Moving into the decade of the 2020s, Kevin Murphy reflected back over his two years as president of Publix Super Markets, Inc. Sales and profits had maintained their positive trend, established long before Murphy's presidency, and comparable store sales continued to increase, despite the chain's expansion of the number of stores. Publix continued to enjoy excellent publicity and a great corporate image, both internally and externally: it had been on Fortune's 100 Best Companies to Work For, and Publix's voluntary turnover rate was 5 percent, versus the industry average of 65 percent. The company was the largest employee-owned company in the United States and had never laid off an employee in its 89-year history. Although fiscal 2019 had shown net sales of a record $38.1 billion (an increase of 5.6 percent over fiscal 2018), and net earnings of over $3 billion, or 7.9 percent of sales, Mr. Murphy was concerned about the future. The grocery industry appeared to be moving rapidly from the traditional in-person shopping experience in which the shopper visited a favorite grocery and personally chose the week's grocery items, to e-commerce with home delivery, or phone app-ordered pickup based shopping. Technology had provided the means for shoppers to select their grocery items from an app on their phones, and delivery and logistics improvements enabled quick delivery of the grocery basket to the shoppers' door. Mr. Murphy believed that Amazon's purchase of Whole Foods was a likely catalyst to cause faster than normal industry change in ecommerce grocery sales and delivery. Evolving lifestyles had resulted in a decreasing amount of food cooked at home, and an increased focus on sustainability, health, and natural organic foods. A new and powerful force that Murphy thought capable of causing significant and lasting industry effects was the COVID-19 pandemic sweeping the country. Cost control remained a major key to success, and private brands had emerged as a practical means of keeping costs low. Murphy was concerned that the rapid change in the supermarket industry was of sufficient magnitude to cause a major disruption in Publix's positive trajectory if the company did not accurately identify the driving forces in the industry, and forecast and stay ahead of the industry's path. He resolved to accurately assess the supermarket industry and keep Publix at its forefront.

History of Publix Super Markets The history of Publix began with its founder George Jenkins beginning his retail career in his father's general store in Harris, Georgia. In 1925, Jenkins decided that Florida's real estate boom offered better opportunities, and he moved to Tampa, Florida. Rather than working in the real estate industry, Jenkins took a job as a stock clerk in a Piggle Wiggly store. After two months, he was promoted to store manager, and a short time later, was transferred to Winter Haven, Florida, to manage the chain's largest store. Jenkins held the management position at Winter Haven from 1926 to 1930. In 1930 he resigned from Piggly Wiggly and opened his own grocery store in Winter Haven and opened a second in 1935. page C-199 Jenkins closed his first two stores, and opened his dream store, the first Publix Super Market, in November 1940. The Publix was a "food palace" of marble, stucco and glass, and included innovations such as fluorescent lighting, air conditioning, electric eye doors, and terrazzo floors at a time when these items were considered luxuries not found in competing grocery stores. He acquired a warehouse and 19 All American stores from the Lakeland Grocery Company in 1945 and began replacing the small stores with larger supermarkets. He continued his aggressive expansion and brought the Publix brand to customers throughout Florida.

The Publix Culture From the day he opened his first grocery store, Jenkins was focused on excellent customer treatment. He thought that friendly customer service and royal treatment were crucial elements in connecting with customers and forming lasting relationships. He believed that the key to treating his customers like royalty was knowledgeable and friendly employees who provided a convenient, but lean, shopping environment. At Publix, the foundation of its first-class customer service was learning all possible about the business, and to make the shopping experience pleasurable. Publix employees (called associates) were taught that providing the highest level of service and treating the customers like royalty, extended beyond the grocery aisles. Customers should have excellent experiences in every interaction with the company. Publix believed that its associates, who continued to embrace the philosophies set out by Jenkins, were what separated Publix from other major grocery retailers. The Company regularly recognized and rewarded its associates for their hard work, dedication, and service. Associates were recognized for many reasons, including:

Going "above and beyond." Associates who had been a role model in embracing the Publix culture and provided premier service were eligible to receive a free sub coupon and a personalized note from their manager. Being dedicated to the Company. Associates received a gift and were invited to a dinner recognizing each five years of service.

Publix valued its associates and rewarded those who made a difference in the lives of others. Although Jenkins died in 1996, his beliefs influenced the way Publix operated up to the present. Each year on September 29, the Company celebrated Jenkins's birthday. The celebrations, known as Mr. George Day, honored the man whose passion for "people first" led to Publix's beginning in 1930.

