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VOL. 35 | NO. 2 | Friday, January 14, 2011

Publix finds Midstate success

By Joe Morris

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Almost nine years into its Middle Tennessee launch, Publix Super Markets Inc. is finding the Midstate a good place to be.

Publix arrived here when it purchased seven closed Albertson’s stores in mid-2002, coyly stating it didn’t plan to stay small in the market and would be aggressively pursuing new locations.

The Lakeland, Fla.-based chain saw plenty of opportunity here, though, in a market dominated by a single chain, Kroger, with around $2 billion in annual sales. By comparison, it took Publix only eight years to pull even with Kroger in the Atlanta market in terms of market share.

The chain has now grown to 26 stores in the Middle Tennessee region, with at least two more set to open this year and more being planned. Kroger, meanwhile, has 62 stores in the same general market. Harris-Teeter, which entered the Nashville market in 1997 with its Brentwood location, has grown to five stores, while Wal-Mart has placed 20 of its supercenters and neighborhood stores within 20 miles of downtown during the same timeframe.

“Nashville has been a very good growth market for us,” says Brenda Reid, media and community relations manager for Publix. “We had a strategy going in where we wanted to become the supermarket of choice, and so we are planning to continue to grow.”

A Fairview location is set to open by March 2011, and a lease has been signed in Clarksville with opening scheduled for May. Reid says Publix will only comment on sites that are confirmed, but did indicate the chain is expanding.

“We’re very strategic about where we place stores,” she says. “When we look at new sites, we’re looking at where the customers would be coming from, and we’re looking at the growth pattern of the market so we can determine how we can serve those future customers.

“We like to go into communities under development or renovation so we can find those customers looking to develop a relationship with a supermarket.”

Like Publix, neither Wal-Mart nor Harris-Teeter will discuss expansion unless a location is secured, but industry analysts say that Wal-Mart will continue growth in a market as long as its centers are meeting company expectations. Harris-Teeter’s Nashville-area stores are doing well, but there are no expansion plans for 2011 or 2012, says Catherine Reuhl, communications specialist for the chain.

Publix’ ability to grow in a tough economy is indicative of its strong customer-service push, and how that translates very quickly into buyer loyalty, says Phil Lempert, chief executive officer of The Lempert Report and SupermarketGuru.com.

“Publix is focused on the shopper’s needs and is brilliant in executing,” he says. “In Atlanta, they faced off against Kroger and built better, cleaner, fresher and [more] friendly stores, and have done well.”

Lempert predicts Publix will continue to infill where “a more upscale and more educated shopper resides, [someone] who cares a bit more than average about the quality of their foods and wants excellent customer service. They are terrific supermarketers who have built their business with a laserlike focus on meeting the shoppers’ needs, even before they have those needs.”

One area lobbying hard for a Publix is East Nashville. Denizens and bloggers in the 37206 and 37216 areas have been avidly following the various moves of local commercial realtors and Metro Council members to amend, upgrade or even suspend parts of the Gallatin Pike Specific Plan that have proven to be stumbling blocks for those looking to woo Publix into the area so far.

Although the area is served by two Kroger stores and a Wal-Mart Neighborhood Market, the listserv pro-con Publix debate rages on.

For its part, however, Publix has remained silent. But that doesn’t mean it isn’t watching with interest, especially given that residents have been vocal in their dissatisfaction with Kroger stores in that area, notes analyst David Livingston of Wisconsin-based DJL Research.

“Publix is one of the most feared competitors,” Livingston says. “Despite an onslaught of Wal-Mart, Publix has grown more than ever. Being employee owned, they tend to hire the best and most motivated employees. They can’t and won’t compete on price, but rather on good locations and customer service.”

Livingston says even areas in which Kroger or other competitors are doing well are seen as opportunities by Publix.

“They go to densely populated areas where the surrounding competitors have higher than market average per sales-per-square-foot levels,” he says. “They will target the highest volume Kroger stores because the more volume Kroger is doing, the more Publix can steal from them.

Publix’ Reid is quick to dismiss growth comparisons to Atlanta, where the chain now has 150 stores in the Metro area. But at the same time, she says that the Nashville-area market is far from tapped out.

“Our growth in Middle Tennessee has been aggressive like Atlanta, and also like Birmingham,” Reid said. “It’s really based on the opportunities that are available to us. There’s no cap on the market; we grow based on need, and based on the growth of the metro area. As long as Nashville is growing, we hope to continue to grow with it.”

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