Organizational Analysis and Recommendation Plan for Publix Supermarket

       Publix Super Markets, Inc., commonly known as Publix, is an employee-owned, American supermarket chain headquartered in Lakeland, Florida. Founded in 1930 by George W. Jenkins, Publix is a private corporation that is wholly owned by present and past employees and members of the Jenkins family. Publix mission is to be the premier quality food retailer in the world. They are committed to be passionately focused on customer value, intolerant of waste, dedicated to the dignity, value and employment security of their associates, devoted to the highest standards to stewardship for their stockholders, and involved as responsible citizen in their communities. The mission statement highlights the aspirations of the company as a food retailer. In this, it communicates that it aspires to be “the premier quality food retailer in the world.” This commitment is further expounded as having a passionate focus on customer value, intolerant of waste, and involved as responsible citizens. The emphasis on the customer, the environment, and the society, is a clear commitment that ensures that the company meets the expectation of the company. To employees, suppliers and other associates, the company indicates that it is dedicated to the dignity, value and employment security. These commitments form a strong foundation for the company, and making the brand formidable in the market, ensuring customer loyalty thrives and ensuring the company attracts new talent. Consistent communication of this information through a recognizable Integrated Marketing Communication provides the company with a competitive advantage in the market

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       Publix Super Markets Inc. has managed to maintain and improve its market share in the six states it operates over the years of stiff competition.  The grocery food chain has established a loyal client base in the southeastern and immensely benefits from its renowned brand. To achieve this, the company communicates its commitment through a clearly defined vision and mission statement. The vision statement “To become the premier provider of quality grocery items for American families” conveys a clear message on the quality of the products they offer and the commitment to serve the company target market (Harrison et al., 2018). The vision highlights the aspirations of the company and what it aims to achieve in the future.

       On Sept. 6, 1930, George Jenkins opened his first store, called Publix Food Store, in Winter Haven. In 1935, he opened a second location across town. He closed these first two stores to open his dream store, the first Publix Super Market, on Nov. 8, 1940. A “food palace” of marble, glass and stucco, this store included innovations such as air conditioning, fluorescent lighting, electric eye doors and terrazzo floors. In 1945, he acquired a warehouse and 19 All American stores from the Lakeland Grocery Company. He began replacing these small stores with larger supermarkets. He continued his never-ending expansion, bringing the Publix standard of clean stores, friendly service and quality merchandise to customers throughout Florida. As Publix supermarkets continued to spring up across the Southeast, improving to include delis, pharmacies, and even cooking schools, the company never veered from Mr. George’s original philosophy of treating employees and customers like family. Our thousands of cashiers, baggers, meat cutters, and bakers are the company’s largest collective shareholders—all trained to put their customers first. As a result, year after year, Publix has been hailed as the No. 1 supermarket for customer satisfaction, one of FORTUNE’s “100 Best Companies to Work For,” and as an inspiration for its sustainability efforts and community involvement.

       Grocery store providing fresh produce, Deli, Bakery, Meat and Seafood department, cooking classes as well as their own name brand grocery products. Florida’s corporate appeal is strong, particularly among “everyday” retailers like Publix that benefit from the state’s permanent population of 19 million, which balloons to include 95 million tourists annually. As a Florida-headquartered company, they would strongly advocate their great state for other corporations. One element of Publix’s homegrown success stands out from the rest. In an industry where price is often the deciding factor in brand preference, Publix has built a fiercely loyal customer base with their reputation for outstanding service. While others can try to emulate the store environment and product selection, they cannot replicate our associates or their commitment to our success.

       Back in May of 2018, Publix’s stock price increased from $41.40 per share to $41.75 per share. Publix stock is not publicly traded and is made available for sale only to current Publix associates and members of its board of directors. The companies that are a major competition are Kroger, Safeway, Trader Joe’s, Giant Eagle, Wegmans, ABC Fine Wine & Spirits, Albertsons, Meijer, Piggly Wiggly, and Stop & Shop. Publix has a Functional structure organization. Publix has several different departments that are all grouped based on similar skills, expertise, work activities, and resource use. The different departments such as human resources, marketing, public affairs, manufacturing, and distribution. All the departments have specific resources that help it reach the organizational task, and each department only deals with their specific area and problems

TENURE

Percentage

< 2 YEARS

38

2 TO 5 YEARS

23

6 TO 10 YEARS

17

11 TO 15 YEARS

11

16 TO 20 YEARS

6

OVER 20 YEARS

6

Company’s employee demographics:

Generation

Percentage

Millennials

57

Gen X

22

Baby Boomers

19

Full / Part Time

Percentage

Full Time

43

Part Time

57

       Publix staffing strategy is one of the major reasons for the organization’s successful history. It treats its employees in a manner that encourages them to have active engagement in their jobs. Actively engaged employees feel a strong emotional bond with their organization. This is portrayed by the employees’ willingness to recommend the organization to others and invest their time and effort for the success of Publix in the business market (“Publix Grocery Store”, 2017, August 24). It is only through this employee dedication that Publix has been able to attain a spot on the annual Forbes list (“Publix Grocery Store”, 2017, August 24). The employee satisfaction offered has also earned Publix a top slot in the top 100 organizations to be employed in the survey (“Publix Grocery Store”, 2017, August 24).

 Publix’s success can also be attributed to its characteristic of being employee-owned. This is through turning its servicemen such as cashiers, baggers, and bakers into the organization’s largest shareholders (“Publix Grocery Store”, 2017, August 24). This is achieved by the tradition of awarding any employee that puts in 1000 work hours and one years’ service an extra 8.5 percent of their total pay in the form of Publix stock (“Publix Grocery Store”, 2017, August 24). This leads to Publix employees being the controlling shareholders garnering stakes of up to 80 percent which is worth 16.6 billion (“Publix Grocery Store”, 2017, August 24). In each and every Publix store, there is a flowchart that shows which path an employee can take to attain a managerial position in the organization (“Publix Grocery Store”, 2017, August 24). This method is efficient since the leaders can tackle the challenges have experienced firsthand and work on how to better customer care from their previous experience with Publix customers.

 Publix also sets its standards for employee expectations through the employees themselves. From their relations with customers, they portray fast services and friendly natures to the customers. Through this, they attract only those that can cope with such expectations (“Publix Grocery Store”, 2017, August 24). The communication among Publix associates is also efficient and enables the solution to problems immediately they arise (“Publix Grocery Store”, 2017, August 24). Whenever something is the matter, employees approach their seniors if the situation is out their control. At Publix, this tradition has proven to be resourceful and prevents any future losses due to a problem that was never aired out. By encouraging this freedom in communication, employees have a relaxed environment in their line of work even in the involvement of their seniors. The productivity of employees working under minimalized pressure is very high as can be seen with the success of Publix.

       Besides displaying their applicant’s expectations through the standards set by the already existing employees, Publix also has an online job advertisement and application platform (John, 2014). Through this platform, Publix is able to use technology to sample out qualified employees and pick out the ones that meet the expectations for interviews (John, 2014). The system provides questions to applicants and goes ahead to rank them according to how they perform in this assessment. The questions are categorically organized, and an applicant receives questions based on the position they are applying for. After ranking the performance of applicants, on those in the top group get to proceed to have interviews. This method spares time wasted when organizations hold interviews for each applicant without cutting down numbers by use of specifics (John, 2014). The application is done at stations found in front of every Publix branch. The online platform advertises the job position and gives the basic requirements.

 Publix can improve its staffing strategy by creating an online platform where all its employees can interact. Through this platform, they can share ideas targeted at improving the organization and solve the problems that arise among employees. The platform can be categorized according to the specific entity the employees deal with. It can be general platforms but with subdivisions inside according to job specializations. This platform can also be important to help a new member of the organization to get the assistance they need to adapt to the new environment. Publix can also avail the Application process online to reduce the labor intensity required for this operation. Since a computerized system can easily perform this analysis, it should make it quite simple to apply for a job space

       One of Publix core strength is its approach as an employer. Publix has established its reputation by being the largest employee-owned supermarket in the nation. Also, the company is one of the best companies to work in 2017 for according to Fortune magazine. Publix employees motivated by the conducive work environment as well as the fact that they benefit from the development of the company. This tags along with a good employee diversity, due to the near equal gender distribution with 44% of board members being women and 41% of employees are minorities (Mujtaba, & Johnson, 2016). As a result, the company has a good retention percentage with most of its employees staying for more than ten years in different ranks in the company. Besides, in 2016 Publix was 87th in the Fortune 500 lists. As an employer and a business, Publix stands among the best, and this provides a competitive edge over most of the company main competitors.