Recognition of Publix Super Markets

Fortune's Best Big Companies to Work For Fortune's Best Workplaces for Parents Indeed's Top-Rated Workplaces for Veterans Fortune's 100 Best Companies to Work for in America for 22 consecutive years Fortune's Best Workplaces for Diversity Fortune's Best Workplaces for Women Fortune's Best Workplaces for Millennials Fortune's Best Workplaces for Retail Fortune's Most Admired Companies for 23 consecutive years Indeed's Top-Rated Workplaces

Publix's Mission, Commitment, Guarantee, and Key Values Publix's mission was "to be the premier quality food retailer in the world." To achieve that mission, the company focused on its customers, efficiency, employees, stockholders, and communities. Over the years, Publix had an unwavering commitment to being:

Passionately focused on customer value, Intolerant of waste, Dedicated to the dignity, value, and employment security of our associates, Devoted to the highest standards of stewardship for our stockholders, and Involved as responsible citizens in our communities.

The company gave its customers the guarantee that "We will never knowingly disappoint you. If for any reason your purchase does not give you complete satisfaction, the full purchase price will be cheerfully refunded immediately upon request." During the early years, Jenkins reflected on what he had learned in his business life before Publix and developed a set of values upon which he built the company. page C-200These values were adhered to every day at Publix. These values were:

Jenkins believed in investing in others by building relationship, making connections, working collaboratively, learning, and mentoring others. Being a good community partner was requisite for organizational success in Jenkins' mind and he stressed donating time, talent and money to the cities in which Publix operated. Publix's growth required a constant increase in employees and Jenkins encouraged his people to prepare themselves for the constantly emerging opportunities in the organization. Having experienced working for a company where his thoughts and ideas were not valued, Jenkins vowed to make Publix a place where individuals were respected, communication was open, everyone had a voice, and opinions were valued. Further, he committed himself to being involved in all aspects of the company, because he wanted his customers and employees to know that he cared about them. Until his death in 1996, Jenkins regularly visited stores and other facilities, attended store openings, serving as a highly visible example of Publix connecting with its employees, customers, and stakeholders, and this practice was continued by Publix's management. Jenkins sought ways to treat customers like royalty and thereby connect with the customers and form enduring relationships. He used store presentations, personal service, and quality products to make customers feel valued. Publix attributes its high customer loyalty to unwavering focus on excellent and unmatched customer service.

Publix Super Markets' Financial Situation As of March 2, 2020, Publix operated 1,243 supermarkets in Florida, Georgia, Alabama, South Carolina, Tennessee, North Carolina, and Virginia. In 2019, Publix ranked as the eighth largest private company in the United States. Publix's sales revenue for the five years 2015-19 increased at a compound average growth rate (CAGR) of 4.2 percent. Over the same period, gross profit had a CAGR of 3.9 percent, and net profit showed CAGR of 11.2 percent. Publix's net margin ranged from 6.1 percent in 2015 to 7.9 percent in 2019, significantly greater than the industry averagesee Exhibit 1.

Stock Market Performance Publix stock was not traded publicly: it was held only by current and former employees. Because of the lack of active trading, there was no traditional trading- or market-based daily price available. A group of independent financial analysts determined the Publix stock price based on comparison of financial performance in a "peer group" of other supermarket chains. Consequently, stock price swings in other grocers' stock price could affect Publix's share price. Exhibit 4 produces Publix's stock, compared to the S&P 500, and its peer group of supermarkets.

EXHIBIT 4 Comparison of Five-Year Cumulative Return Based on Fiscal Year End Price for Publix Shares, 2014-2019

Source: Publix Super Markets, Inc. 2019 Annual Report.

