Publix: Where hefty profit margins are a pleasure

Jeff Ostrowski/The Palm Beach Post

Over the past two decades, Publix consolidated its dominant position in Florida’s grocery market. As Publix has vanquished Winn-Dixie, its profit margins have climbed steadily.

In 2003, when Winn-Dixie was still a viable rival, Publix’s profit margin was 3.9 percent. As Winn-Dixie withered, Publix’s profit margins climbed steadily, reaching 6.1 percent in 2015.

That would be considered a weak profit margin in the software industry, but in the notoriously low-margin supermarket business, 6 percent is quite high. By contrast, grocery giant Kroger routinely posts profit margins of less than 2 percent.

The obvious question: Are Florida consumers getting the best deal without two dominant supermarkets doing battle? Publix ranks high in customer satisfaction, but a little rivalry never hurts, said Erik Gordon, a professor at the University of Michigan’s Ross School of Business.

“Nothing keeps the prices as sharp, nothing keeps the stores as clean, as competition,” Gordon said.

While Publix faces increasing competition from Walmart and specialty grocers like Whole Foods, Costco, Trader Joe’s and Aldi, Publix has benefited from the disappearance of Albertsons and the demise of Winn-Dixie.

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