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Customer Relationship Management of Publix -
January 19th, 2011
Publix Super Markets, Inc. (commonly known as Publix) is an American supermarket chain based in Lakeland, Florida.
Founded in 1930 by George W. Jenkins, it is an employee-owned, privately held corporation. Publix is currently ranked No. 86 on Fortune magazine's list of 100 Best Companies to Work For 2010 and was ranked No. 9 on Forbes' 2009 list of America's Largest Private Companies and is the largest in Florida. The company's 2009 sales totaled US$24.3 billion, with profits of over $1.2 billion, ranking #99 on Fortune magazine's Fortune 500 list of U.S. companies for 2010. Supermarket News ranked Publix No. 7 in the 2009 "Top 75 North American Food Retailers" based on 2008 fiscal year sales. Based on 2006 revenue, Publix is the fifteenth-largest retailer in the United States. Publix's current stock price is $19.85 per share though it is privately held and not available to the public.
Publix has operations in five states: Florida, Georgia, South Carolina, Tennessee, and Alabama. It employs over 140,500 people at its 1,023 retail locations, cooking schools, corporate offices, eight grocery distribution centers, and nine Publix brand manufacturing facilities. The manufacturing facilities produce its dairy, deli, bakery, and other food products. In addition, Publix owns Crispers, a chain of restaurants in Florida specializing in salads; some Crispers locations are adjacent or built into the already existing deli department in select Publix Super Markets.
Publix stands as one of the largest regional grocery chains in the United States. Its main competitors are national grocery chains IGA, Kroger, SuperValu,and Whole Foods; consolidated retail and warehouse chains, including Wal-Mart, Target, Kmart, Costco, Sam's Club and BJ's Wholesale Club; and several regional grocery chains, including BI-LO, Fresh Market, Piggly Wiggly, Sweetbay, Winn-Dixie and Ingles.
Publix's slogan is "Where Shopping is a Pleasure".
Publix Super Markets Inc. stands as one of the top seven chains of supermarkets in the United States as measured by sales volume and number of stores. It is the largest employee-owned supermarket; its current and former employees own about 85 percent of the business. The rest of the company is owned by its officers and directors, many of whom are members of the Jenkins family. Most of the chain's more than 600 stores are in Florida, but the company also does business in Georgia, Alabama, and South Carolina.
A Commitment to Service During the Great Depression
Publix was founded in 1930 by George W. Jenkins, the son of a rural Georgia grocer. Jenkins moved to Winter Haven, Florida, in 1927 and took a job as a stock clerk at the local Piggly Wiggly. He became the store's manager six weeks later at the age of 17. At 20, he borrowed less than $2,000 and started his own 27-by-65-foot grocery store across the street with five employees. The store earned $500 its first year, in the midst of the Great Depression. By 1935, Jenkins owned five stores.
Jenkins was one of the first in the grocery business to stress customer service and high-quality goods. While most of his competitors focused on price and productivity, the signs on the front of the Publix store read, 'Where shopping is a pleasure,' reflecting the firm's early belief in the importance of customer satisfaction. Jenkins also stressed employee satisfaction, promoting almost entirely from within, and giving his workers a large amount of control over the section of the store in which they worked.
By 1940, Jenkins had an additional 18 Publix stores, some of which he acquired from the small All-American chain in 1939. In 1940, Jenkins also opened his first supermarket, an 11,000-square-foot space with a paved parking lot, air conditioning, wide aisles, electric doors, and frozen-food cases. The aesthetics and features of Jenkins's superstore were unusual for American grocery stores during the Depression, reflecting the founder's attempt to make shopping an enjoyable experience. By 1950, 22 Publix supermarkets had been opened, with total chain sales of $12.1 million.
In 1949, R. William Schroter stepped in to head up Publix's own one-person advertising department, employing local freelancers. The department eventually grew into the W.M. Zemp & Associates advertising firm in St. Petersburg. Publix advertised heavily in newspapers, but avoided the weekly circulars used by many supermarkets.