Supermarket and Grocery Stores Industry The U.S. supermarket and grocery stores industry had grown during the five years 2014-19, primarily due the strong national economy, producing revenue of page C-203$655 billion in 2019, a .9 percent increase over 2018. Annual revenue growth, 2015-20 had been 1.4 percent, and revenue was forecast to top $678 billion in 2020. There were over 66,290 grocery businesses in 2109, with industry employment of 2,772,898. Industry Margins. The margins vary among departments in a large supermarket. The main grocery aisles margins, approximately one percent, are the lowest in the economy. Industry consolidation had resulted from the low margins: in a low margin situation, economies of scale could provide efficiency and centralization, and economic rewards. Consequently, for several decades, the grocery industry had been in the process of consolidation. New store formats pressed margins even lower as competition became more intense. The present average grocery store was a large supermarket with an average of about 45,000 square feet and annual revenue of about $14 million a year, or about $500 per square foot of sales as the industry average. New grocery formats since the 1990s changed the industry, and specialty chains like Whole Foods were earning margins of about 3.2 percent and higher, far greater than the industry average. The wholesale clubs format also undercut the larger grocery stores, putting pressure on the struggling industry. Organic and Private Brands. During the five years 2014-19, many consumers switched to organic and all-natural food brands, and premium food brands, as per capita disposable income increased, which boosted industry revenue. However, many consumers continued purchasing private-label, or store brands due to rising food costs. Increasing generic food purchases reduced revenue growth, but increased profit margins, because store brands could be produced at less cost than national brands. Not only could private- brand foods fill inventory voids, but they also boosted the bottom line. Profit margins on third-party-branded foods were about one percent to two percent, while gross margins on private-label goods could reach between 25 percent and 30 percent. When private brands were first introduced, retailers' ideas of private labels were an afterthought. The word "Generic" was often used interchangeably with private brand, and packaging, usually black and white, was not highly desirable, and quality was also not a priority. The Food Marketing Institute's 2019 poll reports that 46 percent of private-label brands are "very influential" in their decision of which food retailer to shop, an increase of 35 percent from three years previous. The data reflects a similar result from Coresight Research posted earlier in 2019, that suggested more page C-204than half of U.S. shoppers visit a particular retailer to purchase a private-label good. Some grocers turned their private-label brands into lines that are were as well respected as comparable options from packaged food companies like Kraft Heinz or General Mills, if not more so. Data from the Food Marketing Institute (FMI) and market research firm IRI indicated that almost half of all consumers specifically seek out a private-label product. "Food retailers should be very pleased that their brands are becoming bigger factors in how consumers shop. This gives retailers the opportunity to further drive loyalty and trips", the FMI/IRI study commented.1 The increase in acceptance and importance of private brands offered the supermarket industry an opportunity that was far more significant than a few years previous, as the industry moved into an era in which house brands were not just the cheap alternatives, rather the private brands were increasingly the consumer's intended purchase. Industry Challenges. Despite the industry's revenue growth, the industry faced significant challenges. Consumer's habits had been changing--consumers expected low prices and the ability to buy almost anything, at anytime, anywhere. The largest U.S. demographic group, millennials, were the first generation to be less wealthy than their parents: they wanted deals and discounts, in addition to healthy food, socially and environmentally responsible companies, knowing where their food came from, and how it was made. They were also attracted to online shopping. According to BloomReach, a digital shopping platform, 41 percent of retailers listed improving online sale capabilities as the number one priority in 2019.2 The greatest challenge facing the Supermarket and Grocery Stores industry appeared to be the increase in online grocery shopping, which was between three and four percent of total industry revenue in 2019. According to many leaders in the grocery industry, that number would rapidly increase to over 20 percent, and the current industry leaders, Walmart, Kroger, Albertson's (including Safeway and others), Ahold Delhaize (Stop and Shop, Giant Food, Peapod and others), and Publix were not prepared to stay on top in online shopping. A significant problem that faced the industry as online shopping increased, was the decline in brick and mortar store profitability when 20 percent of customers no longer visited the stores, and the consequent decline in the value of supermarket real estate. In addition to developing high efficiency grocery order fulfillment centers and controlling costs, grocers must cultivate new skills to motivate consumers. Many supermarket purchase decisions are made during a visit to the store as customers walk the aisles and make impulse purchases, motivate in some part by the attractive packaging designed by the product manufacturers. As the number of traditional grocery consumers visiting the stores decreases, consumer product companies will face pressure to develop new skills to motivate the grocery consumers. The rapid and increasing emergence of new technologies had been quite disruptive for the retail grocery industry. Amazon and other online competitors had been successful, due partially to transparent pricing, enabled by their online environment. To compete, traditional grocers were forced to keep their prices low, even when their costs had risen. Online grocers pioneered the use of artificial intelligence, advanced analytics, and robotics far more quickly and aggressively than traditional grocers. Amazon's website, for example, has a product-recommendation search engine, over 100,000 robots moving pallets of goods through its warehouses, and innovations designed to make the online shopping experience easier and faster. Most traditional grocers were being forced to catch up. Grocery stores were in a precarious position as they attempted to meet the millennials' expectations while maintaining low prices. Baby boomers continued to have significant buying power and remained a vital component of the industry's customer base. Boomers valued in-store customer service, they were concerned with health and wellness, were receptive to new products, and many were comfortable with technology. All demographic groups presented a huge challenge to the industry with their decreasing inclination to cook. In the United States, about 50 percent of millennials reported rarely cooking at home, and food-service revenue exceeded food-at-home sales. Industry Reaction. Traditional grocers reacted very slowly to the changing consumer trends, which provided entre for other types of retailers. Convenience stores, discounters, and club stores began to directly compete with traditional retailers: food service businesses seized the lunch and dinner demand. Discounters were particularly aggressive, offering a limited variety, and providing great value on all items, which provided higher earnings, than supermarkets. The discounters' low prices reduced the sector's overall revenue by about four percent. The retail grocery industry was generally slow to respond to the changing competitive conditions, and between 2008 and 2018, sales growth of large grocery chains in North America had been only two percent, versus 8.4 percent in South America and Eastern Europe, 6.2 percent in Asia, and 9.8 percent in Africa. As labor costs and commodity prices increased between 2012 and 2017, traditional grocers had not been able to increase their prices to compensate, because of intense competition from lower priced formats such as dollar stores and discount chains. Consequently, their margins dropped dramatically.

