LAKELAND, Fla. -- Publix Super Markets here is the latest supermarket to jump into the gas business with its announced test of a gas/convenience store format in Tampa next year.
A 3,000-square-foot convenience store with gas pumps will be built outside a Publix store in the Dale Mabry Shopping Center in Tampa. The opening is expected to be in early 2001.
"We always want to make shopping easier for our customers, and this format will offer more convenience, along with a new product -- gasoline," said Jennifer Bush, spokeswoman for Publix in a press statement.
Although the product selection for the convenience store has not been nailed down, Bush said the unit would retail items already sold in its grocery stores.
Publix is also reviewing other test sites for the format in central Florida, Bush told SN.
"Supermarkets in many ways don't have much choice to seriously consider, if not be in, the business. They look around and see that gasoline is a very important component of consumers' buying habits and traits," said Tim Carroll, partner and managing director of Chicago-based Arthur Andersen's corporate finance group.
As Carroll points out, gas is not a loss leader category. His research points to a 5% to 15% increase in grocery sales when gas pumps are added to the store operation. Harry Hammond, a supermarket gas station consultant in Pollock, Texas, estimates a 30% return on investment.
Carroll expects Publix, along with other supermarkets, to offer high profit-margin foods, such as home meal replacement selections, at the convenience stores. "When I can pick up my dinner, get gas and go home, it is obviously much more profitable. Ready-to-eat meal sales may double," he said.
Sam Middlebrook, director of merchandising for Publix's Atlanta division, will be the operations manager for the test formats.
Publix's entry into gas fueling will be closely watched by competitors who are already heating up the Florida area with gas service. Wal-Mart stores in the region already sport fuel pumps, and Boise, Id.-based Albertson's, as well as Issaquah, Wash.-based Costco Wholesale will be adding gas service outside stores in Tampa, according to Hammond.
Albertson's currently has six stores in Florida with gas pumps -- and 90 nationwide -- and is "evaluating all existing locations" to determine if gas pumps should be added, according to Anne Alenskis, a spokeswoman for Albertson's.
Winn-Dixie Stores, based in Jacksonville, also recently opened gas stations outside a store in Jacksonville and one in Bushnell, Fla. The units are not staffed and do not include convenience stores. Officials at Winn-Dixie said there are no specific expansion plans.
"We planned two [gas stations] in two different markets to see how they do," said Micky Clerc, spokesman for Winn-Dixie. "We'll see how these go, then make future plans."
Tampa-based Kash n' Karry, which does not currently operate any gas stations, will watch the success or failure of other supermarkets before getting into the business, according to a spokeswoman.
Despite the influx of grocers in the gas business, some maintain the market is wide open for other supermarkets. "They are not really cannibalizing on other grocers, they're cannibalizing on what convenience stores have taken away from them for the past 10 to 15 years," Hammond added.