In the early 1950s, Publix began giving out S & H Green Stamps, handing shoppers a fixed number of stamps per dollar spent, which they could then redeem for discounted merchandise. The resulting sales increase far exceeded the cost of the stamp program, and Publix quickly became the largest vendor of S & H stamps in the country. Jenkins liked the stamps because he believed that they encouraged store loyalty as well as thrifty habits. In the late 1950s, Publix began to sell stock to its employees.
Steady Growth Throughout the 1960s and 1970s
Publix's success in less developed parts of Florida encouraged Jenkins to move into the lucrative, but highly competitive, Miami market in 1959. In 1963, the firm opened a warehouse to service the growing number of supermarkets it was opening there. The state of Florida itself contributed to the chain's expansion as it became one of the fastest-growing states in the country. Fueled partly by its move to Miami, Publix grew to 114 stores in 1965, with sales of $262.9 million, and 157 stores, with sales of $465.7 million in 1970. In 1974, the firm opened a 200,000-square-foot warehouse in Jacksonville to supply Publix stores between Jacksonville and Tallahassee.
Publix management kept a careful eye on lifestyle trends. By 1966, as more women began to work and more people remained single, stores shifted from one small frozen-food display case to large, upright cases with glass doors. Frozen-food sales continued to grow, and Publix added more freezers and devoted more attention to their stocking, keeping brand name products together rather than sorting by food type. The firm identified and responded to food trends such as yogurt and frozen pizza earlier than most of its rivals. In setting up shelves, dairy cases, and freezers, it was careful to keep ease of shopping its top priority, while also displaying high-margin items at eye level and making certain that products were arranged in a way that facilitated quick restocking.
In the early 1970s, with a wave of discount stores taking hold in Florida, Publix opened its own discount chain called Food World. In 1976, Publix introduced in-store photofinishing, giving away a roll of film or an extra set of prints with each roll it developed. Within ten years, the firm accounted for 12 percent of the total photofinishing business in its marketing area and had 24 discount stores.
In 1979, the company reached nearly $2 billion in sales and had 234 stores and 26,000 employees. It was the 11th largest chain in national sales and had an after-tax net averaging 1.7 percent, far ahead of most of its rivals. Publix was the leading grocery chain in Daytona Beach, Palm Beach, and St. Petersburg, where it had 30.6 percent of the market. It was the second largest chain in the Miami area, with 26 percent of the market. All Publix stores were similar inside and had in-store delis and bakeries. Publix supermarkets also took advantage of technology, using the second largest number of price scanners of any business in the United States.
Publix's skilled marketing and use of up-to-date technology had contributed to its success, but so had the stability of its workforce. The firm had never experienced a strike, lockout, or layoff; it had the lowest employee turnover of any large chain. This was attributed to employment policies that included a profit-sharing plan that distributed 20 percent of net profits at each store to that store's full-time workers; a retirement plan funded by 15 percent of pre-tax profits; and the policy of promoting from within the company. Employees were also given more responsibility than at most large chains.
The Move to Superstores in the 1980s
By 1980, Publix had a strong presence throughout the state of Florida, with the exception of the panhandle. Its operations were divided into three divisions: the Jacksonville division, which covered the northern third of the state; the Miami division, which covered the eastern coast south of Brevard County; and the Lakeland division, which covered the rest of the state. The company headquarters were located in Lakeland, where a 425,000-square-foot grocery warehouse stored a three-week supply of goods.
Publix spent about 0.75 percent of sales on advertising, amounting to about $15 million in 1980. Newspaper ads accounted for 68 percent of the advertising budget, television 24 percent, and radio, which aimed to reach younger Floridians, five percent. In-store merchandising displays, accounting for the remainder, were highly theatrical and changed weekly. They were created by employees without direction from the Publix central office since Jenkins believed that store managers best knew what would work in their own territories.