Profile of Select Rivals in the U.S. Supermarket Industry Kroger Co., Costco Wholesale Corporation, Albertsons, H.E. Butt Grocery Co., Meijer, Inc., and Whole Foods were Publix's close competitors for top U.S. supermarketsee Exhibit 5.

A June 2018 study of favorite grocery store chains showed that Publix Supermarkets had the second highest composite customer loyalty in the grocery/supermarket industry, scoring 76 percent, versus the leader, Wegmans (a small, privately held New England grocery chain) which was 77 percent. Among Publix's other close competitors, H-E-B was 69 percent, Costco was 65 percent, and Whole Foods 60 percent, Kroger, Albertsons, and Meijer did not make the list.3 Publix compared quite favorably to the top supermarket competitors in customer experience metrics, ranking first among top grocery chains in item availability, store cleanliness, and finding wanted items. Customers ranked Publix number two in checkout speed and cashier courtesy: Publix tied for number two with Whole Foods for specialty department service. Despite these high rankings, Publix placed eighth for good sales and promotions of the 22 top grocery chains surveyed, and 18th for value for the money.

The Kroger Co. The world's largest retail grocery/supermarket chain was Kroger Co. with fiscal 2019 sales of $121,162 million. Kroger was the third-largest retailer in the world, behind Walmart Stores, Inc., and Costco Wholesale Corp. Kroger owned 18 chains of supermarkets including King Soopers', Ralph's, Smith's, City Market, and Pick'n Save, with a total of 2,764 stores, as well as price-impact stores (e.g., Food4Less), multi-department stores (e.g., Fred Meyer, Kroger Marketplace), as well as jewelry and specialty retailers. Kroger's statement of income is produced in Exhibit 6.

