Introduction
Publix Super Markets is a regional grocery chain that punches above its weight. Founded in 1930 in Winter Haven, Florida, Publix has grown to become the largest employee-owned company in the US, with 1,326 stores across seven southeastern states. In 2021, Publix recorded $48 billion in retail sales, a 7.8% increase over 2020. It‘s ranked #12 on the National Retail Federation‘s list of Top 50 Global Retailers.
Publix is known for its impeccable store conditions, stellar customer service, and high-quality private label products. It has earned a loyal following in its core markets, with 80% of customers rating it as their favorite grocery store in a 2021 Market Force survey. But the grocery industry is notoriously competitive and dynamic. Let‘s take a deep dive into the competitive forces shaping Publix‘s business.
The Big Four: Kroger, Walmart, Amazon, and Target
Publix‘s four largest competitors by revenue are Kroger, Walmart, Amazon, and Target. These grocery behemoths operate nationally and collectively control over a third of the $1.7 trillion US grocery market.
Kroger
Kroger is the nation‘s largest supermarket chain, with 2,742 stores across 35 states and $137.9 billion in 2021 sales. This Cincinnati-based company has made big moves in recent years to gain share:
- Expanded its thriving private label portfolio, which now accounts for over 30% of unit sales. Kroger‘s Simple Truth brand is the largest natural/organic label in the country with $3 billion in annual sales.
- Entered a landmark partnership with UK online grocer Ocado to build a network of automated fulfillment centers for home delivery. Kroger aims to double its digital sales to $20 billion by 2023.
- Launched a retail media business called Kroger Precision Marketing to monetize its rich customer data. It‘s expected to generate $1 billion in high-margin revenue by 2024.
In Publix‘s home state of Florida, Kroger mainly competes through its Lucky‘s Market banner. Lucky‘s operates smaller-format stores focused on natural and organic foods.
Walmart
Walmart is the 800-pound gorilla of retail, with 4,742 US stores (including Sam‘s Club) and $459 billion in 2021 sales. Roughly 55% of Walmart‘s sales come from groceries and consumables. The Bentonville giant has several key advantages:
- "Everyday Low Prices" – Walmart leverages its massive scale to offer unbeatable prices on staples like milk, bread, and bananas. This drives customer traffic and price perception.
- One-stop shopping – Walmart Supercenters carry over 100,000 products, allowing customers to consolidate trips. Busy families can pick up groceries, school supplies, and a new bike all in one place.
- E-commerce with free pickup – Walmart is the second-largest online grocery player after Amazon. It offers free curbside pickup at 3,750 stores and same-day delivery from 3,000 stores. The Walmart+ membership includes unlimited free delivery for $98/year.
Walmart Neighborhood Markets pose the greatest challenge to Publix in terms of convenience and price. These stores are located closer to where people live and work.
Amazon
Since acquiring Whole Foods Market in 2017, Amazon has become a formidable omnichannel grocery competitor. It sold $28 billion worth of groceries in the US in 2021, a 25% jump over the prior year. Amazon is attacking on multiple fronts:
- A rapidly growing network of Amazon Fresh stores, with 38 locations opened in the past two years. These stores emphasize fresh prepared foods, low prices, and innovative tech like smart Dash Carts.
- Integration of Whole Foods into the broader Amazon ecosystem, with 10% discounts and free 2-hour delivery for Prime members. Whole Foods 365 products are now available on Amazon.com.
- Category leadership in online grocery, with over 40% market share. Amazon Fresh offers a wide selection of perishables, while Subscribe & Save allows shoppers to save up to 20% on recurring purchases of shelf-stable items.
A 2021 survey by Escalent found that Amazon was the second most-shopped grocer after Walmart, with 60% of consumers buying from Amazon.com or Amazon Fresh.
Target
While sometimes overlooked as a grocer, Target is becoming a bigger player. It derived nearly 20% of its $104 billion in 2021 sales from food and beverage. Target‘s grocery business has benefited from:
- Store remodels that expanded fresh food assortment and in-stocks. Target has remodeled over 1000 stores since 2017 to feature more grab-and-go items and locally relevant products.
- Rapid growth of in-store pickup and Shipt same-day delivery. Target offers fresh and frozen grocery pickup and delivery from 1,500 stores. Its Shipt subsidiary serves 5,000 cities.
- Unique private label foods spanning premium to value. Good & Gather is Target‘s flagship $2 billion food brand, known for high-quality staples and specialty items. The new Favorite Day brand delights with premium sweet and savory snacks.
Target excels at driving cross-shopping between grocery and non-food categories. Roughly 95% of Target shoppers browse non-food departments on a grocery trip, leading to bigger baskets.
Other Notable Players
Beyond the big four, Publix faces competition from several other chains, each with distinct positioning and geographic footprint.