The 1980s brought considerable change to Publix. One of the first changes was automatic teller machines, which Publix began installing before many banks did. The firm was also the first supermarket chain to install bar-code scanners in every store. Jenkins had always refused to open his stores on Sunday, but in 1982, losing market share to stores that did, he relented. In 1984, Joe Blanton, who had been president for ten years, died, and was replaced by Mark Hollis. Hollis began with Publix in 1946 as a bag boy at age 12 and had worked as a stock clerk and a produce and store manager. In 1985, all but three of the discount Food Worlds were closed, unable to give workers a percentage of their store's profits and turn a profit for Publix. Sales for the entire chain in 1985 reached $3.2 billion, up from $2.8 billion in 1983, making Publix the ninth largest grocery chain by sales.
Superstores, with 30,000 square feet or more, were another 1980s innovation. After competitors successfully began to rely upon them, Publix began opening its own superstores of up to 39,000 square feet each. Most were located in shopping malls where customers could shop for goods other than food as well. In the 1980s, when Publix's competitors opened combination stores where customers could fill prescriptions in addition to buying groceries, Publix followed suit, opening its first combination store in Orlando in 1986. The 55,000-square-foot, upscale space combined a grocery store with gourmet food and deli and bakery sections, as well as hardware and toy departments and the firm's first pharmacy. The combination stores included a one-hour photo department, a counter where cameras and small electronics were sold, and an expanded cosmetics, health, and beauty aids section. The stores were intended to appeal to younger, professional, two-income families, and their sites were carefully selected with an eye on demographics. Publix quickly opened two more Publix Food & Pharmacy stores in Tampa, one in Tamarac, near Fort Lauderdale, and three more in other parts of Florida. The firm also remodeled and expanded old supermarkets and opened new ones. Publix opened 28 stores in 1986 and more than 30 in 1987, often choosing sites in advance of Florida's population explosion.
A String of Legal Woes in the 1990s
To help support these new stores, Publix doubled the size of the Lakeland warehouse to 440,000 square feet, and planned a 660,000-square-foot perishables warehouse near Fort Lauderdale. To increase flexibility in merchandising and marketing, Publix dropped S & H Green Stamps in the Lakeland and Jacksonville divisions in June 1987. In 1989, Publix again tried a new technology when it began moving toward automatic checkout machines with machines that allowed customers to scan their own groceries, then pay a central cashier.
In January 1990, after suffering a stroke, George Jenkins retired as chairman and chief executive of Publix and became chairman emeritus. He was succeeded by his son, Howard M. Jenkins, who was 38 years old. As with many Publix executives, the younger Jenkins had begun at the retail level and worked his way up through the company's ranks. At the time of the leadership change, Publix ranked as the 21st largest retailer in the United States, with 370 stores, 60,000 employees, and profits of $128.5 million on sales of $5.38 billion. Late in 1990, it announced plans to build a 48,000-square-foot store in Kingsland, Georgia, about 80 miles south of Savannah, and plans for a second store in a Savannah shopping mall soon followed. In August 1991, with 384 stores, the firm announced that it was looking for sites in Atlanta. It opened its first store in Georgia in 1992 and began aggressively to build in and around Atlanta. By 1994, Publix had snapped up 10.1 percent of the market, trailing only Kroger and Winn-Dixie, whose market shares nonetheless dropped as a result of Publix's performance. By 1995, Publix had constructed a three million-square-foot distribution center in Lawrenceville and a milk processing plant. Its 34 Atlanta stores, all built from the ground up, offered features unknown to its Florida counterparts, such as freshly grilled fajitas and stir-fry dishes in a 100-seat dining area.
