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Journal of Business Case Studies – Fourth Quarter 2007

Volume 3, Number 4

A Retailer‘s Steady Growth Strategy: Should Publix Stay National Or Go Global? Bahaudin G. Mujtaba, (E-mail: Mujtaba@nova.edu), Nova Southeastern University Erica Franklin, (E-mail: efrankl@nova.edu), Nova Southeastern University

ABSTRACT Publix Super Markets, Inc. is a Florida-based grocery chain which has over 120,000 employees and annual sales in 2005 of $20.7 billion. Presently, Publix serves over one million customers every day and is one of the largest employee-owned companies in the world. Publix is one of Florida’s premier supermarkets and has responded to most cultural trends in the grocery market-organic foods; natural foods, health foods, ethnic ingredients, prepared meals, etc. Publix has enjoyed great success in the grocery industry and has expanded in many states. With the advent of globalization affecting almost every industry, the supermarket/food retailing industry has joined the trend. Domestic and international food retailers across the globe have begun to internationalize at a rapid rate and open operations around the world. However, as you will see, the growth of supermarket chains beyond their home countries has been done mostly by European and Asian companies. With the exception of Wal-Mart, few U.S. food retailers have expanded abroad. Currently there are no plans for Publix to expand internationally but this case seeks to examine the possibilities of Publix making a step toward going abroad and highlights the various factors in the global environment that may directly or indirectly affect the company.

INTRODUCTION

A

s of August 2006, Publix was operating 833 stores. Publix operates 642 stores in Florida, 164 stores in Georgia, 37 stores in South Carolina, 27 stores in Alabama, and 13 stores in Tennessee. Publix carries items ranging from food products to personal care and household goods. The company also has their own line of private label goods that span the same spectrum. To better cater to their market and expand operations, Publix has also created new concept stores for its different target markets, Greenwise and Publix Sabor. The Greenwise store features organic produce and natural foods; Publix Sabor caters to the large Latin-American population in Central and South Florida and carries food products highly-demanded by these consumer. Publix has also moved into the restaurant business through their equity investment in Crispers, the fresh salad and sandwich meal concept-restaurant. In addition to the restaurant subsidiary, Publix Supermarkets Inc., also owns seven other subsidiaries: 1) Publix Alabama, LLC; 2) PublixDirect, LLC; 3) Publix Asset Management Company; 4) Publix Tennessee, LLC; 5) Real Sub, LLC; 6) Lone Palm Golf Club, LLC; and 7) PTO, LLC. In 2001, Publix began online operations for its consumers for home delivery of groceries. However, its Broward County, FL and surrounding areas pilot programs failed to meet revenue and profit goals; so Publix Direct discontinued operations in August 2003 just short of two years after it was launched. The core of Publix‘s operations is the belief in doing everything for the customer. The company holds a superior belief that success lies in customer value and employee appreciation. They developed a policy of Customer Intimacy, which means that their guests need an intimate, professional, thorough, consistent, and disciplined method of serving customers that has become a normal way of doing business. See Table 1 for an evolution of Publix‘s growth since its inception. COMPANY EARNINGS In terms of financial success, in some years, Publix has outperformed the S&P 500 Index and the customer Peer Group Index with regards to return on investment. The Peer Group includes A&P, Albertson‘s, American Stores, Bruno‘s, Food Lion, Giant Foods, Hannaford Bros., Kroger, Safeway, Smith‘s Food & Drug, Weis Markets, and Winn23

Journal of Business Case Studies – Fourth...
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