How the 1% Shop for Groceries in the Richest Zip Code in America
The food desert in the richest zip code in America is no more. Publix had shut down their location just blocks from Worth Avenue in Palm Beach, FL to do a remodel, rendering the area — named the “richest zip code in America” in a recent Bloomberg BusinessWeek report — supermarket-barren. Now that the Publix is reopened, residents no longer have to cross the bridge to West Palm Beach to buy groceries.
I visited the newly formatted store just two days after its opening, and it’s a beauty. The new Publix has all of the standard amenities: pharmacy, upscale deli, bakery, salad bar, seafood counter, gourmet cheese counter, aisle of wine, parking lot security guard, and valet parking (to come later). This may not be an everyday occurrence, but at least this past Saturday there were half a dozen sampling stations offering everything from sushi and wine to ground buffalo. There were Publix employees all over the store, constantly tidying up and ready to answer any questions. One thing not in sight: self-checkout.
In all honesty, while this Publix was nicer than others I’ve visited, the difference wasn’t that noticeable and the store is a little more of an effort to shop, as it is smaller than many (45,000-square-feet). Shopper comments included, “Isn’t the dairy case a little small?” (it is) and, “What exactly is port anyway?” from a shopper in the wine aisle. A Publix staffer was at the ready, to answer in detail. The parking lot is a little small, too, but the security guard ) was there to direct wayward drivers and everybody seemed in good spirits.
Bottom line: Even rich shoppers can get a little grumpy when they are missing a supermarket in their town, and Publix has now remedied that situation while taking the store up a few notches. The fact is, nobody is going to come in to Publix’s trading area and beat them on service or ambiance, other than a gourmet market. And Publix keeps their prices within shouting range of the discounters, to make defectors think twice.
Discussion Questions
Discussion question: Do supermarket operators need to treat the 1% differently? How radical a difference should it be? Does it pay for supermarket operators, with a broad demographic base, to provide special treatment to customers in high-income communities?
Before we get fancy, let’s remember what customers, rich and poor, are looking for: a clean, well laid-out, well lit store, fully stocked with correct signage and pricing. Unfortunately, this isn’t always the case, even at the top end of the market. Toronto’s Pusateri, which caters to the extremely affluent, recently got some very bad press when it was discovered that one of their stores was infested with rats! Makes you think twice about buying fresh salmon there, doesn’t it? Make sure your stores are compliant with ALL health and safety, service and merchandising standards first; worry about customers’ income brackets later.
Broad-range supermarkets should not overly modify their stores in wealthy areas, because those shoppers can easily pay more money at a specialty grocer if they choose. Product assortment should match local preferences and maybe there should be a few extra staffers with some additional customer service training, but even wealthy people sometimes just want to run to the local supermarket to buy milk and eggs.
All consumers get grumpy when they are missing a supermarket nearby, whether it’s the 1% super-rich or the 99% everyone else. Should retailers treat the 1% differently? It all comes down to business and profitability. If I were the owner of a supermarket chain, and analytics showed me that I was going to lose money and profits by my absence, I would take actions to be sure I’m serving that market seamlessly with few interruptions. Why treat them differently? Because I’m in business to capitalize and make profits, too!
Most of the wealth in the U.S. is generated by entrepreneurs. That represents “made” wealth, not merely “inherited” wealth. Entrepreneurs bring a broader view of upper and middle class mentality to their wealth.
Of course, this Worth Avenue Publix will have a unique number of inherited wealth in their customer base. The BIGinsight Consumer Intentions & Actions (CIA) Survey points out that adults living in households with $100,000+ income have similar consideration to those of the total adult population in the selection of their grocery stores. In the case of $100,000+ households, 75.3% say location is one of their top concerns, followed by 67.6% saying price, 59.4% mentioning selection, and 52.7% saying quality.
In the case of total population, price is mentioned by 73.1%, location garners 70.5%, selection 54.9%, and quality consideration is 45.5%.
High income earners are more likely to choose a grocery store over a discount store for their grocery shopping(65.4% vs. 56.9% of total population).
Grocery retail still needs convenient location and ease of ingress/egress. Merchandising, unique selections, quality, and store operations will all play a role in keeping the stores busy.
Supermarket operators should treat all consumers with respect, while tailoring their product offerings to the local community. If a community also warrants a more personalized shopping experience, they should provide it. If not, a competitor will.
First, as someone who lives in the vicinity (not the zip), the customers in this particular zip are not the 1% – more likely the .001%. My guess is that most of the shoppers here are domestic help.
That aside, food is, in these kinds of zips, viewed like any other luxury item. The assortment must be of the highest quality. The service must be excellent, both knowledgeable and friendly. The environment must be impeccably clean and inviting. The typical go-to of price reductions is not as powerful although even the well-to-do will still look for bargains. The difference is they look for bargains on Beluga, not Cheese-Whiz.
I assume the shopping habits of the 1% are substantially different because in my experience the stores in poorer areas are substantially different from those in the more affluent areas, and I assume that the retailers know what they are doing. The nearest Kroger for me is in a poorer area and it is substantially different from those in more upscale neighborhoods. No one else seems to want to fill the void left when the Big Bear closed, though I have tried to get Giant Eagle interested. They said they might consider placing a Value King there. That seems to validate Kroger’s decision to downscale for that neighborhood. But both Walmart and Aldi are nearby — and a Target with their limited food section.