Publix was named as one of the top ten companies to work for in the nation by the 1993 edition of The 100 Best Companies to Work for in America. However, the timing of this honor was somewhat ironic, as the company was then in the throes of racial- and gender-bias charges with several groups. The chain had been picketed by the United Food and Commercial Workers union since its entry into Georgia for allegedly racial- and gender-biased employment and promotion practices. In 1992, a coalition of labor, feminist, Hispanic, and African American rights groups began threatening to boycott Publix supermarkets if the company did not place more women and minorities in management jobs by 1994. Their position was based on a survey revealing that women held fewer than two percent, African Americans fewer than three percent, and Hispanics fewer than four percent of the store's top management positions. In 1993, the Equal Employment Opportunity Commission asked the U.S. District Court in Miami to force Publix to turn over employment data for an investigation into sex bias charges. That same year, Publix agreed to pay a $500,000 fine after the Labor Department found minors working too many hours and during prohibited times in 11 Publix stores.
The year 1994 saw temporary respite from Publix's legal woes. By 1994, stores in Georgia and South Carolina were contributing to sales growth, and sales reached $8.66 billion, up 16 percent from 1993. In 1995, Publix, now the seventh largest supermarket chain in the nation, also introduced a smaller sized, 27,000-square-foot store in Tampa, Florida. At half the size of most new Publix supermarkets, this downscaled version of Publix's megastore offered neither a pharmacy nor health and beauty aids department, and fewer dry goods to provide space to the deli, bakery, and perishable goods sections. Instead its focus was on prepackaged deli items in response to the new consumer demand for prepared foods. The company also opened its Atlanta Division distribution facility and began to introduce full-service banks located in its stores.
Yet despite such advances, sluggish gains in profits and sales bespoke a difficult year for Publix. Accompanying a general downturn in retailing, sales increased only eight percent to total almost $9.4 billion in 1994. However, Publix added a net total of about 50 stores that year to reach the 500-store mark, and the chain was rated number two, behind Kroger, in the Atlanta market with 31 stores and 14 percent of sales. The company made the Fortune 500 list in 1995 and became the seventh largest-volume supermarket chain in the nation.
However, the chain's legal woes were resurrected in 1995 when eight women sued that Publix clustered women in cashier, delicatessen, and bakery jobs, denying them promotions and equal pay to men. Late in 1995, the U.S. Equal Opportunity Commission joined in the discrimination lawsuit, and in March 1996, a judge ruled to allow the case to proceed as a class-action suit, expanding the field of possible litigants to 120,000 current or former workers and making it the largest sex discrimination case in U.S. history. A second class-action suit was filed in Miami several months later by a firm representing women who worked in the company's administrative offices, warehouses, and plants. In addition, a former employee accused Publix of coding job applications to denote race, gender, and disabilities and work safety inspectors targeted Publix as the Florida company with the most workers' compensation claims.
Publix's growth still continued unabated. By 1996, it had captured 18 percent of the Atlanta market. Its sales for the year totaled $10 billion, an impressive 9.5 percent increase over 1995. However, the settlement in January 1997 of the first of its class-action suits for $81.5 million, the fourth largest such settlement in U.S. history, took a huge chunk out of the company's earnings. In addition, it agreed to pay a $3.5 million fine to the EEOC over accusations that it had denied blacks job opportunities.
Before the company had the chance to recover, a third high-profile class-action suit was filed. Despite the fact that the company had earlier signed an agreement with the Southern Christian Leadership Conference setting specific goals on hiring, training, and promoting more minority workers, and had opened three stores in predominantly black neighborhoods in 1996, early in 1997, a group representing 50,000 blacks, who had worked for Publix since 1993, claimed that the chain systematically denied equal hiring and promotion opportunities to blacks and created a hostile work environment for minorities.
Still Publix remained a favorite among customers. A Consumer Reports article in 1997 ranked it as tied for the highest overall score in terms of shopping experience. It placed above average for checkout speed, meat, deli, and produce, and average on price. The younger Jenkins had successfully wed Publix's longstanding commitment to customer service to advances in technology. Throughout 1998 and 1999, the chain held to its practice of building 40 or more stores a year. In 1998, it pulled in $12 billion in sales and $378 million in profits. In 1999, the company completed a new corporate headquarters in Polk County, Florida.
Principal Competitors: Albertson's Inc.; The Kroger Company; Winn-Dixie Stores, Inc.