Publix is the first thing that people miss when they move out of Florida. I am confident of this despite having no actual evidence beyond reports from friends. But it is no surprise that Forbes magazine has recognized Publix as the most profitable grocer in America, the largest employee-owned company, and sees the Publix formula one that can fend off Wal-Mart’s cornering of the grocer market.
As published Wednesday on Forbes.com and in print this August, Publix President Todd Jones is quoted saying, “We believe that there are three ways to differentiate: service, quality and price. You’ve got to be good at two of them, and the best at one. We make service our number one, then quality and then price.”
To Forbes columnist Brian Solomon, if this is a dig at Wal-Mart’s slogan “always low prices”, it is a subtle one — but with a direct retort in the numbers. With a 5.6% profit margin, Publix far exceeds that of Wal-Mart (3.8%), Kroger (1.6%) and Whole Foods (3.9%).
Publix’s employees and former employees are controlling shareholders with an 80% stake, worth $16.6 billion. The remaining shares are held by family of founder George Jenkins, worth $4.2 billion. None of them belong to a union, and Publix almost exclusively promotes from within. Employees who have been with the company for one year and have registered 1,000 work hours are given an additional 8.5% of their total pay in Publix stock, and the company grants shares of a store-specific bonus pool every 13 weeks, which typically amounts to 20% of quarterly profits of which 20% is paid out in cash to the store’s employees.
It appears from these policies that to make “shopping a pleasure” for customers, you start with staff investment first.
Solomon’s article continues to highlight the history of Publix, its expansion through the south, and how the grocer has made it difficult for competitors to enter Florida — though certainly they try.
As Wal-Mart and Publix go head to head with advertising blitzes, many of which involve direct comparisons to one another, Publix continues to play on its own terms.
“You can’t have the lowest price and do what we do,” says CEO Ed Crenshaw, who is Jenkins’ grandson and the fourth family member to run the company. “So we don’t tell our customers that we have the lowest price. What we do is say, ‘Wal-Mart doesn’t always have the lowest price.’ Shop with us and we’ll show you value on your entire basket. Some items will be lower in price, but in addition to that you’re going to get trained, knowledgeable people that care about you as a customer in a clean, safe environment.”
According to Forbes, Publix sales were up 6% last quarter and net earnings rose 15%. Solomon’s column is certainly worth a read in full.