The Five Secrets of Publix Supermarkets' Success

(MoneyWatch)  In the crowded, complicated, low-margin world of supermarket retail, $23 billion Publix Supermarkets Inc. stands out. Warren Thayer takes a look at "Why Publix Is So Darn Good" in the September issue of Refrigerated and Frozen Foods Retailer, and in the process offers a list of best practices that other retailers would do well to study.

• Sweat the small stuff. In terms of customer satisfaction, Publix ranks as the best supermarket in the country with an 83 out of 100 on the National Quality Research Center?€?s annual index. "Being able to run stores that are pleasant to shop isn?€?t easy," says Ken Harris, managing director of Cannondale Associates. "These are fundamental things they've been able to master. They do so many little things incredibly well that it builds into a store experience, and that makes people enamored of Publix."
• More and better-trained employees. "I think they have more full timers than the industry average, which means better commitment and knowledge," an observer tells Thayer. "In a soft economy, I don't see them moving away from this because, like Wegmans, it is part of the culture. They may have to focus a little more on price, but they have good perimeters and will find a way to maintain margins." In 2007, 48.2 percent of Publix?€?s 141,000 employees were full-time.
• Firm, fair, and consistent vendor relations. "They're honorable, and they have the supply chain mechanics to execute on merchandising programs," says Harris, whose firm ranks Publix in the top five retailers with which to do business. "The buying teams are not just good at procurement -- they're thoughtful and creative, and willing to work on innovative programs. Manufacturers we work with consistently say it takes a long time to figure out how to work within the Publix system, but once you get it down, at least things become more routinized."
• Top-notch private label programs that reinforce the brand. Spokeswoman Marie Brous says: "Within the last four years we removed all the noise from the packaging and have found our niche with our consumers -- clean, defined packaging meant to engage our customers with clever sayings where appropriate. Our packaging now stands out on the shelves as opposed to blending in. It's clean, crisp, clever marketing."
• Smart risk-taking. Publix ventured out of its Florida base in 1991 and now operates nearly 30 percent of its 937 stores in Georgia, South Carolina, Alabama, and Tennessee. It has ventured into alternative formats, including the Sabor Hispanic market format, an organic/natural store called GreenWise, and in-store meal preparation centers called Aprons.
• Good corporate culture. According to Gene Hoffman, former president of Kroger and Supervalu, "[Founder George] Jenkins understood that the great difficulty for a retailer is first to win a good reputation; the next to keep it strong while you live; and the next to preserve it after you die. George set deep seeds and they continue to grow very strong today."