As previously covered by Local Profile, H-E-B is making a massive investment in the DFW area. With four new stores coming soon to Plano, Frisco, Allen and McKinney, H-E-B aims to take over North Texas with a recipe they’ve been developing since they opened in Houston twenty years ago.
According to The Dallas Morning News, the San Antonio-based company entered Houston’s very competitive retail industry in 1992. At first, they opened modest pantry stores that closed only eight years later in favor of the H-E-B supermarket model. By the mid-2000s, H-E-B was building between seven and ten stores yearly in Houston, with the Bunker Hill store on I-10 selling six times the average for a supermarket.
So what was H-E-B’s secret?
One of the main features of the company was to be involved in the community. Chairman and CEO Charles Butt hired former Frito-Lay employee Scott McClelland to be the region vice president in Central Texas in 1990. Under McClelland’s leadership, H-E-B grew from an 11% to a market-leading 27% share thanks to their emphasis on low prices and locally sourced products with an assortment tailored around the neighborhoods the stores landed on.
“H-E-B doesn’t have a prototype store. They’re rethinking, tweaking, very much always evolving,” said JoBeth Prochaska, Weitzman’s senior vice president of development and asset management in Houston, via The Dallas Morning News. “They’re never done, and that’s part of their big success.”
In addition to marketing strategies and operations, McClelland got H-E-B involved in local charities and food banks and even helped when weather disasters struck.
Another important aspect of H-E-B’s system is real estate. Developers will try to recruit the retailer for their projects. “H-E-B won’t take any locations out of expediency, and they train managers from their first store to open their next store,” said Drew Alexander, former CEO of Weingarten Realty Investors, via The Dallas Morning News. According to Alexander, when H-E-B first landed in Houston, it was common to see landlords in the waiting room offering deals on anchor sites.
While these methods clearly worked for the company in Houston, it took twenty years for H-E-B to become the market share leader, so it might take some time before they take over one of the most competitive grocery markets in the U.S., according to Denton Record Chronicle.