Grocery wars: Publix will face off with Kroger in Kentucky, but will it stop there?

Tribune Content Agency

Publix is heading into Kroger country with an expansion to Kentucky this year, but industry experts say they don’t see the Florida grocery giant expanding far beyond the Southeast anytime soon.

Lakeland, Florida-based Publix’s growth into its eighth state will start with a Louisville store expected to be completed during the last part of this year. The company has revealed it is opening three Louisville locations as well as one in Lexington.

In Kentucky, Publix will face competition from Kroger, which has 104 stores in 55 cities in the Bluegrass State. Iowa-based grocer Hy-Vee has also announced an expansion there, said Amanda Lai, a director at Chicago-based retail consulting firm McMillanDoolittle. Her specialties include grocery stores.

Lai said Hy-Vee stores are larger than Publix locations, but the grocers are similar in that they emphasize prepared food and are both employee-owned.

Retailers are expanding beyond their core markets as they continue to seek new growth opportunities, Lai said, noting Kroger moving into Florida with grocery delivery.

“This reflects ongoing grocery wars,” Lai said.

Kroger has about 2,800 stores in 35 states under different banners and reported total company sales of $148.3 billion in 2022.

The competition will make moving into Kentucky more difficult than when Publix entered the Carolinas and faced less effective rivals, said Honolulu-based supermarket analyst David Livingston, whose background includes market research analyzing new store locations.

“It’s not impossible,” Livingston said. “Publix will probably prevail.”

Publix spokeswoman Maria Brous did not answer questions from the Orlando Sentinel about how many states Publix hopes to be in or the risks of moving into Kentucky, but she said a new distribution center in Greensboro, North Carolina, allows the company to “have an even further reach.”

Brous called Kentucky “a natural progression of our expansion into new market areas.”

“We’re always looking to grow, and it’s always great when we are able to come to a community that has long asked for us to be a part of the fabric of their area,” Brous said.

Publix already has more than 1,330 stores in seven states, with 847 in Florida. Its most recent expansion was in Virginia, where it has 19 stores. The employee-owned grocer has 240,000 staffers and brought in $54.5 billion in sales in 2022.

Lai said few grocery store chains are successful in going nationwide.

There are challenges getting products across the country, having enough density in markets to support distribution centers and local differences in what shoppers want, she said.

In one example, Livingston pointed out the difficulty of going into Louisiana, where the focus is more on Cajun cuisine, unlike Publix’s existing markets.

Livingston said he could see Publix possibly expanding into southern Indiana as well as Mississippi.

He added it is hard to predict what will happen 10 years from now because how people buy groceries is changing and retailers moving away from brick-and-mortar stores.

Part of the appeal in Kentucky is the economy in the state and Louisville, Lai said.

A news release from the governor’s office said in 2022 Kentucky had 248 business expansion announcements expected to bring in more than 18,000 jobs and $10.5 billion in investment.

“One thing Publix does right is they do it slow and methodical,” Livingston said. “They don’t just leapfrog and go into new markets.”