Kroger launched a three-year "Restock Kroger" plan, beginning in 2018, that was intended to create shareholder value by pursing its vision of serving America by food inspiration and uplift. The company reported that it delivered over $1 billion in savings in 2018 through process improvements and cost page C-206controls and invested in the future. One part of the Restock Kroger plan was an aggressive move toward omnichannel retailing: the Company believed that its customers did not distinguish between online and in-store purchase experiences, but rather sought the easiest and most seamless solution to their needs or problems. Kroger attempted to expand its capabilities and be available, relevant and accessible to its customers in both the physical and digital shopping environments. The Company had been working on increasing its digital platform for several years and showed a 58 percent growth in digital sales in 2018, and a 21 percent increase in the third quarter of 2019. It was integrating its traditional brick and mortar business with its expanding digital sales platform, with the intention of serving its customers anything, anytime and anywhere. By December 2018, grocery pickup or delivery was available to 91 percent of Kroger households: in December 2019, the company had 1,915 pickup locations and 2,326 delivery locations covering 96 percent of Kroger households. Kroger entered into partnerships with several companies that enhanced the company's omnichannel retailing and served the rapidly evolving grocery market. The Company merged with an online meal kit company, Home Chef, which was ranked first place in online meal kit companies. Shortly after the merger, Home Chef launched the first in-store meal kit line, and at the end of 2018, they were in 700 Kroger locations, and expanding. In February 2019, Kroger announced that Home Chef retail meal kits would be added to an additional 500 Kroger stores. Another significant partnership in 2018 was Ocado, one of the world's largest online grocery retailers, which used advanced robotics and highly efficient automated warehouses. This partnership enabled Kroger to provide faster, more organized ecommerce shopping to its customers. Customers had fresher food, delivered faster from Ocado's page C-207customer fulfillment centers initially located in central Florida, the Mid-Atlantic region, and southwest Ohio. A Wisconsin fulfillment was added in 2019. Kroger invested heavily in private brand foods. Kroger's private brands, known as Our Brands (Kroger, Private Selection, Simple Truth, Big K, and Heritage Farms) accounted for 31 percent of Kroger's sales in 2018. In 2019, Kroger produced about 43 percent of Our Brand grocery items in Kroger owned food production plants. Kroger also debuted a Greenwise Market chain of healthy-living stores designed to be a place for customers to find products that will support their evolving lifestyles. Greenwise locations provided a beverage bar with coffees, locally crafted beers, wines, and smoothies as well as handcrafted sandwiches, burritos, acai bowls, gourmet pizzas, bowls, sushi and sausage made in-house; local and organic produce; body care products; and natural vitamins and supplements.

Costco Wholesale Corporation Costco was the second largest retailer in the world, with fiscal 2019 sales of $152.7 billionsee Exhibit 7. Costco operated as a Cash & Carry/Warehouse Club but was a significant competitor to grocery stores page C-208and supermarkets. The company opened its first location in 1976 as Price Club, in San Diego. The fledgling company quickly discovered that it could achieve much greater buying power by serving small businesses and a select group of non-business members. This was the beginning of the warehouse club industry. Costco's operating philosophy is "Keep costs down and pass savings on to our members." Costco focused on a best value strategy and provided a 100 percent satisfaction guarantee on the memberships and merchandise.

Costco developed its private brand Kirkland Signature as a way to support its low-cost strategy by helping to keep prices low. The Kirkland Brand included grocery items, eggs, honey, sparkling water, razor blades, tissues, wine and vodka, which sold for at least 20 percent less than national brands. Costco's strategy in private branding had been quite successful. In 2018, Kirkland Signature's revenue was $40 billion, an 11 percent increase over the prior year, and a greater amount than the revenue of Macy's and JCPenny, combined. Costco's private brand had become the powerhouse in private brands by 2019. The Washington Post ranked Kirkland hot dogs number one of the best-selling brands in 2019. In 2019, Costco's Kirkland brand revenue of $39 billion, and accounted for about 25 percent of the company's total sales. Kirkland accounts for about 30 percent of all U.S. private-brand grocery sales. Kirkland's numbers starkly contrast with the Private Label Manufacturers Association's report that private brands account for only 17 percent of all grocers' sales. Costco was rather late to offer grocery delivery: its online grocery, CostcoGrocery, did not begin operations until 2017. The company was slow to adopt online shopping because its members tended to spend more money when they shopped in a physical store. Costco shoppers had one- and two-day delivery options for online groceries. Costco members in "qualifying zip codes" could order groceries, including perishable foods, meat, produce, and seafood online and have it delivered in a selected time window by Instacart, a national delivery service. The minimum order was $35.00, and prices for same-day delivery items were higher than Costco warehouse prices. Customers who were not Costco members could order online from Instacart.com but paid a higher price than Costco members. The two-day delivery could be used for cleaning supplies, organic non-perishables, tissue, detergent, and similar items. There was no separate delivery fee for two-day orders, but a minimum order of $75.00 was required. Although many groceries and supermarkets were devoting significant resources to grocery pickup, Costco had no plans to implement pickup services as of mid-2019. Costco's CFO Richard Galanti remarked on an earnings call that despite the success that Walmart and other competitors had with grocery pickup, Costco had no plans to add pickup services. Galanti said that, "We continue to look at it, we continue to scratch our head about it, we recognize that they [Walmart] and some others are putting in a lot of financial commitment to doing this. I think what you're going to find it is like everything else in life at Costco, over time we figure out how to do it our way that makes sense for us that still works.

