Publix Tests Larger, Organic Hybrid Format
By
Tom Ryan
Publix
is testing a 60,000 square foot prototype store in Naples, FL, that will
meld many of the features of GreenWise Market, its neophyte concept emphasizing
natural, organic and eco-friendly products, with its conventional stores.
The
extra space – about 15,000 square feet larger than the average Publix
location – will add a broader selection of natural and organic goods
and cafe-style seating for customers to eat meals in the store. The many
preprared food counters at GreenWise – including The Carvery, Mediterranean
Oven, Pacific Wok and Soup Station – may be reduced in number.
The
store, to debut in the second half of 2010, will be branded as a conventional
Publix, rather than GreenWise Market.
Publix
just introduced a shelf tag program to better identify items as natural,
organic and earth-friendly products throughout its store system as Publix’s
conventional store customers are also increasingly interested in organic
and natural products, spokeswoman Shannon Patten
told Refrigerated
Foods & Frozen Retailer.
So in addition to continuing to test smaller GreenWise Market concept,
Publix wanted to enhance its better-for-your stance at its traditional
stores. “We want to test that concept as well,” Ms. Patten said.
Publix
only has three GreenWise locations in Palm Beach Gardens, Boca Raton
and Tampa.
Suzy
Badaracco, a food industry forecaster at Culinary Tides, told The
Ledger in
Florida, that the prototype goes against the current trend calling for
smaller grocers with a more intimate, “neighborhood” feel. But she said
it could be successful because only Whole Foods is doing such a format
on a widescale.
“To
go big, but also organic and green completely fits,” said Ms. Badaracco. “The
only one doing it well right now is Whole Foods. There’s not a lot of
competition there.”
But BNET
Retailer noted
that many grocers are testing what it calls the “hybridized supermarket” concept.
A Kroger Signature format first opened in late 2008 features wider
product selections organics and all-natural foods, video rentals, fully
cooked entrées, health and beauty care, a photo lab, and a play center
for babysitting shoppers’ kids. In January 2009, a 100,000-square-foot
Signature location – Kroger’s largest store – opened in the Houston
area. It includes a “Chef Shoppe” featuring a chef on hand to prepare
meals for customers, a extensive wine section guided by an on-site
wine steward, a “Kitchen Place” offering an assortment of kitchenware,
a “Nature’s Market” offering natural food and organic selections, and
a drive-thru pharmacy offering $4 generics.
Hybridized
supermarkets, according to the BNET
Retail article,
have also been opened up over the last few years by Supervalu, HEB, A&P
and Meijer.
Discussion
Questions: What do you think of the potential for Publix’s large format
prototype? Do you see opportunities across the U.S. for bigger organic/natural
food stores or conventional/natural hybrids such as the new Publix prototype?
- Publix to Test
Large Store Idea – The Ledger - Publix develops
organic hybrid store concept – Refrigerated & Frozen
Food Retailer - Kroger Combines
Concepts for Houston Store – BNET Retail - Kroger opening
new store in Missouri City – Houston Business Journal - Publix Joins
Supermarkets Developing Hybrid Stores, This Featuring Organics – BNET
Retail
Fresh Markets is doing well in South Florida, so I do think there’s room for more large format organic stores.
Having said that, if Trader Joe’s could get some stores open in the area, it could prove to be a really disruptive influence. The price points are superb and food quality good enough.
Absolutely, this will be a success if they can find a way to make it affordable. The Wild Oats or Whole Foods model melded with the Publix purchasing power, brand and reputation of competitive prices. People want to eat better and healthier but can’t afford to pay 3 times the price. Naples is a great place to test.
Publix is one of the few retailers that can pull this off. It sounds almost like a Wegmans, only smaller. Naples is a good area to try this out. Plenty of cash in consumers’ pockets there. Keep in mind this is a conventional store with added natural/organic selection. Just about every chain does this but it sounds like Publix is simply one-upping the competition. There are other opportunities around the country but only a handful of retailers with the wherewithal to pull it off. It would have to be a high class regional chain like Wegmans or HEB. If one of those sterile, publicly-held grocery chains tried the format, it would probably be a bust.
Major regional and national supermarket chains are undoubtedly attempting to recapture some of the ACV lost in the past few years to companies such as Whole Foods, and other specialty entities. However, all supermarkets should exercise caution while expanding too fast, in too many neighborhoods, for all-natural or all-whole versions of their stores because even Whole Foods has achieved success in a big way by expanding carefully to serve only the true size of such specialty markets.
Truth is, the overwhelming number of consumers that are currently buying all-natural, all-whole, or all-organic, might be doing so more in a current “trendy” state of mind, rather than for keeps. One certainty is that even today, only a small percentage of consumers are willing to pay premium prices.
All the research I’m looking at supports the idea that Baby Boomers will (on balance) be highly conscious of maintaining health, wellness and youthfulness over the next 30 or so years. With the oldest Boomers now in their early 60s, the timing for this initiative likely couldn’t be much better.
The economic collapse has caused a reevaluation of lifestyles in general. Diet will surely factor highly as we seek out healthier behaviors.