Costco
Costco is a membership-only warehouse club operating 563 US locations, including 50 Business Centers. In 2021 the Issaquah, WA-based company recorded $163 billion in US sales. Costco‘s key strengths are:
- Unrivaled buying power – Costco limits its assortment to 4,000 fast-selling SKUs, allowing it to secure the best prices from suppliers. These savings are passed on to customers.
- Kirkland Signature – One of the most recognized and trusted private labels, spanning everything from cashews to toilet paper to golf balls. It accounts for 25% of Costco‘s sales.
- Fiercely loyal customer base – 88% of members renew each year, and the average member spends over $3,000 annually. The new Costco Next marketplace allows members to shop curated Costco products on partner sites.
Costco has a limited presence in Publix‘s markets today but is slowly expanding in the Southeast, with a new store slated for St. Augustine, FL in 2022.
Albertsons
Albertsons Companies is the nation‘s second-largest supermarket operator, with 2,278 stores across 34 states and $69.7 billion in fiscal 2021 sales. Its banners include Safeway, Acme, Shaw‘s, Jewel-Osco, and United Supermarkets. Recent strategic moves include:
- Heavy investment in digital and omnichannel. Albertsons grew its digital sales 263% in 2021 and offers Drive Up & Go pickup and delivery via DoorDash and Uber from 2,000+ stores.
- Expansion of own brands, which reached 26.2% penetration in Q1 2022. O Organics is now a $1.5 billion brand, while the new Soleil sparkling water brand generated over $200 million in first-year sales.
- Emphasis on fresh departments like produce, meat, and floral. Albertsons‘ "Best in Fresh" program trains associates to be experts in perishables.
Albertsons‘ Safeway banner competes with Publix in Florida, with a strong presence in Miami, Tampa, and Orlando.
Aldi
Aldi is a no-frills discounter operating over 2,100 stores in 38 states. In 2021 the German retailer recorded estimated US sales of $17.8 billion, up 5.6% year-over-year. Aldi‘s playbook is based on:
- Small stores – Aldi stores average just 16,400 square feet, compared to 45,000 for a traditional supermarket. This allows Aldi to open in more locations and keep labor costs down.
- Curated assortment – Aldi carries just 1,400 core items, 90% of which are private label. This simplicity leads to lower prices and easier shopping.
- Treasure hunt – Aldi rotates 100 Aldi Finds products each week, including seasonal favorites, unique international items, and non-food specials. This creates excitement and encourages frequent visits.
Aldi has been aggressively expanding in Publix markets like Florida, Georgia, and North Carolina, putting pressure on Publix to sharpen its value image.
Key Battlegrounds
As the competitive landscape evolves, Publix and its rivals are placing big bets on several areas:
E-commerce and Omnichannel
Online grocery sales surged 54% to $96 billion in 2020 due to the pandemic. While the pace of growth has slowed, e-commerce is expected to reach 20% of total grocery spending by 2025. Publix offers delivery and pickup via Instacart from over 75% of its stores, but has been slower than some peers to build out these capabilities. It will need to invest in digital to protect its customer base, especially among younger shoppers.
Private Label
Private brands have been a bright spot for the industry, growing nearly 10% in 2021 and stealing share from national brands. Publix‘s private label portfolio is well-regarded but may need a refresh to keep up with competitors. Target has launched over 50 new owned brands in the past five years, propelling its private label penetration to 36%. Publix has an opportunity to expand its opening price point tier and add more premium products to drive trade-up.
Health and Wellness
The global pandemic has heightened consumer focus on health and immunity, with 50% of adults saying they are eating healthier as a result. Sales of organic, plant-based, and functional foods have soared. Publix has made solid inroads with its GreenWise private label and in-store pharmacies, but faces stiff competition from Whole Foods, Sprouts, and Earth Fare. There may be potential to offer more in-store health services and better integrate healthy living into Publix‘s loyalty program.
Technology and Analytics
Data and technology are transforming every aspect of the grocery business, from how products are sourced to how stores are run to how shoppers are engaged. Leaders are leveraging AI, robotics, IoT, and other innovations to personalize offers, optimize supply chains, and enhance the in-store experience. Kroger‘s partnership with Microsoft to digitize stores and Walmart‘s use of robots to scan shelves point to the future. Publix will need to ramp up its tech investments to not fall behind.
Conclusion
Publix is a formidable regional player with a long track record of success. Its unwavering commitment to customer service, quality, and community involvement have earned it a loyal following. But as the competitive landscape continues to heat up, Publix can‘t afford to rest on its laurels. It will need to accelerate its digital transformation, enhance its value proposition, and find new ways to delight customers. If Publix can stay true to its core values while pivoting to meet the needs of a new generation, it will be well positioned to thrive for another 90 years.
