The Most Profitable Grocery Chain In The Country Is…

Written by: CashAdvice Staff

The Most Profitable Grocery Chain In The Country Is…

Publix? Yes, Publix. For those of you unfamiliar with them they are based in Florida (and still where they have most of their stores). But expansion has been happening steadily and from the looks of things, any and all future competitors had better watch out. This article from Forbes calls them a “Wal-Mart slayer” and not without good reason:

…If that’s a dig at Wal-Mart–traditional slogan: “Always low prices”–which has recently targeted Publix’s home turf, Florida, it’s a subtle one. The more direct retort comes via the numbers. As best we can tell, Publix is the most profitable grocery chain in the nation: Its net margins, 5.6% in 2012, trounced Wal-Mart’s (3.8%), as well as those of every public competitor, ranging from mass market Kroger (1.6%) to hoity-toity Whole Foods (3.9%).

Whoa. Those kind of margins are unheard of in the grocery business. How do they manage to pull this off? Well, that’s where it gets interesting. In addition to being the most profitable chain, it is also the largest employee-owned company in the country. On top of that, Publix is a private company which makes the stock arrangement even more unusual. And nearly everyone you see at their stores is an owner:

All staffers who have put in 1,000 work hours and a year of employment receive an additional 8.5% of their total pay in the form of Publix stock.

In addition, Publix makes it clear as can be on how to make more money and move up the ranks of ownership/employment:

The route to that payday is completely transparent. Publix almost exclusively promotes from within, and every store displays advancement charts showing the path each employee can take to become a manager. Fifty-eight thousand of the company’s 159,000 employees have officially registered their interest in advancement.

It really is a fascinating story, even if you have never stepped foot in a Publix.-and I encourage you to read the whole thing. I am surprised that more companies don’t follow a similar path. I think that many of you readers may remember a similar situation happening at Home Depot in their big growth days. Stock boys or cashiers making big money on Home Depot stock was a familiar story at one time. Publix seems to be following a similar route (although the plans are different) and with expansion at a point closer to the beginning rather than the end, this may turn out to be a serendipitous place to be a grocery bagger.

While becoming a “Wal-Mart slayer” is something that still has to be played out, it is difficult to exaggerate the total dominance Publix has over Florida. Its major competitors have struggled to stay alive, let alone compete effectively. Any resident or long time visitor to Florida will notice that Albertsons, once a major player in Florida has disappeared, Sweetbay has been closing stores and Winn-Dixie often seems like a second-tier player.

And on a personal note, I must say that the story doesn’t surprise me at all. Publix is by far the best grocery chain in Florida for a number of reasons. First of all, they have freshly baked bread every day and it is far superior to anything that Wal-Mart is offering. That right there gets one (well, one that eats bread regularly) coming into the store on a regular basis. The prices are reasonable as well, although it may be entirely true that Wal-Mart has lower overall prices (as the Forbes article posits). But maybe the absolute best thing about Publix is that the lines are never long. Now this could be a guy thing, but waiting in line at grocery stores (including Wal-Mart) always seems to be the most annoying aspect of grocery shopping. Especially if you are there during peak shopping hours, which of course, many if not most people are or they wouldn‘t be the peak hours! Publix seems to always open up lanes immediately if there is a line. It is mentioned as a policy in the article and I can attest to that part as a fact. You really do get the feeling that you can run in, grab a few items and be out the door quickly. That in itself is what makes Publix stand out.

Will the employee-owned concept translate to national dominance against the big giants of the grocery world? I think they have a really good shot, but I am interested in what you have to say. Are you a Florida visitor or resident? Tell us how you think Publix compares to the other stores.


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