To seal competition from entering the Florida market, Publix would be wise to go a step further with store design.
When I visit Wegmans, Trader Joe’s, Green Market, or even Harris Teeter, I get a much better feeling than walking in the doors of Publix. There are more amenities, more prepared foods and meals and areas to sit and access wireless internet while having a quick meal.
Even the 1% will pause and sit down for coffee or a simple meal if the atmosphere is right. It’s good that Publix has taken a step forward, just wish it was a bigger one that could be proliferated across its chain in other higher end demographic areas.
Rich customers can still be price sensitive! Our stereo-typical “average” views don’t always apply.
Any store has to meet the needs of their actual customers, not meet the needs of some broad-based perception of what the local customer needs may be….
Heck. Should be a great candidate for Publix’s new online alternative, with pickup in the lot. Full range of products, same prices…why ever get out of your car?
Years ago I did a study in the Stop & Shop in Bridgeport, Connecticut, where Paul Newman and other luminaries shopped. The manager told me that anything less than perfection was simply not acceptable, and his clientele gladly paid for that. Fresh meant absolutely fresh, and there was no mark-down for “day-old.” There WAS NO day-old for sale in the store.
The situation was similar in Gelsons in Southern California, and the name eludes me of a smaller chain in Dallas that had valet parking 30 years ago.
Personally, I applaud Publix for tailoring their footprint to the people that traffic their stores. Shoppers — rich or poor — still want a good value, quality service and a nice product mix in stock and easy to find. And if a supermarket doesn’t deliver this, some other retailer will. At least Publix knows their shopper in the zip code and is prepared to deliver on their needs.
The simple answer is yes, as it would be were the question about any specific shopping population in a target market. Just as supermarket operators must consider ethnicity or cultural influence in a specific market, they should consider other important segmentation categories in determining their value proposition and resulting strategies and tactics.
Bill touched on something I was thinking: just because the ultimate customer here is wealthy doesn’t necessarily mean the actual shopper is.
That aside, I don’t think the over-hyped 1% moniker is very useful here: income differentials are probably important at lower levels — say the bottom 10% vs. the middle 20% — but at some point they become irrelevant (to a supermarket, at least); I don’t think the food purchasing habits of someone with a net worth of $2B are meaningfully different from someone with a worth of $2M.
For me the question here isn’t whether to treat the so-called 1% differently. It’s more a question of how to match the shopping experience with the area’s demographics. Some merchants have long designed and operated stores according to the demographics of the areas where the stores are built, as long as it adheres to the overall brand promise and experience. And that continues to be the case.
So if a supermarket is erected in a high-income area, it’s natural to have valet parking and plenty of sampling stations for items like ground buffalo. If the store is in a more mid-income income area, then the retailer should nix the valet parking and replace ground buffalo with the latest Hamburger Helper offering. If the store is located in an area with a high number of senior consumers, then maybe the brand should consider some form of grocery shopping service/delivery. If the store is in a hip area of downtown, then maybe a smaller store with regular wine tastings/jazz gatherings for singles is in order.
It’s not a question of treating the 1% differently. It’s how the retailer implements a long-term strategy to maintain the overall brand promise while creating a shopping experience that resonates with the store’s demographic base.
The per capita weekly expenditure in the urban south for a white family of 3 with a $50,000 income is about $49 per person. The same family with a $500,000 income is $68-69 a week person. It depends on the density of high income shoppers. If they only represent 1% of your demographic, they won’t affect sales much.
Supermarket expenditures do not increase very much as income rises. Otherwise I’d have a store parked outside Warren Buffet’s home. I think if you have broad base, it doesn’t pay to cater to such a small percent. Does Walmart or Aldi change their model in higher income areas? I don’t think so. It’s not worth it. Does Whole Foods change their model where those 99% types live?
Publix “Where Shopping is a Pleasure” — kinda says it all. The trick to dealing with the 1% is knowing how to deal with the help. Just because someone is shopping for someone else doesn’t mean that you treat them with less respect. If you are smart you will make an extra effort because the help doesn’t usually have a budget and their future can depend on the quality of what they deliver. Many retailers seem to miss this point. The help are usually willing to listen to suggestions and if you handle it correctly (and Publix does) it is possible to actually do some menu planning. You might also suggest wines to go with the prime rib and lobster tails. And hors d’oeuvres to accompany the meal and “how many will you be serving at Mrs. Buffets tomorrow evening and is Bill coming? He hardly eats anything but really loves his Dom Perignon!
This is a loaded question, and in my supermarket, everyone gets treated the same (very well).
Poor people — who are the majority of my customer base — enjoy the quality, freshness, and the great values we have every day. It goes back to the the principles my dad taught me when I first started in this business. He told me to look people in the eye, be a good listener, provide the service with a smile, don’t over promise what you can’t do for someone, and make the customer feel special, by carryout service or providing across the board value everyday. Also make sure your employees try to mirror your image of service, and there is a good chance of succeeding.
People with money love the homemade catering service, and deli, plus if they need a hard-to-find item, we get it for them. Other than that, everyone here is treated well.