Yash Ravindra Pawar.

PUBLIX Student ID – 22203251

Strategic Management of Projects

November 2022

SUPERMARKET
Detailed Analysis and Recommendations
Contents
Issues identified ...................................................................................................................................... 2
Deep analysis .......................................................................................................................................... 2
Publix Super Market Strategic elements ........................................................................................... 2
Is the strategy good enough? ............................................................................................................ 2
Situation of US Supermarket and store industry .............................................................................. 3
Competitive capabilities and weaknesses of Publix Supermarket ................................................... 5
Recommendations .................................................................................................................................. 7
Bibliography ............................................................................................................................................ 8
Issues identified
1. Intense competition (especially with the existing giants) -- Fierce competition due to
existence of giants like Costco, Kroger, Walmart and Amazon in the market.
2. Product prices higher than some competitors in the market – Statistics show product prices
of Publix higher than those of Costco, Kroger and Albertsons making them less competitive.
3. People’s company but lacks strategic implementations for sustainable growth – Focusses
intensively on people but lacks management strategies like acquisition/merger, exporting,
franchising, outsourcing, etc.
4. Expanding into new markets – Right time but major challenge to step out into the outer world
due to restrictions and presence of competitive companies.

Deep analysis
Publix Super Market Strategic elements
 Customer-centric service – Publix made sure to make the customer feel royal through
excellent service.
 Strategic positioning - Broad differentiation strategy within the food retail business.
 Employee caring – Publix employees were given training for pleasurable & royal service to the
customer. They made sure the employees had the needed business learnings. Also the
company focusses on aspects like job security, remuneration, etc.
 Product/Item – Correct identification of the necessities of the client. The important product
strategies are design, features, packaging, etc.
 Price value – The worth in terms of value of the product to the customer is correctly made.
This includes giving proper discounts and offers/deals on the products.
 Market segmentation – One of the most important strategy of Publix. This allows to get a
clear idea of the different types of customer-base in terms of sex, race, richness, etc.

Is the strategy good enough?

I believe the strategy followed by Publix is strong and effective enough in the food retailing business.
Here are some of the key points for why I feel so-

 Increasing brand value – By following the proper marketing strategies, the target, value
proposition and culture of the organisation is well communicated which helps customers
realise the brand image.
 Knowledge about its customer-base – Following the strategy of market segmentation and
targeting the right audience, Publix has a great clarity of which kind of customer needs what
kind of stuff, be it be a person from middle class or rich background.
 Acquiring new customers – Publix’s strong knowledge of its customer base and attractive
marketing tools make it successful in impressing new people and create awareness about its
brand.
 Happy employees, happy customers – Customer service is the most important thing in
today’s and it is only possible if a company has a team of highly efficient and happy employees.
This is because happy employees deliver their best improving the efficiency.
 Situation of US Supermarket and store industry
 Different stores and retailers are becoming more competitive.
 Limitations to new entrants due to presence of giants like Amazon & Walmart.
 Similar products sold at best prices making the industry more competitive.
 Discount schemes and deals used to attract customers.
 Companies forced to sell products online because of the growing trend and changing
customer habits.

Substitute Products Threat

Porter 5 forces analysis Less threat as similar style of food
items.

Organic products can act like a

substitute upto some extent. Strongest force

Suppliers Rivalry among Buyers

competing sellers Strong bargaining
High bargaining power
of suppliers resulting in Extreme competition in power.
costly raw materials. the US market. Demand products at
High price of raw Big giants like Amazon & lesser price.
materials impacts the Walmart able to offer Switch to other
final product cost. quality products at low competitors if demands
prices creating not fulfilled.
Expensive products
pressures on local
impact the customers.
retailers. Innovative products
needed for retention.

Potential new entrants

Easy entry for new entrants.

Pressure on existing companies to

be innovative all time to retain
customers.

Maintain low costs to compete.

 Strategic group map of US Industry

Costco
Market share/Brand reputation

Kroger

Albertsons

Publix

H.E.
Whole
Foods
Butt Meijer

Low Price of products High

Causes of impacts on the Industry

 E-commerce technology – This has been the biggest change in the industry with most
consumers using online apps on mobiles to order food and stuff.
 Evolving lifestyles – More and more people are preferring to order food online instead of
preparing at home. This is due to the shift of people towards highly ambitious life.
 Low industry margins – The process of consolidation replaced by new industry formats
making competition more intense.
 Organic and private products – Organic food may have been the preference for some health-
conscious people but popularity of private brands not decreasing due to low prices.
 Discounting and acquisition strategies – In order to attract customers, discounting and special
deals are implemented for the products. Also companies looking for acquisition or merger in
order to fight competition and to expand the market share.
 Industry becoming more profitable and competitive – Every organisation trying to implement
new strategic and marketing measures, bargaining powers of suppliers & buyers and intense
rivalry makes the industry more competitive and profitable.
 Omnichannel strategy – Companies developing their own delivery channels.
Competitive capabilities and weaknesses of Publix Supermarket

VRIN Analysis
Valuable: YES

 Better & knowledgeable employees for customer satisfaction.

 Known brand for making consumers feel ‘royal’.

Rare: NO

 Lot of competitors with similar line of business.

 Giant companies disrupting the market.