Albertsons Albertsons Companies, Inc., a Boise, Idaho-based supermarket chain, was the world's 15th largest retailer. The Company family of stores includes over 2,200 supermarkets operating under 22 names in 34 states and the District of Columbia. Albertson's statement of operations, 2014-19 are produced in Exhibit 8.

Albertsons Companies' in-house brand, Own Brands, launched in 2018, comprised over 1,000 items, and was one of the most diverse private brands in the country. The Company also owned one of the nation's largest lines of USDA-certified organic products, with sales of over $1 billion yearly. Recognizing that competitive success in the retail grocery industry required a good online grocery platform, and that omnichannel shoppers were more valuable to the Company than only traditional brick and mortar customers, Albertsons entered into three strategic digital partnerships. The partnership with BloomReach, a digital experience platform, employed artificial intelligence to provide Albertsons's online customers an enhanced search experience, quickly showed results in expanding the shopping basket. The Company partnered with Quotient Technology, which became Albertsons's exclusive digital media platform. Quotient enabled consumer packaged goods companies to work with Albertsons to direct shoppers to their branded shopping locations that allowed customers to add products directly to their carts. Although Albertsons had an existing partnership with Instacart, a grocery delivery service, page C-209it launched its own branded subscription delivery service in 2019, and partnered with Glympse, a location sharing technology. Glymps enabled customers to get real-time status updates for delivery and pickup orders. By the fourth quarter 2019, Albertsons's home delivery services were available in 11 of the top 15 markets across the United States. Albertson's filed for an IPO (Initial Public Offering) in 2015 but abandoned it due to market volatility of grocery stocks. The company filed again in March of 2020, and if successful, it would be one of the largest market debuts of the year, estimated at $2 billion. However, stocks around the world were dropping sharply due to rapid spread of the coronavirus in March 2020, and the fate of Albertson's IPO was questionable.

H. E. Butt Grocery H. E. Butt Grocery, commonly known as H-E-B, was a family-owned, regional supermarket chain in Texas and Mexico. H-E-B was founded in 1905 by Florence Butt, and had grown to 400 stores (336 domestic) in 2020. In fiscal 2018, H-E-B had $28 billion in revenue, an increase of 12 percent from the prior year. The company was the 37th largest retailer in the world in 2017, and 12th largest private company in the United States. In 2018, the company had moved up to 11th largest. The company operated as H-E-B, H-E-B Plus, Mi Tienda, Joe V's Smart Shop, and Central Market. In 2019, H-E-B was listed by Forbes as number 11 - America's largest private companies, number 23 - Best Employers for New Grads, number 32 - Best Employer for Women, and number 32 America's Best Employers by State. H-E-B tied for first in customer satisfaction in the 2019-20 survey by the American Consumer Satisfaction Index ranking. Financial information was scarce. Annual sales were estimated to be $28 billion in fiscal 2018 (ended October 31, 2018), and $23.12 billion in fiscal 2017. These revenue amounts exclude results from Mexican operations. In fiscal 2017, Mexican operations generated sales of $1.48 billion. H-E-B developed a family of private brands, beginning in 1991, including H-E-B, H-E-B Select Ingredients, H-E-B Organics, Hill County Products, H-E-B Buddy. Central Market, H-E-B Kitchen & Table, and ChefStyle. The company promised that the quality of H-E-B brands would always equal or exceed that of national brands. The company began page C-210grocery delivery in 1916 in a Model T Ford. A century later, in February 2018, H-E-B acquired Favor Delivery, an innovative, on-demand delivery service. Favor was the best-rated delivery service in Texas, and in 2017, had become the first U.S. on-demand company to achieve profitability at scale. According to H-E-B, the Favor and other acquisition partnerships, plus strategic investments in technology, gives H-E-B the ability to ship groceries and other merchandise to 48 states and military bases around the world.

