Publix Positions for the Future

Frozen and Refrigerated Buyer – While it grapples with how to translate its legendary customer service prowess to online shopping, the chain dips a toe in the loyalty card pool and debuts a new foodie-centric format.

Another day, another accolade for Publix Super Markets. The 1,220-store Lakeland, Fla.-based chain recently landed the top spot among grocers named to Newsweek’s 2019 America’s Best Customer Service list. Citing the “impersonal forces” currently transforming retail, the magazine’s editor-in-chief said it seemed like a good time to recognize ways in which companies like Publix nurture their relationships with customers through personal interaction. She added, however, “Analysts predict that by 2020, one-fifth of the country’s multi-trillion dollar retail business will have moved to the web, slashing the number of workers needed.” And therein lies one of the biggest challenges facing Publix as it moves into an increasingly digital future: how to translate a stellar in-store experience fueled by highly motivated, well-trained associates into a positive online experience as well? One thing’s for sure: It’s not gonna be easy.

Why? Publix recently entered into a partnership with Instacart to provide home delivery of online orders, completely eliminating any contact with store associates — the biggest thing that made the chain stand out. As a result, “Shopping online at Publix has been reduced to a more expensive alternative to shopping online at Walmart or Kroger,” says Don Stuart, managing director at Wilton, Conn.-based Cadent Consulting Group.

“It’s definitely not a long-term solution,” agrees another source close to the company, who believes the chain is still evaluating its options. In order to ensure an excellent experience, “The person who brings the order that last mile to the customer’s door should be a Publix associate. That’s part of the brand and shouldn’t be farmed out.”

Beyond that, says Hayley Howard, manager of business analytics at Cadent, “The company absolutely needs to find ways to personalize the online shopping experience or add value somehow in order to differentiate itself from other retailers.” Because right now, she says, its e-commerce

program is, at best, middle-of-the-pack.

“Just yesterday, I saw the first ad for BOPIS [buy online, pickup in store] from Publix,” reports Paula Rosenblum, co-founder and managing partner of Miami-based Retail Systems Research (RSR) and a regular Publix shopper. Honestly, though, “I think they hope customers don’t use it much.” Not only does it keep shoppers out of stores, “It’s also a real profit-killer,” she says. “But they’re working to keep it up.”

The good news for Publix is the company can afford to sacrifice some profit. While the best chains are operating on 1.5% profit lines, Publix is typically in the 4 to 4.5% range. “They may have to come to terms with a 3% bottom line instead,” says a source.

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