Competitors Confident Against Publix Sabor
By George Anderson
When it comes to operating supermarkets, few companies do it better than Publix. So, when the company opened its first two Publix Sabor units targeted to Hispanic consumers, other businesses in that space were clearly wary of what might happen.
Today, at least according to one independent Latino grocery store operator, the lesson learned is not only that others can survive, but that they can thrive with Publix Sabor in the market.
Stella Siracuza, the owner of Tomato Express in Orlando, Fla., is one of those. This time last year, Ms. Siracuza watched as a Publix Sabor opened a quarter of a mile from her business.
One year later, she has found that not only has the new competition not hurt her business but that she needs to expand. A second Tomato Express will open next month in Poinciana, Fla.
The new store will be the same size as the first unit (8,000 square-feet) with wide aisles and a clean appearance. “Our focus will be the deli and bakery,” Ms. Siracuza told the Orlando Business Journal. Tomato Express offers baked bread, pastries, prepared meats and side dishes, all made to Latino tastes.
Ms. Siracuza, whose first unit delivered $2.5 million in sales last year, expects to double that performance with the new store. “There is only one other Hispanic grocery store in the area, and it’s not that close to my store,” she said.
For its part, Publix is waiting to grow its Sabor business at its own pace. The company has announced it will add two more South Florida stores. As to its plans for Central Florida, Publix spokesperson Dwaine Stevens, said, “We’re still looking at the demographics… We don’t do anything without first doing a careful study.”
Publix Sabor stores run around 40,000 square-feet in size and offer a wide range of Hispanic groceries, fresh and prepared foods. Stores are staffed by bilingual associates and include sit-down cafes designed to make visiting the store a more social experience.
Ms. Siracuza said Publix is relatively late to the game in targeting Hispanic shoppers and that may hurt the performance of the Sabor stores. “Publix is an excellent supermarket, and I tell my employees I want to be the Publix of the Hispanic stores. But they didn’t give Hispanics the time of day until last year.” (The first Tomato Express opened in 2002.)
Publix said it is happy with the performance of its current Sabor units although it has declined to release sales numbers.
Moderator’s Comment: Are the Sabor units the Hispanic equivalent in terms of quality of product, service, etc. to Publix’ stores in general? Having so
often discussed what makes the company great, what do rival businesses need to do to compete with the chain in its core businesses as well as new ventures such as Publix Sabor?
– George Anderson – Moderator
Publix is great, but not perfect. Not everything they do is a home run. But they always have a winning season. Tomato Express sounds like a small mom & pop if they only do $2.5 million a year. That is less than $50,000 per week which is often the cut-off for chain like Publix to even consider as a competitor. Not having seen either of theses stores, it’s hard to analyze. But Tomato Express sounds as if they have been able to differentiate themselves from the larger competitors. Being small, they can probably fly under the radar of Publix.
Publix is a strong retailer with a good sense of the Hispanic community and a vision for increasing market share. The fact that other specialty retailers are benefiting from their presence confirms that there is an audience that wants to shop for ethnically targeted products in a culturally relevant environment. The market is large and there is room for the big and small.
Publix may not be the best example of a major chain doing well with an ethnic market segment. Kroger has absolutely nailed it with Food4Less. Their new store in Cochella, CA is overrun with shoppers amidst a number of Hispanic competitors.
I disagree with an earlier post. Hispanic and Asian consumers have different tastes and needs than the “mainstream” consumer. No matter how many years they have been in this country, they still want a place to get fresh tortillas, etc. Retailers have to adapt to the market, not the other way around.
Yes, Publix will use its “Best Practices” for the Latino/Hispanic stores (and more) as is done for its regular supermarkets.
But, as a superior marketing supermarket chain, it will take its shopper and competitive research and create the additional “plus factors” to satisfy this ethnic group.
Publix will expand the total area sales of this ethnic market, while continuing to differentiate itself from competition.
Another PLUS for Publix! Hmmmmmmmmmm
Publix, by any measure, is a terrific food marketer. In my opinion, it is not about competing with the local Hispanic options but about making a statement to the community that Publix respects this important segment of the market. Likewise, the introduction of the Green Wise Markets reinforces their approach to customizing offerings to emerging target markets.
Publix recognizes that brand equity is an important asset, not to be wasted. These new markets have permission to delight their target customers without diluting the Publix brand image.
Obviously, Publix success has not caused them to become complacent.
It seems odd that polls show the overwhelming majority of Spanish-speaking immigrants want to learn English as quickly as possible, yet American retailers are making every possible effort to segregate them and keep them out of the mainstream. Ethnic markets should be quaint tourist attractions or a fun, attractive section of a larger supermarket, not places to sideline a significant portion of our population.
It’s unlikely that Hispanic people ignore regular Publix stores. If Publix wants to expand Sabor, they have to be careful about cannibalizing their other stores. Undoubtedly, successful Sabor stores will take volume away from competitors as well as other Publix locations.
Publix simply cannot be successful luring customers away from other chains without providing the items that Hispanic consumers purchase from their competitors on a weekly basis. If our company’s experience with Publix is any indication of their strategy, they simply are not doing adequate research. I represent a minority frozen fruit bar manufacturer located in an area that is almost entirely Hispanic. One of the Sabor stores is just a few minutes away from our factory. Our product, Chunk’s O’ Fruti, is full of real fruit and a favorite of Hispanic consumers. The packaging is 100% bi-lingual, unlike some companies that strategically place a few descriptions in Spanish. Continuing to expand based on our South Florida success we have become a leading manufacturer of premium frozen fruit bars with global distribution. We are a dominant brand in the local Hispanic markets four items in the top ten frozen novelties. Publix does not stock our products. No amount of activity will help if their strategy to win market share among Hispanic’s is the same in other categories. Publix provides excellent customer service and it is clear why the dominate the Florida market. This is going to be interesting to watch. Publix has the resources to make this work. It remains to be seen if they convince their own management team to embrace the Hispanic segment.
Publix isn’t concerned about cannibalization nearly as much as you might think. Here in my town of Gainesville, FL, we have 12 Publix, yet our town only has 150,000. They have built several new stores over the last few years, and some are as close to each other as a mile! Yet many still manage to do 15 million or more in sales a year. Winn-Dixie and Albertsons are very weak here. Publix is the favorite by far…it has better service, cleaner stores, and lower prices than the other two. Go Publix!
The important point here is that the small local business is surviving against the big guy. The question is, HOW is the business surviving? What are they doing differently compared to Publix? Are they offering different food selections, different cuts of meat, a different environment? Are they stocking more dairy and fresh produce products? The early establishment of Tomato Express in the community does help its reputation. Perhaps the community demographic contains more “isolated,” or first generation Hispanics that prefer to shop in neighborhood stores rather than chains. Having never seen these stores first hand, it is hard for me to make accurate comments but I would bet Publix is in the process of looking into the answers to these questions.