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LOGISTICS
A Site Selection Web Exclusive, September 2018
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Yes, Virginia, Publix is Betting on You Too

The supermarket chain’s inexorable march north includes a $300-million investment in Greensboro, North Carolina.

LOGISTICS
A Publix store in Weaverville, North Carolina, is among those to be served by a new distribution center in the Greensboro-High Point metro area.
Photo courtesy of Publix

by RON STARNER

In the spring of 2017, then-Virginia Governor Terry McAuliffe paid a house call to Publix Super Markets Inc. at the company's headquarters in Lakeland, Florida. The purpose of the visit was to persuade the privately-owned firm, founded by George Jenkins in 1930, to open a few stores in Virginia.

Nearly a year and a half later, it's safe to say that the house call paid off. Publix opened its first eight stores in Virginia in mid-2018 and is on pace to open even more.

"Virginia is the new frontier for us," says Brad Crenshaw, senior real estate manager for the $36-billion company based in Polk County in Central Florida. "We are definitely in growth mode. Virginia is our new state now."

New doesn't mean last. On August 29, Publix cemented its northward march by announcing a $300-million investment into establishing a new warehouse and distribution center just east of Greensboro, North Carolina. Upon completion in 2022, the facility will employ up to 1,000 workers and service Publix stores in the Carolinas and Virginia.

Crenshaw

“Virginia is the new frontier for us. We are definitely in growth mode.”
— Brad Crenshaw, Senior Real Estate Manager, Publix Super Markets Inc.

For a firm that has 1,190 stores, including 779 in Florida and 186 in Georgia, the logistics operation in north central North Carolina signals an expansion phase into the heart of the Mid-Atlantic and perhaps beyond.

With a net profit in 2017 of $2.3 billion, Publix is one of the kings of food retail in America. Walmart leads all grocers with $13.6 billion in net profit, while Kroger registered profits of $1.9 billion and Amazon matched Publix with $2.3 billion.

Publix sales for the first six months of 2018 were $18 billion, a 5.4 percent increase from $17.1 billion in 2017. Same-store sales were up 3.4 percent, while net earnings climbed 23.4 percent. Publix's private stock price, meanwhile, increased from $36.85 a share to $42.55 a share, a jump of over 15 percent.

All that growing keeps Crenshaw and his 138 colleagues in the Publix Real Estate Department busy. "We've bought 178 shopping centers over the last five years," says Crenshaw. "We own 302 now, and we expect to acquire more."

Project Sky Takes 30 Months to Land

The site selection process leading up to the August 29 announcement in Greensboro lasted 30 months — an indication that Publix painstakingly performs its due diligence before investing anywhere. Project Sky, as it was known, will qualify for up to $37 million in incentives from the Guilford County Board of Commissioners, plus another $13 million over 12 years from the North Carolina Job Development Investment Grant (JDIG) program.

The project will be Publix's 10th distribution center and will pay an average annual wage of $44,000, but Publix spokeswoman Maria Brous says that incentives were not the decisive factor.

"State and local incentives were important to the deal; however, many other factors were also part of the consideration process," she says. "We consider many different factors in site selection, including market, inbound/outbound traffic, company growth, capacity, available incentives and workforce development, to name a few."

The site in the Piedmont Triad region of North Carolina sits on 350 acres near the intersection of Birch Creek Road and U.S. 70 east of Greensboro, a city of 300,000 people at the congruence of Interstates 85, 40 and 73. The project delivers a shot in the arm to a city that this summer lost the headquarters of longtime corporate resident VF Corp. to Denver. But the metro area's 41 projects last year allowed it to finish narrowly behind metro Omaha in Site Selection's Top Metros rankings for Tier-2 metro areas.


"We've bought 178 shopping centers over the last five years. We own 302 now, and we expect to acquire more."
Brad Crenshaw, Senior Real Estate Manager, Publix Super Markets, Inc.

Publix, which employs more than 190,000 people companywide, has 38 stores in North Carolina and operates supermarkets in seven Southeastern states.

"We also own and operate 11 manufacturing plants," says Crenshaw. "These include facilities for making fresh foods, dairy products and bakery items. We even make all our own mayo."

A Tried and True Site Selection Checklist

When asked what makes a successful site for one of Publix's stores, Crenshaw rattled off a grocery list of criteria that he knows like the back of his hand:

  • A place that is underserved in the market, based upon meticulous customer data.
  • A median household income of $45,000-plus.
  • A population trade area of 5,000 to 8,000.
  • A high-growth (3 to 6 percent) area.
  • Future sales potential.
  • Adequate zoning and utilities already in place.
  • An amenable beer and wine ordinance.
  • Accommodating topography.
  • Road networks providing easy access to and from the site.
  • Building codes that will accommodate Publix construction needs for a store of 30,000 sq. ft. to 61,000 sq. ft.
  • A site plan that will allow for five parking spaces (10 feet each and wide angled) per 1,000 sq. ft.
  • A favorable view corridor, meaning that Publix signage and storefronts can be seen easily by motorists passing by the shopping center.

PUBLIX OPERATES
1,190
STORES IN
7
STATES


As Publix continues to grow in the Southeast and push northward, says Crenshaw, it will also bank on more sales from its new GreenWise Market concept. About 25,000 sq. ft. each, the GreenWise Markets cater to the natural and organic foods market, which Publix expects to hit $117 billion in the U.S. by 2021.

"It will include a beverage bar that sells coffee, draft beer and kombucha," he notes. "The idea is for the food and drink to be the stars of the store."

As if that's not enough, Publix is also rolling out valet parking at some of its stores. "The valet is free, and they'll even load the groceries into your car for you," Crenshaw says. "It's still in pilot mode, but it's being well received."

So, is Publix going to take a breather and slow down now? Not a chance, says Brous. "We are always looking to expand our footprint in all seven states in which we operate."

Ron Starner
Executive Vice President of Conway, Inc.

Ron Starner

Ron Starner is Executive Vice President of Conway Inc. He has been with Conway for 16 years and serves as editor of the TrustBelt Report and lead organizer of the annual TrustBelt Conference. He also writes extensively for Site Selection and Conway's Custom Content Publishing Division. His Twitter handle is @RonStarner.

  




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