, Publix is “one of the most socially responsible companies in America, ranking second overall (right behind Wegman’s) and second among Millennials (just behind Tesla Motors)” (Hitt et al., 2017, Publix Supermarkets, para. 4). The store’s socially responsible initiatives are highly admirable due to the rising ethical and environmental concerns of the public.

In order to differentiate itself in the market, every business must have a unique selling point. Publix Supermarkets’ value proposition is its high level of customer service and pleasant shopping experience, which are a part of the company’s vision of sustainability, employment security, and innovation. In order to make such statements valid, a company needs to implement various initiatives that demonstrate its commitment. Publix does just that and has a strong organizational culture to ensure the store delivers on its promises. The company’s focus on putting people first, while remaining sustainable, is highly relevant to customers, which makes the value proposition compelling. Finally, providing the highest level of service for the lowest cost makes Publix stand out among its competitors. The company’s ethical stance on the environment also aids in differentiating it on the market.

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Porter’s Five Competitive Strategies

The main two sources of competitive advantage for any business are distinctiveness and the lowest cost. Therefore, in order for a company to succeed in a highly saturated environment, it has to implement effective strategies to ensure it can offer customers both of advantages. Publix remains one of the most profitable grocery stores in the nation, which implies the management’s skills in making the business stand out, while spending as little as possible. However, Publix is in danger of being ‘stuck in the middle” of differentiation and cost leadership if it stops improving. The store has an issue with pricing, which has been overshadowed by excellent customer service. However, as other customer-oriented businesses start to enter the market, Publix Supermarkets will have to innovate and engage in strategic alliances in order to remain competitive.

Tactics for Cost Leadership

Although the executives of Publix Supermarkets admit that they value customer experience over price, it is important for the store to cater to the consumers’ need to spend less. In order to ensure that Publix customers shop for the lowest prices, while enjoying the highest quality of service, Publix utilizes various tactics. Firstly, the company has its own distribution centers, which it relies on for the majority of goods sold at Publix stores. This helps the enterprise to save money, which is then allocated towards marketing, innovation, and sustainability efforts. While the first example focuses on the operational costs of Publix Supermarkets, the second tactic has more of a direct effect on prices at the stores. The supermarket offers numerous savings opportunities, including coupons. Since the company refuses to implement loyalty programs, Buy One-Get One promotions and digital coupons serve as substitution. It is evident that Publix wants to give people an opportunity to spend less without abandoning its core values, which imply that all customers should enjoy a high quality of service.

Tactics for Differentiation

Cost leadership is no longer enough in a hyper-competitive world of the 21st century. Businesses have to find innovative ways to differentiate themselves, which is why Publix employs various strategies to achieve distinctiveness among competition. The most important characteristic of the store is its commitment to ensure the highest quality of customer service. Publix Supermarkets is the company that focuses on enabling customers to have a pleasant experience just as much as selling groceries and general merchandise. The store’s employees “practice Publix’s 10-foot and 10-second rules, speaking to and smiling at everyone with 10 feet and greeting customers within the first 10 seconds of their arrival in a department” (Hitt et al., 2017, Publix Supermarkets, para. 7). Publix workers do not just point to the aisle when the customer cannot find an item, but get it for them. Publix Supermarkets also has predictive staffing software that helps to keep the lines short. In addition, the store’s employees are trained to help get customers’ groceries to their vehicle. Therefore, it is evident that Publix takes customer service to a different level, which positively impacts its brand recognition.

Another reason why Publix is effective at being distinctive among the competitors is the store’s focus on sustainability. “Publix Greenwise” is a house brand that allows customers to buy organic and ethically produced groceries. Outside all of the Publix stores, there are stations for recharging electric vehicles. Moreover, Publix Supermarkets offers curbside recycling and invests in creating environmental initiatives in the United States. Although such actions do not directly affect consumers (unlike prices), they show the ethical principles of the business. Moreover, customers are more prone to support companies that share the same values and contribute to the same causes.

Treacy’s Model and Proposed Strategies

Treacy’s model of value disciplines can help to identify the store’s weaknesses. Publix Supermarkets may succeed in product leadership and customer intimacy, but it fails in operational excellence. The company is unable to provide customers with the best total cost. Although differentiation is important, Publix executives refuse to optimize the business’ operations in order to ensure consumers are presented with the lowest possible price. Therefore, in order for Publix to remain successful and profitable, the company would have to implement grand strategies. One of the store’s primary objectives is expansion, which can only be achieved through combining offensive and defensive tactics. For example, Publix Supermarkets would benefit significantly from market penetration (engaging with a new demographic due to lower price points) and strategic alliances with meal delivery/takeaway services.

Conclusion

In conclusion, Publix Supermarkets is one of the most successful stores in the United States. Commitment to high-quality customer service, employment security, and sustainability gives the store an advantage against its rivals due to the company’s ability to differentiate itself. Although it dominates the southeast and mid-Atlantic region, further expansion would be a failure if the store’s operational model remained the same. In order to ensure a beneficial strategic position long-term, Publix executives have to focus their efforts on developing operational excellence in order to make the company more adaptable to new markets.

References

Hitt, M., Ireland, R. D., & Hoskisson, R. (2017). Strategic management: Concepts and cases: Competitiveness and globalization (12th ed.). Cengage.

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Publix Asset Management Company. (2020). Support areas: Information technologies. Publix Corporate. Web.

Simmons, J. (2016). Employee ownership can boost corporate profits. Wall Street Journal. Web.

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