       On the business side, Publix has diversified its business and now runs pharmacies, sushi bars, restaurants, and cafes as well as floral fronts. This allows the company to serve a wide variety of customers. Further, the company ensures that over 72% of all the products are distributed and delivered through its distribution centers. More convenient is the fact that the company relies on a few suppliers. This indicates that the supply chain is internal and hence more convenient and reliable. Compared to the industrial average of ROA, 5.5%, and Gross Margin of 19%, Publix way higher margins at 12.7% and 28% respectively (Solomon, 2013). The broad product portfolio and a more internal supply chain ensure that the company meets industrial standards.

       Publix Super Markets Inc. is not an open market and its relatively high prices as compared to leading competitors. As a result, the company cannot rely on equity financing from the stock market and also there is no explicit value of the stock. Also, the company has intensive regional activities in six states, and this increases the business risks of operating in single markets. Further, Publix relies on internal supplies and distribution centers slows the expansion efforts of the companies. Minimal growth rates affect the ability of the company to reach new markets. Despite having a loyal customer following in the six states, the company has not established a loyalty program such as loyalty cards as a customer respiratory. This limits the ability of the company to monitor the buying habits of loyal customers and capitalize on that information.

       The grocery and foods industry is highly competitive, and most companies are closing stores due to losses. The closure of stores of competitors such as food lion as well as low sales is an opportunity for Publix to grow as it adopts the customers. Since the companies are one of the pioneer stores in the region, it has a high likelihood of benefiting from the increased customer pool and reduced competition.

Further, Publix has developed a recognizable brand and customers are choosing the store-branded products over expensive brands. This is an opportunity to expand sales, develop better performing products branded with the store’s name. This is supplemented by the fact that even though the store-branded products decreased revenue, they also increased the profit margins in the food sector.  As the food industry continues to prosper and more customer habits are understood, Publix is in a better position to grow and develop due to its customer base.

       Trends in consumer habits, strategies used by competitors as well as the expansion of large retailers into the region are among the main threats facing the company. More customers are frequenting dollar stores, drug stores and mass-market retailers such as Wal-Mart for foods and grocery sold by Publix (Gielens, 2018). Market retailers offer a one-stop shopping experience as customers can shop for a variety of things other than meals and groceries. Also, due to the high price competition, the company has narrow profit margins and is further faced with more completion by price. This competition is stiff because competitors such as Kroger have a wider area of operation and offer more products than Publix (Bloom & Hinrichs, 2017). The threat of competition is escalating due to the high number of new entrants into Publix markets and a grueling price war that affects the profits margin of retailers in the food industry.

       The supermarket business is becoming more and more concentrated as large regional chains such as Kroger, Safeway, Wal-Mart, and Albertson’s dominate their markets. Publix’s present strategy is to progressively grow from within and enlarge the Publix culture all over its stores across different states (Mujtaba & Franklin, 2007). The company has been top ranking in customer satisfaction for several years, which can be leveraged to drive their customer loyalty, average spend per customer, and financial growth. However, the labor costs and commodity have been on an increase and Publix has limited capability to pass on these costs to consumers, impacting the margins negatively (Anonymous, 2010). Publix is focused on building market value though is dedication to exceed consumers expectations. Furthermore, as an employee owned company many key stakeholders are depending on positive financial performance from Publix. 

       Sales for the three months ended September 25, 2010 were $6.0 billion as compared with $5.8 billion for the three months ended September 26, 2009, an increase of $206.1 million or a 3.5% increase. The Company estimates that its sales increased $48.6 million or 0.8% from new supermarkets and $157.5 million or 2.7% from comparable store sales. Sales for the nine months ended September 25, 2010 were $18.8 billion as compared with $18.2 billion for the nine months ended September 26, 2009, an increase of $546.0 million or a 3.0% increase (Publix, 2010).

       To push future sales growth, Publix is expanding its liquor store business, granting an opportunity to attain better market share in the alcoholic beverages market. Currently Publix is building the liquor chain and has 112 liquor stores now to the public.  Like the strategy with building the liquor chain to create greater profits, the company is focused on expanding its pharmaceutical business due to the fast growth in the industry. Publix owns more than 800 pharmacies and also offers value added services such as health screenings, diabetes management and counseling services by pharmacy associates. The company has also been actively offering convenient access to seasonal flu vaccines at an affordable price (Anonymous, 2010). The company is taking advantage of the fast-growing pharmaceutical industry to increase current and future revenue growth

       Internal issues indicate despite having a well monitored and structures supply chain, the capabilities of distribution and manufacturing centers limit the growth of Publix. At its current state, the food industry is highly competitive, and this affects the ability of the company to increase its profit margin without venturing into new markets. Hence it would be essential for the company to develop an appropriate approach to working with external distributors in new markets as well as suppliers. Even though this will minimize the ability of the company to monitor quality, having a reliable quality check as assurance with the supply chain will ensure growth. Also, adding the number of distribution and manufacturing center should be a long-term goal. By developing the supply chain, Publix will be an able venture into new markets and states.