Meijer, Inc. Meijer, Inc. was started in 1935 as a supermarket chain in Grand Rapids, Michigan by Hendrik Meijer. The company operates over 200 stores in Michigan, Ohio, Indiana, Illinois, and Kentucky, employs over 80,000, is the 19th largest private company in the United States, and 54th largest retailer in the world in 2017. Meijer's estimated 2019 revenue was $17.8 billion. Meijer is credited for pioneering the modern supercenter concept in 1962, when it opened "Thrifty Acres," a food and general merchandise store in which customers could find everything they needed in only one trip to the store. Each Meijer supercenter has 40 departments, which sell over 120,000 products: the stores are open 24 hours daily, 364 days a year. The company has created about 10,000 private-label brands. The Meijer corporate values are customers (customers don't need us, we need them), family (Meijer is a family business, treating each other with dignity and respect), fresh food, safety and health, and competition (Meijer is committed to keeping its competitive spirit strong and staying nimble and flexible to win in the marketplace). The manifestation of Meijer's value of competition is evidenced in Grand Rapids, Michigan, where the company is reacting to the challenge of e-commerce by piloting a micro-fulfillment center, built in repurposed footage of a supercenter. The center will employ proprietary hardware and software that will enable Meijer retail stores to pick and assemble on-line orders to meet their customers' expectations and make online grocery profitable.

Whole Foods In 1978, John Mackey and Renee Lawson, with $45,000 borrowed from family and friends, started a natural foods store named SaferWay in Austin, Texas. Two years later, Mackey and Lawson partnered with Craig Weller and Mark Skiles, who owned Natural Grocery, and formed Whole Foods Market in 1980. The company began an expansion and acquisition strategy in 1984 and expanded into Houston and Dallas. In 1988, Whole Foods Market acquired Whole Food Company in New Orleans, and, in 1989, expanded into California. The company continued opening new stores, but the rapid growth was the result of acquisitions. Throughout the 1990s, Whole Foods Market acquired companies from California to Boston. In 2002, the company expanded into Canada, and, in 2004, entered the UK market by acquiring seven Fresh & Wild stores. Whole Foods Market was acquired by Amazon in August 2017 for $13.4 billion. Whole Foods Market statement of operations 2015-17 (prior to being acquired by Amazon) is produced in Exhibit 9. As of January 2019, Whole Foods operated 479 stores in the United States.

Amazon immediately began to work toward positioning Whole Foods Market to excel in the online grocery market. Amazon Prime members received special discount on many foods and free shipping on online grocery purchases. In many markets, Amazon Prime customers could receive their online grocery orders in as little as two hours, between 8 a.m. and 10 p.m. Cost control was a priority: Whole Foods Market centralized its procurement and operations in Austin, Texas. Amazon imposed merchandizing fees for suppliers of items that were on sale: the company offered a 10 percent Amazon Prime discount on selected items, and Whole Foods charged that 10 percent back to the vendor. It was expected that Whole Foods Market planned to focus on expanding its online grocery services and the availability of its 365 private label brands to online shoppers under Amazon managerial control. Publix Super Markets in Mid-2020. As the industry moved into 2020, the magnitude of online sales made delivery options almost mandatory. Although delivery was necessary, it was not always profitable. For example, Walmart, which was considered one of the most successful online grocery retailers, forecast a loss of over $1 billion in 2019. Obviously, efficiency and cost control were mandatory areas for grocery retailers' attention as the rapidly changing industry moved an increasing amount of sales into ecommerce. page C-211 Profitability in the retail grocery industry had been falling due to decreasing productivity, higher costs and significantly increased price competition. According to a January 2019 McKinsey & Company report, grocers could experience a $200 billion to $700 billion in revenue shift to online, discount, and non-grocery channels. The net result was that the industry was risking more than $1 trillion in earnings (before interest and taxes), as well as the loss of about half of traditional grocery retailers. The COVID-19 pandemic in early 2020 injected additional speed into the supermarket industry change. In 2019, about one-third of a sample of shoppers reported that they bought "almost none" of their groceries online, while 16 percent bought "some," and 12 percent bought "almost all" online. On March 13, 2020, with the COVID-19 pandemic spreading through the United States, one-third of shoppers reported purchasing groceries online during the prior week, with 41 percent being first-time online grocery shoppers. A result of the COVID-19 crisis was that most restaurants were closed, resulting in a large swing in food sales going to supermarkets. This presented many previously reluctant online grocery shoppers with the experience of easy, convenient online shopping, which would likely accelerate the structural change in shopping with an increase in the online grocery segment. Although the large revenue increase was welcomed by the industry, it concealed e-commerce deficiencies. A looming challenge for the industry was coping with the shift from groceries purchased from store shelves to lower-profit ecommerce sales.

1. What are the chief elements of Publix Super Markets' strategy? How good is the strategy?
2. With what strategic issues should Publix Supermarket's managers be concerned?
3. What recommendations would you make to Publix Super Market's top management regarding how best to sustain the company's growth and improve its financial performance?