Publix Porter's Five Forces Analysis
Publix Super Markets, more commonly known as Publix was founded in 1930 by George W. Jenkins. The grocery chain is an employee owned, privately held company. In 2009, Publix was ranked ninth on Forbes's list of America’s largest private companies and number 99 on the Fortune 500 list of all U.S companies for 2010. Publix operates in five states in the southeast, Florida, Georgia, South Carolina, Tennessee and Alabama, with its headquarters in Lakeland, Florida. The company employs over 140,500 people between its 1,023 retail locations.They also have cooking schools, event planning locations, corporate offices, eight grocery distribution centers, and nine Publix brand manufacturing facilities. Among the grocery stores, Publix owns Sabor grocery
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The threat of new substitutes include smaller health food stores, (such as Whole Foods, Earthfare, Trader Joe’s) the larger wholesale stores, (such as Walmart, Costco, and Target) farmers markets, and restaurants. There is high amount of rivalry for Publix because they are large and few in numbers, they have high fixed costs, they have low switching costs, their brand identity is strong, they have high exit barriers, and the industry growth is in the mature stage meaning that new rivals will have a hard time entering the market. The barriers to new entry include high capital intensity, the existence of solid brands, high customer loyalty, the ability to sell their own brand of items, (which means the economies of scale are high) the Food and Drug Administration monitors the supermarkets with immense scrutiny, and the relationships with the suppliers are already very strong with the existing firms. Suppliers have high power in relation to setting price and setting quality. They can also determine what the grocery store can carry. Other factors determining supplier power include, that vast quantity of suppliers making supplier power low. The produce suppliers offer similar products also making supplier power low, and depending on the nature of the product, switching costs can be high. There is also a threat of forward integration because they would lack product variety, but on a small scale. The buyer power that exists is high. The factors include low switching costs to buyers, (which gives them more power because if a product costs too much, they can easily go elsewhere) low threat of backward integration because it is unlikely that a person will open a chain of grocery stores, products are undifferentiated giving the buyers power, buyers are large in number and have little power individually, and the
The threat of new substitutes include smaller health food stores, (such as Whole Foods, Earthfare, Trader Joe’s) the larger wholesale stores, (such as Walmart, Costco, and Target) farmers markets, and restaurants. There is high amount of rivalry for Publix because they are large and few in numbers, they have high fixed costs, they have low switching costs, their brand identity is strong, they have high exit barriers, and the industry growth is in the mature stage meaning that new rivals will have a hard time entering the market. The barriers to new entry include high capital intensity, the existence of solid brands, high customer loyalty, the ability to sell their own brand of items, (which means the economies of scale are high) the Food and Drug Administration monitors the supermarkets with immense scrutiny, and the relationships with the suppliers are already very strong with the existing firms. Suppliers have high power in relation to setting price and setting quality. They can also determine what the grocery store can carry. Other factors determining supplier power include, that vast quantity of suppliers making supplier power low. The produce suppliers offer similar products also making supplier power low, and depending on the nature of the product, switching costs can be high. There is also a threat of forward integration because they would lack product variety, but on a small scale. The buyer power that exists is high. The factors include low switching costs to buyers, (which gives them more power because if a product costs too much, they can easily go elsewhere) low threat of backward integration because it is unlikely that a person will open a chain of grocery stores, products are undifferentiated giving the buyers power, buyers are large in number and have little power individually, and the