Also, the company faces stiff completion, and its price is its main threats to the sales of the Publix. The price reduction is inevitable, but it should be accompanied by a shift in the focus of the company. First, price reduction should be on store-branded products that are making more sales than other expensive brands. As industry analysis indicates, higher income consumers purchase more organic foods. Hence, Publix should capitalize by creating categories with quality natural and organic foods at a relatively fair price. Price reduction should be made with more investments in enlarging the product portfolio by increasing the variety of organic foods, introducing liquor fronts and lowering of store-branded product prices.

       Finally, the company should develop a loyalty program. Loyalty cards and points are a norm with the industry and Publix should focus on developing a concrete loyalty plan. The benefits of the program exceed the ability to engage customers and build a following to being able to track the data of customers and make well-informed decisions with the insight of customer habits. Even though this is a long-term course of action, it should aim at developing a respiratory of consumers that allows the retailer to monitor purchases, award customers and have a better understanding of the market.

c) Provide a proposal of four specific strategic goals, with at least one in each of the following areas:

i. Personnel allocation and/or scheduling

ii. Performance gaps

iii. Budget allocation

a)      Provide a summary proposal for the overall strategic direction of the company. Your proposal should address how your recommendations and strategic goals can assist the company in responding effectively to future organizational changes and challenges.

       At the moment, Publix is performing well, and these recommendations will help the company retain and increase its market share. The introduction of new suppliers and distributors in new areas should be coordinated to ensure that all internal structures such as quality control can monitor the transition. The process of increasing the breadth of the supply chain should be progressive a review team should be established to select suppliers and distributors who can fit into Publix’s approach to business. In the meantime, plans should be underway to build at least three new distribution centers and a manufacturing plant.

       Further, the increase of branded products should also be gradual, and an innovation team should be selected to examine different products and the ability of the company to offer the products to customers with a brand name and discounted prices. On organic foods, Publix should source a supplier that delivers quality products and distribute this product to stores especially in high-income areas. Finally, the company should develop a well-defined loyalty program and offer discounts for three months for the customers that join the program. The program should have a point structure that allows the company to give bonuses to clients. This implementation strategy should factor in the response of clients and more industrial trends such as upgrading systems to ensure quick checkouts. 

References

Organizational Structure of Publix. (2013.). Retrieved November 10, 2017, from http://www.managementparadise.com/forums/human-resources-management-h-r/215071-organisational-structure-publix.html

Publix Grocery Store … Is Employee Engagement It’s Backbone? (2017, August 24). Retrieved               November 10, 2017, from https://digitalsparkmarketing.com/publix-grocery-store/

W. John (Ed.). (2014). Publix Supermarket. Retrieved from Publix Store Job Application Process

(2010). DATAMONITOR: Publix Super Markets, Inc. Publix Super Markets, Inc. SWOT Analysis, 1-11. Retrieved from Business Source Complete database.

Blocher, Stout, & Cokins (2010). Cost management; A strategic emphasis, Fifth Edition. New York, NY: McGraw-Hill Primis.

Mujtaba, B. & Franklin, E. (2007). A Retailer‘s Steady Growth Strategy: Should Publix Stay National Or Go Global? Journal of Business Case Studies – Fourth Quarter 2007,Volume 3, Number 4. Retrieved from http://www.cluteinstitute-onlinejournals.com/PDFs/70.pdf

Publix. (September 25, 2010). Form 10-Q. Retrieved November 21, 2010 from http://www.publixstockholder.com/servlet/ProxyServlet?path=/stockholder/Document.do&seq=1&SECDocumentId=6459&curPage=1&selectedDocumentType=-              99&selectedYear=-99

Bloom, J. D., & Hinrichs, C. C. (2017). The long reach of lean retailing: Firm embeddedness and Wal-Mart’s implementation of local produce sourcing in the US. Environment and Planning A: Economy and Space, 49(1), 168-185.

Brat, I. (2015). Hunger for organic foods stretches supply chain. Wall Street Journal (Online), 4(04), 1.

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