Publix
The costs at Publix are competitive; the prices are not, leaving the company exposed to potential threats. Taking a look at the Publix value chain, we can see that they have a cost advantage on the supply side over some of their other competitors. Publix is around four times the size (by sales revenue) of major competitors such as Whole Foods and Winn Dixie. This gives Publix stronger buying power at the supplier level. They are, however, smaller than some of their other competitors, such as Kroger and Wal-Mart. The dominant market position in the Southeast region allows Publix to exert significant power over buyers as well. This combination gives Publix higher margins. Moreover, Publix has made significant investments in technology and strategic alliances over the years to reduce supply chain costs (Thayer, 2008 & Publix, 2003). These investments, particularly in terms of it, appear to be ahead of the competition, save for Wal-Mart, a renowned supply chain it innovator.
However, these margins come at the expense of competitive pricing. Publix margins are substantially higher than those of warehouse stores operated by Wal-Mart and Costco. This exposes Publix to the risk that those stores can move into the Southeast strongly and win market share.
Overall, Publix has fairly good control over their supply side costs. They have average operational costs, as they have invested in attractive, well-staffed stores in order to compete at a slightly higher end of the market than Kroger or Winn Dixie. On the buyer side, however, Publix does not offer competitive prices. The biggest danger for Publix in terms of their value chain as that while they are generally inferior to Wal-Mart in terms of supply chain management. A higher-end market position can only insulate Publix for so long given the value chain disadvantages that they experience vs. Wal-Mart.
Works Cited
Publix Q3 Fiscal 2009 Form 10-Q. Retrieved February 2, 2009 at http://www.publixstockholder.com/servlet/ProxyServlet?path=/stockholder/Document.do&SECDocumentId=4909&curPage=1&selectedDocumentType=3&selectedYear=2008
No author (2003) Publix Joins UCCnet to Improve Supply Chain Efficiencies. Internet Retailer. Retrieved February 2, 2009 at http://www.internetretailer.com/internet/marketing-conference/20143-publix-joins-uccnet-improve-supply-chain-efficiencies.html
Thayer, Warren. (2008) Why Publix is So Darn Good. RFF Retailer. Retrieved February 2, 2009 at http://www.rffretailer.com/Articles/Cover_Story/BNP_GUID_9-5-2006_A_10000000000000409591
