PUBLIX PLAYS FAMILIAR TUNE IN NASHVILLE ENTRY

MARK HAMSTRA

NASHVILLE, Tenn. -- Publix is hoping that it has another hit when it enters the Music City this fall -- in fact, the Lakeland, Fla.-based company would like to perform a cover of the tune it wrote when it entered Atlanta 10 years ago.

In Atlanta, Publix became the No. 2 player behind Cincinnati-based Kroger by taking market share away from weaker chains and small independents, and analysts said the company has similar opportunities in Nashville after recently agreeing to buy seven shuttered Albertson's stores in the market.

"What you really have is a market that's not a whole lot different than Atlanta," said Andrew Wolf, analyst, BB&T Capital Markets, Richmond, Va. "You have Kroger with a big share, 30%-plus, and there's nobody in that next slot that's all that challenging."

Publix declined to discuss its strategy for the Nashville market, but a spokeswoman for the chain told the Nashville Business Journal that the company had plans to expand aggressively in the area, which is about 250 miles from its Atlanta distribution center. Included in the acquisition is a convenience store/fuel center, which a Publix spokesman told SN would be converted to the company's experimental Pix brand, currently in test in a handful of Florida locations.

Publix' expansion into Nashville is part of an ambitious strategy to add more than 340 stores in the next five years. The employee-owned company now has just over 700 stores in Florida, Georgia, South Carolina and Alabama.

Meanwhile, Publix has delayed the expansion of its PublixDirect online grocery-delivery service in the Orlando, Fla., and Atlanta markets, a Publix spokesman told SN last week. The company's online operations were originally scheduled to debut in Orlando by this spring and in Atlanta later this year. Lee Brunson, the Publix spokesman, declined to reveal when the company planned to expand PublixDirect in those markets. The company is handling about 5,000 orders per week in three counties in southern Florida, according to local media reports.

According to some accounts, Bentonville, Ark.-based Wal-Mart Stores has recently moved into the No. 2 food retailing spot in Nashville behind Kroger, followed by Food Lion and H.G. Hill, a local chain with 21 outlets. Other chains with stores in the market include Bi-Lo and Harris Teeter.

Wolf said he thought Publix would be able to compete effectively by taking share away from independents and chains other than Kroger.

"With what they offer and the way they do their merchandising, there's a lot of market share to be taken away without having to antagonize Kroger," he said.

Some of those independents said they won't give in without a fight, however.

"We have to be proactive and give customers what they want," said Scott Means, president, S&C Foods, Nashville, which owns nine of the H.G. Hill stores in the market. "We've got the name recognition. It's up to us to keep that market share."

He noted that the H.G. Hill brand has been in the Nashville market for 107 years. To be competitive, he said his stores tend to be small -- about 30,000 square feet -- and they cater to individual neighborhoods and get involved in local community events.

He pointed out that both Bruno's and Albertson's failed to retain a presence in the Nashville market.

The United Food and Commercial Workers union won't be laying out the welcome mat for Publix either.

"We're certainly not happy Publix is coming to town," said Jeff Francis, secretary-treasurer of the UFCW Local 1995 here. "We'd just as soon they stayed in Florida."

Publix told the local media that it planned to remain a nonunion employer in Nashville, as it has in each of the other markets in which it operates, despite efforts by the UFCW to organize its stores.

Francis declined to provide details about his strategy for attempting to unionize the Publix stores in Nashville, but he did say that actions could include addressing both store workers and the public at large.

"We could inform the public that by supporting or shopping at Publix, you'd be supporting a company that doesn't treat its workers fairly," he said. "We will set up picket lines to discourage shoppers, to inform shoppers of the many problems and concerns that Publix has had, both in Florida and everywhere that they've operated."

He said the union would remind consumers in the Nashville market about Publix's previous brushes with the Equal Employment Opportunity Commission. In 1997, Publix agreed to settle a lawsuit for $81.5 million alleging that it deliberately kept women in low-paying jobs without opportunities for advancement. It later settled a similar suit filed by African-American workers.

Meanwhile, Publix has shaken up its store-level bonus structure, which some observers have indicated could be a way for the company to provide higher potential pay for women and minorities. According to reports, Publix will continue to allocate the same amount of bonus money per store, but some departments will receive lower bonuses while others will have the potential to receive higher bonuses.

According to a report in the South Florida Business Journal, front-end managers, bakery managers and assistant store managers all will have the potential to earn higher bonuses, while managers in the meat and produce departments will have their potential bonuses reduced. The changes will begin in the fourth quarter.

Publix could not be reached for comment on the new bonus program.