Publix will spend $1.5B this year to expand and remodel stores
- Publix Supermarkets plans to spend roughly $1.5 billion this year to build new locations, remodel existing ones, and acquire shopping centers anchored by company stores, according to Retail Leader.
- The Florida-based grocer has been steadily increasing the percentage of company-owned stores it operates. In 2017, Publix owned close to 32% of its stores, compared to just over 11% a decade earlier in 2007.
- This expansion news comes on the heels of last week’s announcement that hourly employees and some managers were getting a raise. The company also increased its stock price by close to 13% to $41.40.
Publix is in an enviable situation for a supermarket chain. It reported a profit margin of 6.6% in 2017, an unusually high figure in the traditionally low-margin grocery business. The chain also has a sterling reputation with both customers and employees. Publix tied with Wegmans earlier this year as America’s favorite grocery stores, and placed once again in Fortune’s top 100 places to work.
Thanks to these reasons, and others, the Florida-based grocery chain is now in the unique position of being able to expand its reach while competitors are being forced to curb growth.
Publix is planning on investing $1.5 billion (up from the $1.4 billion it spent last year) to remodel stores, buy more property that it had previously been leasing, and shore up technology. There is particular opportunity for the grocer in Virginia. Last year in Richmond alone, the grocer was able to acquire ten Martin’s stores, thanks to the merger between Ahold USA and Delhaize Group.
The Mid-Atlantic region does present some challenges for the popular retailer. There is plenty of competition from the likes of fellow upmaket grocers Harris Teeter and Wegman’s, and Publix may have trouble with brand recognition outside of its home region.
Publix is also using some of its capital expenditures budget on remodeling existing stores. The grocer, which has been around since 1930, knows the importance of keeping up with consumer demands, and invests in keeping its stores up to date.
The supermarket chain has also made some serious inroads in the last decade to owning more of its properties, as opposed to leasing them. In 2017, Publix owned close to 32% of its stores, compared to just over 11% in 2007. When possible, it’s generally held as a better position to pay a mortgage than a lease payment. In addition, as Publix picks up more shopping centers where it’s the anchor store, it will be in the advantageous position of being able to keep competitors out, and collect rent.
Publix has been able to succeed by growing slowly since it opened its first store. It wasn't until 1991 when Publix finally ventured outside Florida with a store in Savannah, Georgia.
By not rushing, the supermarket has been able to maintain the two pillars for which its known: service and execution. In this regard, only Wegman’s enjoys a similar reputation. Publix is a well-loved chain because consumers enjoy its excellent customer service, which starts the moment they walk in the store with a greeter saying ‘hello.’ They also appreciate that corners are not cut. If Publix can stay true to its core priorities, these expansion efforts should pay off for the grocer.
- Retail Leader Publix's $1.5B plan to rule food retail