Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.
Home to some of the fastest growing cities in the country, business-friendly Texas has attracted the interest of a wide range of expansion-minded retailers recently.
Walmart alone opened 35 new stores in the state last year, and Target, Aldi, Trader Joe's and a slew of others are preparing to make a big push in 2013. But according to industry insiders, regional supermarket powerhouse H.E. Butt — better known simply as H-E-B — has not only defended its market share but, in many areas, expanded it. One source estimated total sales were up 8 percent or 9 percent in 2012, with same-store sales ahead between 5 percent and 6 percent.
"H-E-B is known for fiercely defending its territory," says John Rand, SVP of retail insights for Kantar Retail's Market Insight Group, who credits the company's diverse portfolio of store formats for its success.
To protect against the Walmarts of the world, the chain relies on its H-E-B Plus and H-E-B Marketplace stores; to beat back the Trader Joe's threat, it has Central Market; and when Aldi comes to town, it can counter with Joe V's Smart Shops — though some believe the limited assortment chain will present more of a challenge than other newcomers.
"H-E-B can compete on the high end any day," explains one industry insider. But given the lower incomes of many Texas residents, "It may have a harder time with Aldi."
In addition to the right format, it takes a very market-specific approach to assortment, store layout and merchandising. Most impressive is that H-E-B doesn't have a loyalty card to gather shopper information but relies instead on transactional data and neighborhood studies to drive its customized approach.
"H-E-B knows how to appeal to the local marketplace better than almost any retailer in the country," says one manufacturer.
To compete on the low-end, H-E-B "takes lesser margins than other chains and makes up for it in volume," says one industry insider. "And when Walmart came to town, it borrowed some of its cost-cutting strategies in warehousing, logistics, etc."
The chain also earns credit as the first grocer to move from a national brand equivalent private label program of me-too products to a market-specific program of unique items formulated for Texas consumers.
H-E-B also stands out among its fans for its commitment to locally sourced products, the friendliness of the staff and its hometown feel. Said Craig Rosenblum, a partner at Willard Bishop, "H-E-B takes good care of its employees, the community and the shopper."