Inimitable: NO

 Rival Companies have similar resources and lower costs.

Non-substitutable/Organised: YES

 Innovative marketing strategies.

 Brand awareness.
 Employee preparing.
 Market segmentation and distribution channels.

Financial Analysis of Publix

Profitability ratios

2019 2018 2017

Gross profit margin 27.22% 27.1% 27.28%
Operating profit margin 7.5% 7.6% 7.9%
Net profit margin 7.8% 6.59% 6.63%
ROA 12.26% 12.54% -
ROE 22.09% 20.14% -

Liquidity ratios

2019 2018
Current ratio 1.06 1.26
Working capital $226,886 $804,641

Activity ratios

2019 2018
Days of inventory 25.1 25.6
Inventory turnover 14.5 14.23
Comparison with other competitors
Kroger

2018 2017 2016

Gross profit margin 21.68% 22.01% 22.4%
Operating profit margin 2.15% 2.13% 2.99%
Net profit margin 2.5% 1.55% 1.7%

Costco

2019 2018 2017

Gross profit margin 12.97% 13.01% 13.28%
Operating profit margin 3.1% 3.16% 3.18%
Net profit margin 2.45% 2.21% 2.07%

Whole Foods market

2017 2016 2015

Gross profit margin 33.66% 34.41% 35.19%
Net profit margin 1.5% 3.22% 3.48%

Net revenues have grown gradually each year from 2015 to 2019 from $32,362,579 to $38,116,402
respectively, a CAGR of 17.77%

Gross profit has grown from $8,902,969 to $10,375,933 from 2015 to 2019 respectively, a CAGR of
16.54%

The company’s ROA was 12.54% in 2018 and 12.26% in 2019.

The company’s ROE was 20.14% in 2018 and 22.09% in 2019.

The company has very good number of inventory days which are less than 30 days for both the years
2019 and 2018.

Inventory turnover was 14.5 in 2019 and 14.23 in 2018.

The gross profit margin of Publix is better than any other competitor in the year 2018 with Publix
having a value of 27.1%

The operating profit margin of Publix is better than any other competitor in the year 2018 with Publix
having a value of 7.6%

Statistics show Kroger and Costco being the major competitors for Publix in terms of market share
and revenue.

Exhibit 4 shows investors are eager to share the company’s success.

Recommendations
1. Adopt acquisition/merger strategies to compete efficiently with giants.
With the presence of giants like Costco, Kroger, Walmart and Amazon already in the industry, it is
important for Publix to merge with other brands on similar levels for sustainable growth. This
would allow them to create more cost-efficient operations, expand the company’s geographical
coverage, get access to new technologies and other capabilities, etc. But at the same time, it
should be kept in mind to not affect the cost savings factor during the merger/acquisition.

2. Improve advertising & promotional strategies.

Advertising is a major factor in today’s era. People today have a lot of options in the market when
it comes to buying a particular good. Consumers easily switch to other stores if they are not
satisfied with a particular store. In order to retain the existing consumers and attract more and
more new ones, it is important to impress them with innovative advertising. For example, When
CRED came into market, it majorly aimed at impressing people with its comic advertising by
making famous actors as their ambassadors. Its major revenue was driven from the advertising
they did.

3. Focus on innovative marketing strategies.

Innovative marketing strategies are the need of the hour. Every other competitors in the market
have similar products so how are you going to differentiate yourself from them? What makes you
the special one? It is the discount schemes and attractive deals that will always keep you different
from the rest.

4. Expand business and go international.

Financial statistics has shown us that Publix are performing very good in the US market. They have
the appropriate funds to be able to put their feet on the global world. They should follow
strategies like outsourcing, exporting, licensing and franchising and foreign subsidiary strategies
which will help them achieve the global market and skyrocket their revenues.

5. Go Public!
Statistics have proved that investors are happy with the mind-blowing performance of Publix in
the US market and are ready to buy its shares. Investors want to take part in the company’s
success but currently Publix is not public. Investment is only eligible for its associates. This is where
Publix is limiting its capability is what I feel. With the right amounts of fund and customer trust, it
is now the right time of Publix to get public not only in the US market but in the global market too.
Bibliography
1. Porter 5 forces analysis

A Thompson, M Peteraf, J Gamble, AJ Strickland, “Crafting and Executing strategy: The Quest for
Competitive advantage: Concepts and cases, 23rd Edition”, McGraw Hill LLC, pp 57-72

2. Strategic group map analysis

A Thompson, M Peteraf, J Gamble, AJ Strickland, “Crafting and Executing strategy: The Quest for
Competitive advantage: Concepts and cases, 23rd Edition”, McGraw Hill LLC, pp 78-80

3. Financial analysis

A Thompson, M Peteraf, J Gamble, AJ Strickland, “Crafting and Executing strategy: The Quest for
Competitive advantage: Concepts and cases, 23rd Edition”, McGraw Hill LLC, pp 93-95

4. VRIN Analysis

A Thompson, M Peteraf, J Gamble, AJ Strickland, “Crafting and Executing strategy: The Quest for
Competitive advantage: Concepts and cases, 23rd Edition”, McGraw Hill LLC, pp 103-105
12268480 Yash Ravindra Pawar

Academic Integrity

Sunday, 18 September 2022