I read this week that Kroger, the second largest grocer in the country, plans to buy Albertson’s, the fourth largest grocer, pending regulatory approval. The combined company would close the market-share gap with the largest grocer in the country, Walmart.
In the business world, “scale” is the key, or so the general held belief holds. The combined company – if the merger goes through – would have around 5,000 stores and almost 750,000 employees. But, at what cost?
I shop at Publix, not Kroger, even though I think that Kroger is probably often cheaper. Why? Well for a number of reasons. I grew up in Florida where Publix is based, in Lakeland. I love their Key Lime pie. I feel at home in their wide aisles and in the smaller stores. When I shop, I know exactly where in the store I need to go that is, unless I am shopping for Christina. Often, she sends me to buy obscure things that even Publix employees struggle to locate. But that is another column for another time.
My Publix stores are incredibly clean – like cleaner than a hospital – always. That is a big deal to me. Publix employees are friendly, too, and they want to help – like always. Plus, they are there, the Publix worker-bees, unlike at the other grocers. Again, it’s a big deal to me that when I need help, there is almost always someone nearby to ask for that help.
Many things about Publix remind me of that TV show “Cheers,” a place where “everybody knows your name” and where you can go and feel like someone actually cares.
Today, “scale” seems so critical to large businesses. In theory it drives prices down and profits up because businesses are able to purchase goods in larger quantities. But again, what is the cost; what is lost when “scale” is the core business mantra? Perhaps a lot is lost.
When you get in line to pay at Publix, you pay a cashier, a real live flesh-and-blood human; same deal with my other favorite retailer, Costco. When you pay at many of the other big retail chains, instead of paying a human, you often pay a machine. Think Lowes. Think Kroger. Think more and more of the big boxes. Sure, these chains are able to hire fewer people and be more profitable. Nothing wrong with that, right? Maybe. Maybe not.
When I go into a store or a service of any kind, the attitude of the employees is a big deal to me. Are they positive? Do they seem happy, or are they walking around like semi zombies being forced to sell their time because they have bills to pay? How does management quantify that? Should they?
When I shop at Publix or Costco, I feel like I am in a place where everybody knows my name, even if they don’t. When I shop there, it is obvious to me that the employees are not just putting in their time; they seem positive and glad to be there. They appear to have pride in being a part of what they do for a living. And if that is how they feel, I know that most likely reflects how they are treated by management and that how they feel must be at least as big a priority – if not more so – than “scale” to management.
These non-quantifiable things make me want to shop there, to be there. There is much value-added to me, enough to justify paying more. Nothing about that “feeling” though seems directly quantifiable or directly related to a better bottom line or to scale. Despite that, it is a priority; it is part of that corporate culture and value set at Publix and Costco. Why? How is that working for those two companies?
One of my favorite things about shopping at Costco is their “lunch area” where you can buy a jumbo hotdog and a cold drink for like $1.50, or a slice of pizza or ice cream for an equally small amount of money, and sit down right there in the store and have lunch. I read recently that a new CEO was named for Costco and one of the first things he did was to try to raise the rates of those hotdogs and pizzas to make the lunch area more profitable. “Over my dead body,” was the response that arrived to the CEO from the founder/chairman of the board.
My point is that today when scale and profitability increasingly are the single driving force in our lives, we must be very careful to not miss the costs that come with that business model and mindset – the human costs.
More is not always better. Cheaper is not always really cheaper. Substituting machines for humans in the long run sometimes actually costs more. Sometimes “enough” is better, healthier than “more.”
So that is why I shop at Publix – where shopping is (still) a pleasure.
Thank you George Jenkins.