Guest Analysis From PlanetRetail.net…
Publix, the USA’s largest employee-owned supermarket business, has reported its 2002 figures, revealing what must be a disappointing 0.7 percent slide in same-store sales. Publix's sales increased by 4.2 percent to $15.9 billion during the year, with new store openings counteracting the weak comparable performance. Despite the decline in same-store sales, net earnings were ahead by 19.2 percent to $632.04 million. CEO Charlie Jenkins Jr. stated "I'm pleased that our strong earnings growth resulted in a stock price increase at a time when the market continues to struggle." The company operates around 750 superstores and c-stores in Florida, Georgia, Tennessee, South Carolina and Alabama.
The drop in comparable sales at Publix serves to underline the extreme competitive pressures facing mainstream grocery retailers in the USA over the past year. The decline is all the more surprising as Publix is among the more impressive supermarket operators in the market, with a well-respected reputation for private label development, customer service and grocery merchandising. Put in context though, Publix’s showing becomes more respectable with its performance comparing well with many of its peers. Of the main supermarket businesses, only Ahold, Winn-Dixie, A&P (against weak comparatives) and Kroger have outperformed Publix, while Delhaize, Safeway, Albertsons, Supervalu and Pathmark have all posted inferior results. The main complaints that have accompanied these lacklustre figures have been deflation and stronger competition. Businesses with a greater exposure to general merchandise – i.e. the warehouse clubs and Wal-Mart - have enjoyed a more benign environment.
What makes interesting reading are the growth rates posted by specialist, more focused niche players like the drugstores, dollar stores and natural food retailers, the bulk of whom have posted comps in the mid to high single digits. Admittedly, booming prescription sales are providing a welcome boost for the drugstores that are seeing less than inspiring front-end sales growth, but the growth rates suggest that higher prescription-based customer traffic could eventually filter through to their grocery and GM categories.
The conclusion for the supermarket players must be that the mainstream is an easy place to occupy but one that is increasingly failing to excite shoppers. Consumers are demanding more in terms of value-for-money, but also in terms of differentiation, value-added services and excitement in both product and merchandising. Providing this excitement will involve taking risks, but it is worth remembering that people who sit on the fence usually end up with splinters in their rears.
Publix, the USA’s largest employee-owned supermarket business, has reported its 2002 figures, revealing what must be a disappointing 0.7 percent slide in same-store sales. Publix's sales increased by 4.2 percent to $15.9 billion during the year, with new store openings counteracting the weak comparable performance. Despite the decline in same-store sales, net earnings were ahead by 19.2 percent to $632.04 million. CEO Charlie Jenkins Jr. stated "I'm pleased that our strong earnings growth resulted in a stock price increase at a time when the market continues to struggle." The company operates around 750 superstores and c-stores in Florida, Georgia, Tennessee, South Carolina and Alabama.
The drop in comparable sales at Publix serves to underline the extreme competitive pressures facing mainstream grocery retailers in the USA over the past year. The decline is all the more surprising as Publix is among the more impressive supermarket operators in the market, with a well-respected reputation for private label development, customer service and grocery merchandising. Put in context though, Publix’s showing becomes more respectable with its performance comparing well with many of its peers. Of the main supermarket businesses, only Ahold, Winn-Dixie, A&P (against weak comparatives) and Kroger have outperformed Publix, while Delhaize, Safeway, Albertsons, Supervalu and Pathmark have all posted inferior results. The main complaints that have accompanied these lacklustre figures have been deflation and stronger competition. Businesses with a greater exposure to general merchandise – i.e. the warehouse clubs and Wal-Mart - have enjoyed a more benign environment.
What makes interesting reading are the growth rates posted by specialist, more focused niche players like the drugstores, dollar stores and natural food retailers, the bulk of whom have posted comps in the mid to high single digits. Admittedly, booming prescription sales are providing a welcome boost for the drugstores that are seeing less than inspiring front-end sales growth, but the growth rates suggest that higher prescription-based customer traffic could eventually filter through to their grocery and GM categories.
The conclusion for the supermarket players must be that the mainstream is an easy place to occupy but one that is increasingly failing to excite shoppers. Consumers are demanding more in terms of value-for-money, but also in terms of differentiation, value-added services and excitement in both product and merchandising. Providing this excitement will involve taking risks, but it is worth remembering that people who sit on the fence usually end up with splinters in their rears.
- KC's View:
