PUBLIX C-STORES OFFER GAS, GROCERIES

LAKELAND, Fla. -- Publix Super Markets' first venture into the convenience store/gasoline business is a compact, tropical-looking store here alongside a traditional Publix supermarket.The "pix" store, halfway between Tampa and Orlando, Fla., offers a wide selection of convenience items and groceries for customers on the go in addition to eight fuel pumps. Opened in early October outside a 27,000-square-foot

LAKELAND, Fla. -- Publix Super Markets' first venture into the convenience store/gasoline business is a compact, tropical-looking store here alongside a traditional Publix supermarket.

The "pix" store, halfway between Tampa and Orlando, Fla., offers a wide selection of convenience items and groceries for customers on the go in addition to eight fuel pumps. Opened in early October outside a 27,000-square-foot Publix store, it is the first of four convenience stores that the 658-store chain is planning to test in Florida.

The second pix opened outside a Publix in nearby Winter Haven on Nov. 6, a Kissimee pix is slated to open in December and a store opening in Deltona, between Orlando and Daytona Beach, is planned for February.

Each will be tested for about six months before Publix executives decide whether to expand the service to more stores, the company said.

"Shoppers say, 'It's about time.' They've seen Albertson's and others doing it," said a Publix spokesman.

While the Lakeland and Winter Haven stores have little merchandising space -- 1,000 square feet -- the Deltona and Kissimee stores will be 4,000 square feet each with expanded food offerings, including a deli and a Publix sub station. The sub station itself could prove to be the top profit center for the c-stores. The stations in Publix delis already generate heavy traffic, even with premium prices: $5.59 for a whole sub using Publix meat and $7.59 for a whole sub using Boar's Head meat.

Although Publix has not created a separate division for the pix stores, they are operated separately from Publix's Lakeland headquarters with designated executives and managers for the pix units, sources said.

The pix stores are designed to have a separate identity. The fact that they are owned and operated by Publix is referred to only in a tiny "Publix" under the white, oval pix logo on the outside of the store and on in-store pricing signage.

However, the signage and decor of the c-store coordinates with Publix's store theme and uniform colors, green and orange. The outside of the store and the island over the eight pumps are bright lime green, and the site is landscaped with palm trees and bright flowers. The interior decor is bright lime green, orange and blue.

The goal is to rely as little as possible on the Publix stores near the pix stations, according to a Publix source. Ordering is conducted separately, because many of the items are sold in smaller sizes than in the grocery stores. At the Lakeland pix, the only items supplied by the nearby store are bakery products, including Publix bread, bagels and cookies.

Although pix pricing is the same on some Publix-branded items in the nearby store, many other items are priced higher, which is standard for the convenience industry. For example, 2-ounce candy bars, which retail for two for 99 cents in the Publix store, sell for 69 cents each at pix. Publix-brand eight-count hamburger buns retail for 85 cents in Publix and 99 cents in pix. A roll of Scott toilet paper is 85 cents in Publix and $1.39 in pix.

"Higher prices may not be a concern since most customers appear to be conducting site activities [main store vs. gasoline site] separately," said Joe Leto, president of Energy Analysts International, Westminster, Colo. Energy Analysts recently conducted a consumer study of hypermarts that have fuel centers.

At supermarket fuel centers in Denver and Dallas, there was very little "cross traffic" -- about 20% -- between the supermarket and the c-store, EAI found.

"A significant fraction of customers who use the gas site don't frequent the main store. Supermarket gas sites behaved more like independent gas sites," Leto said.

This consumer behavior should benefit Publix's pix stores, Leto said, because they will pull traffic away from nearby c-store competitors, not Publix's grocery stores.

"You're going to capture traffic from other convenience stores that will give you a lift that you wouldn't have gotten anyway," he said.

A 24-year-old male who was filling up at pix said he buys gas there because of convenience -- he lives in the area -- and prefers a "nicer gas station" than the gas station/c-store across the street. The pix is neat and clean, he said, unlike the store across the street, which is pix's only gas/c-store competitor in the area.

Set in a mid-income, primarily residential neighborhood, pix shoppers are also price conscious.

Another pix shopper, Jose Arroyo, also said he stops at pix because it is "cheap" and often buys snacks and other food in the store.

The Lakeland and Winter Haven pix each have an "island" setup: the c-store is located in the middle of the four sets of pumps on each side of the building. Customers can enter through sliding glass doors on either side of store.

"This is more intimate than a separate c-store," Leto said. "It may be easier to attract customers due to the convenience, but limited in product offerings."

Publix did not name its fuel supplier, but the pumps, manufactured by Gilbarco, are pix-branded with the same lime green and orange color scheme.

The pumps do not include signs cross merchandising items in the supermarket or in the c-store. In addition, the Publix store does not have promotions or signage referring to pix. However, Sam Middlebrook, director of convenience store operations for Publix, told a local newspaper that the chain will purchase technology that connects the supermarket and fuel systems so Publix and pix can conduct cross promotions. However, he said this technology is still being developed.

Publix joins a growing list of food retailers operating in the Southeast that have added gas pumps and/or c-stores. Albertson's, Boise, Idaho, has 12 Albertson's Express c-store/ fuel centers. B.J.'s Wholesale Club, Natick, Mass., has five; Wal-Mart Stores, Bentonville, Ark., has 28; Wal-Mart's Sam's Club has 15; and Costco has nine stores with gas pumps only, no c-store.

In addition, a major Publix competitor, Winn-Dixie, Jacksonville, Fla., operates two stores with gas pumps (but not c-stores) in Jacksonville and Bushnell, Fla., and acquired 32 fuel centers in some Southern states (but not Florida) with its acquisition of the Jitney Jungle chain earlier this year.

The Albertson's Express units -- up to 2,000 square feet -- could be Publix's most formidable competition in the future, because some stores are located in the same Central Florida region where Publix is testing pix, and Albertson's has said it has aggressive expansion plans for its fuel centers. It will open an additional 120 nationwide in fiscal 2003, starting in February, the company said.