And despite the economy, Boomers will be the only generation in history who in their senior years, will outspend all other age cohorts combined.
I think the only rate-limiter on this will be identifying markets that index highly toward health and wellness and have the income to support a healthy lifestyle.
I was presenting at the Publix headquarters last week and had time to tour some stores while in Tampa. The Green Wise concept appears to be a big success within the traditional Publix format. Expansion of Organic and earth friendly items should go over well. Publix prides itself on being unique and the Green Wise section inside of the Publix store is just that. I like the idea of shelf tags pointing out items that are organic or earth friendly. Keeping these items in the traditional assortment will help shoppers get exposure to these options and increase trial.
Publix clearly has data that indicates that upscale consumers are ready for a concept like this. Their track record of superb execution should help them pull it off. The question is whether the concept will work in less affluent areas….
Creating a hybrid within a PUBLIX (Green Wise) has more legs than a full-line organic store. Naples is a great community (I live there), but only a portion of the Consuming public is going to commit to a full organic lifestyle, even in that affluent enclave.
You have a Consumer base that arrived in Naples for a variety of reasons. One of them is that they conditioned themselves to “buy” at a sharper price–and yes, housing prices, country club memberships, and boat slips have declined there.
PUBLIX’s ESOP arrangement makes this a worthwhile experiment, and the 2010 opening may help a bit. But, they’ll have to remain flexible to making changes on the 100% organic approach.
Perhaps the most important new aspect of this is selectively expanding how different shopper profiles view Publix. Tesco is recognized as a leader in providing stores for the community: Superstores, standard stores, targeted stores (i.e., upscale or Latino) and becoming the #1 c-store in UK. As these concepts are rolled out, the shopper can determine whether she wants broad selection/menu ideas, shopping for tonight’s meals, quick pickup for lunch, etc. This approach meets their shoppers current needs. “I can shop the store for ready prepared, entertaining friends, and convenience.
The weekend headlines also reveal that Florida’s population growth has apparently leveled off. So Publix needs to intensify its share-of-wallet strategies in its home state.
If more folks in its trading area are seeking more organic and “green” products, then that’s what Publix should be offering. But accomplishing this by building larger stores that add these products to existing assortments sounds like dilution to me. It could end up slowing overall turns, with negative effect on GMROII.
Better to refine the total mix and store concept. Define Publix positioning and pare down slower movers among its packaged products to make room. Yes, it’s hard to give up the promotion and allowance bucks that the CPG manufacturers provide, but maybe they can make up for that by actually selling more to more shoppers more often.
I see big opportunities for organic and health-oriented spin-offs; currently, there is Whole Foods and “everyone else” including a bunch of small operators and co-ops that often don’t have a compelling breadth of assortment. I’ve wondered why Walmart hasn’t gone after this since it is already sourcing organic and green products. It seems odd that Bentonville is actually an underserved market for organic, health-oriented and green products! That’s why the UPS truck pops by my house a couple of times each week.
The Publix move is yet another indication that the FTC was out of its mind when they protested the Wild Oats/Whole Foods merger. As organic food becomes more mainstream, there will be more competitors.
First, Publix is a smart retailer. It’s always better to try something and know for sure vs. waiting until your competitors try it and then attempt to catch up. So, they’re obviously putting together a store with things that work from both concepts. More learning = smart.
Second, if it isn’t obvious to the masses yet that food is THE problem and THE solution to the Health Care issue, it should be to the people that sell it. So, for Publix to stick to their guns in terms of ‘better for you’ food, however many shapes that takes, is a very, very good thing. The general public will benefit from more plentiful healthy options and therefore, Publix will too. I believe they “get” it…at least, let’s hope so.
I guess Publix was using GreenWise as a test model to see how organic and fresh lines would fit in a conventional but larger footprint Publix. They must have concluded that it was successful and given a go to expand it throughout the chain, first, in a larger format, and eventually positioned in the rest of their stores.
As the article states, HEB and A&P with its Fresh Market formats and Super Fresh banner have been successfully integrating organics, fresh and the rest of the conventional center store under one roof.
It is so much more economical to buy private label organics like Green Way from A&P banners than more high-priced items from specialty retailers like Whole Foods.
Publix is an exceptional retailer, backed by sound and focused strategy. I have every confidence this organic hybrid format will work well for them. HEB has similarly extended its store network with eight Central Market locations, all in Texas. Publix consistently executes well across every key area: management, customer service, product assortment, site selection, and innovation. This is yet another example of an organization with clear brand values and vision.
The challenge with the marketing of organic foods may boil down to one element: price. Consumers are becoming weary of “going green” whether buying products for their homes or food for their families, when the price differential is significant.
Their is an accumulated level of skepticism amongst consumers relative to the package of consumer package goods and the use of words such as “low fat,” healthy,” and “organic.” The skepticism emanates from “low fat” product which is true to the definition but may not be “healthy” as it is loaded with sugar and sodium.
Publix should be testing different store sizes and layouts, but should not divert attention to truth in packaging for the long run, and pricing for the short term.