September 12, 2013
Walmart vs. Publix: A Case Study On Quality vs. Price
Since the early 1930s the Florida-based Publix supermarket chain has been growing in popularity and numbers in the southeast United States. The chain’s commitment to quality, cleanliness and customer service have attracted a huge and dedicated following that doesn’t much care about pricing.
As Walmart entered the grocery business, the Big Box behemoth went from town to town, destroying other local grocery chains with its rock-bottom pricing and massive availability. But not Publix.
“Even in markets where the two companies faced off and all other competitors had been largely cleared away, Publix still continued to grow. To fight back, Walmart launched a huge price-based advertising campaign in an attempt to put a gap between them and competitors such as Publix,” Ronn Torossian, CEO of 5WPR, said.
At first, the PR gambit worked. People decided to give Walmart a try to see how much they would save. And save they did. Low prices are low prices, after all.
Publix vs Walmart – Quality Matters
Then Publix, the quality and service-positioned grocer did something unthinkable. They did math. See, for years Publix had been marketing their BOGO products and advantage buys. So someone in their public relations department grabbed a calculator.
The result, Torossian said, was very interesting. When considering the BOGO, coupons and advantage buys, shopping at Publix could actually not only compete in price… “They could actually beat Walmart in some situations on a cart of groceries,” Torossian confirmed.
“This was a huge public relations coup.”
Publix began running adverts exactly like Walmart’s, sometimes side by side in the paper. Customers realized they could get quality and service as well as a balance sheet that looked the same.
In the end Walmart’s price gambit worked in the early stages, and it worked very well in various regions across the country. But not so well in markets where Publix maintained a strong presence.
This is not the only time a quality-positioned business successfully competed on price using creative sales and other value added options. The lesson here, Torossian says, is that depending on price alone can kill you in the long run. Public relations and marketing campaigns can include price, but are much better served to focus on quality and value.