For Floridians, Publix is a household name. The grocery chain started in 1940 in the state, evoking loyalty and devotion from consumers who appreciate its promise that in its stores, “shopping is a pleasure.” Competitors thus have no choice but to find a way to contend with its dominance, and many of them are failing, even as Publix seeks to expand its reach beyond the southeastern United States.
Consider some current battles. Just two years after attempting a limited foray, California-based Safeway has announced plans to exit the state, marking down its products so that it can clear stores of inventory. Despite its power throughout much of the rest of the nation—it has a dominant presence in 30 states beyond its initial locations in Ohio—Kroger has never even tried to open stores in Florida. Winn-Dixie continues to seek a competitive edge by investing in store upgrades and renovations, though its parent company also has shifted its focus to opening different store formats that cater specifically to Hispanic shoppers.
In the meantime, Publix just keeps getting stronger. With approximately 1,200 stores in 6 states, it continues to post increases in its sales figures and stock prices. To explain its success, the chain cites its close relationships, both between the firm and its employees and between its employees and its customers. Its status in Florida also is so secure that competitive grocers need to offer something distinctive to attract shoppers.
Accordingly, rather than open Kroger stores, the parent company has invested in opening Lucky’s Market locations, which sell organic and healthy options at lower prices, targeting millennial foodies. Fresco y Mas, a subbrand of the company that also owns Winn-Dixie, stocks foods familiar to Hispanic consumers, promising a wider selection for this targeted cohort.
These moves may prove effective, but perhaps the greatest challenge to Publix will come a few years in the future, from a firm that enjoys a competitive advantage similar to its own, just in a different region. That is, New York’s Wegman’s supermarkets evoke powerful customer loyalty and rely on strong relationships between employees and customers. Furthermore, it too is seeking to expand outside its home state. At some point in the future, the two chains might find themselves meeting in the middle, as one extends northward and the other moves farther south. What will customers choose then?
Discussion Questions:
- How do local retailers such as Publix establish customer loyalty and leverage it?
- How can other retail chains compete to over come this advantage?
- What happens to the advantages of such retailers when they expand into other geographic locations?
Source: Sara Dinatale, Tampa Bay Times, August 19, 2018