LAKELAND, Fla. -- Publix Super Markets is doing more than just whistling "Dixie" as it continues its march north from Florida.
The giant chain, which spent its first 62 years becoming a dominant factor in the Sunshine State, is bursting out of its Florida base here with a vengeance.
Now, with 23 stores outside its home state -- 22 in Georgia and one in South Carolina -- Publix is committed to becoming a dominant player in the Southeast. The chain has plans to open as many as 200 stores in Georgia and the Carolinas by the end of the decade,
regional sources told SN. The chain may also be considering expansion into Alabama, sources added.
Publix is the nation's seventh largest supermarket chain -- and the largest privately held retailer -- operating 432 stores, with a volume of $6.7 billion.
To affirm its optimism and long-term commitment to its expansion program, Publix is building a 3 million-square-foot distribution center in Lawrenceville, Ga., north of Atlanta. When it opens next year, the complex will include 640,000 square feet for groceries, plus the chain's third dairy processing plant and its second ice cream manufacturing facility.
"That distribution center makes it clear that Publix intends to be a major player in the Southeast," an Atlanta-based observer said.
"Publix is in a strong cash position, and its management feels there are opportunities north of Florida to take advantage of, and the sooner they can do it, the better off they will be," another observer declared.
At Publix, Howard Jenkins, chairman and chief executive officer, and other officials declined to comment for this story.
As it spreads out, Publix is counting on good reception to its combination stores -- called Publix Food & Pharmacy -- that typically run 45,000 square feet, although they can be bigger: The store in Charleston, S.C., is 65,000 square feet.
The stores project the typical Publix image of service and variety that helped the store rate No. 1 in customer satisfaction last fall in a national supermarket survey by Consumer Reports magazine.
The stores operate with in-store pharmacies, cosmetics sections and expanded perishables departments. All feature "animation" areas -- locations where specialists perform their craft in view of consumers. Animation exists in the in-store bakeries, the glassed-in meatcutting rooms and the prepared foods counters. Publix's first major area for expansion has been Georgia, Atlanta in particular. Of the chain's Georgia stores, 13 are in the Atlanta metropolitan area. Publix is scheduled to open the 22nd unit in the state today in Thomasville, just north of the Florida border. As Publix expands, its primary goal in Georgia, local sources indicate, is to grab 20% to 25% of the state's market share.
In metropolitan Atlanta, Kroger is said to control about a 40% share of the market. Other big market share players include Winn-Dixie Stores, A&P and Supervalu (including Cub Foods). Publix's market share is now estimated at almost 3%.
Kroger, already a well-established force in Atlanta, has plans for up to 25 more Atlanta-area stores over the next few years. Another operator, Harris Teeter, based in Charlotte, N.C., entered the Atlanta market late last year and is expected to provide another big challenge to Publix. Publix faces a big marketing hurdle in Atlanta. Like Publix
both Kroger and Harris Teeter stress service and quality perishables. However, both offer more marketing excitement than Publix, according to Fred Allvine, a former retailer who is now professor of marketing at Georgia Institute of Technology School of Management, Atlanta.
"Publix has as much great merchandise but its stores don't seem to have what it takes to penetrate the market the way Publix says it intends to," Allvine explained.
"Publix does a fine job in Florida, but I don't see any real pizzazz in its Atlanta operation that Atlanta doesn't already have with Kroger. And the new Harris Teeter stores seem to elevate grocery shopping to a higher plane with a much more attractive package."
According to one Atlanta-area retailer, "Publix believes its formula will be so successful that it can take it into several areas and stamp out success. But it won't be that easy. It's never easy in this business to take share away from competition."
Other observers predict Publix has a good chance to meet its market-share expectations in Atlanta and Georgia within four or five years, based on initial sales results.
Store volumes in Georgia are reportedly running about $650,000 to $800,000 a week, "and with that kind of volume, I can see them reaching their goal of 20% to 25% of the state's volume," a trade observer said.
While Publix's forays into Atlanta and the Southeast as a whole rest partly on the stores' strong image for service and variety, Publix is also trying to compete on price.
"For a while Publix was running ads heavy on national brands in the Atlanta market," a competitor pointed out. "But as the store count has grown, it's been leaning more toward private-label ad features."
Not surprisingly, the winners of the big battle in Atlanta may be consumers, who are getting lower prices because of the heated competition.
"Kroger won't allow Publix to beat it, so they're becoming more aggressive," one observer said.
To maintain its customer base, Kroger has offered triple coupons at certain locations. In addition, it has launched a "free food giveaway" in which shoppers can have a special card stamped once a week. Cards stamped in 13 of 17 weeks will receive $25 worth of free groceries in the 18th week.
"Kroger knows it will lose some customers to Publix in any given week, but the carrot it's dangling allows its customers to shop Publix but to come back to Kroger for the next 12 weeks," an observer explained.
Winn-Dixie historically has maintained a solid market share in the area and, with its everyday-low-pricing program, "it will continue to do so because it has excellent customer loyalty and is less likely than anyone else to lose it," the observer added.
"But while Kroger has responded aggressively to Publix's arrival with giveaway programs and Winn-Dixie has maintained its business with EDLP, A&P has not done anything beyond the norm, and that's likely to hurt them in the long run."
According to another observer, Kroger offers service and variety similar to Publix in Atlanta, while Cub is the price leader, "and anyone in the middle may be a loser if he hasn't already defined his niche. But a pure price operator can survive."
In the Carolinas, Publix has started its growth plan in South Carolina. In its single location in that state, Publix operates the largest store in town -- a 65,000-square-foot edifice that opened in the Mount Pleasant area of Charleston last Thanksgiving.
Publix plans to open at least four more locations in upscale areas of South Carolina by the year's end -- two more in Charleston plus single units in Hilton Head and Columbia.
According to local observers, sales were running about $700,000 a week during the first few weeks of operation in Charleston -- "an enormous volume for this part of the world," a competitor said admiringly.
Since then, weekly sales have reportedly leveled off at about $500,000, he added.
In Charleston, the various operators are reinforcing what each does best, with Bi-Lo competing on price and perishables, Food Lion on price and convenience, Harris Teeter on service and quality perishables, Winn-Dixie on price and meat, and Piggly Wiggly on customer service -- plus a double-coupon program it launched when Publix opened.
"But this is still a brand-new game," one Charleston operator told SN, "so it's still too early to define positions."
With two more Publix stores planned for Charleston later this year, the question arises: Can Charleston support three Publix locations?
"The Charleston area is already overstored, and the small guy is going to get hurt," one competitor said. "The small guy in Charleston is Piggly Wiggly."
According to another competitor, "No market is growing rapidly enough to absorb that kind of increase in store density."
Plans for North Carolina are "sketchy," according to a competitor. Publix reportedly identified three potential store sites late last year in Charlotte, "but they've apparently held off signing the papers," he said.
"However, it's not a question of if but when they move into North Carolina."
Few observers expect Publix to move farther north than North Carolina for the foreseeable future. "Logistically it would be tough, with a distribution center in northern Atlanta, to get beyond North Carolina into Virginia," said one local source. "And there are no major markets in southern Virginia within easy striking distance."