Land deals may signal H-E-B push into Dallas area
H-E-B has quietly been gathering acreage in North Texas while building stores in Houston and San Antonio that redefine the traditional Texas supermarket.
But if you’re a fan of Texas’ largest independent grocer, don’t hold your breath.
The San Antonio-based grocer has bought at least a dozen locations in the region, including in Allen, Carrollton, Corinth, Dallas, DeSoto, Fort Worth, Frisco, Grand Prairie, McKinney, Murphy and Plano.
A full-blown expansion north seems like a natural step to everyone else in Texas, but the 110-year-old family-owned and -operated business didn’t make it to the top of its game by rushing into anything.
“This market is ready for them,” said Karla Smith, senior vice president and partner in the Dallas office of commercial real estate firm CBRE/UCR. “I anticipate H-E-B will open a few stores in Dallas-Fort Worth in 2016.” Smith is echoing what many in the real estate and grocery businesses suspect.
When asked about its local real estate purchases, the company said it has no current plans for H-E-B stores in the Dallas-Fort Worth market.
“We continue to include D-FW in our statewide real estate search for future property holdings for the company,” said Winell Herron, H-E-B vice president. She said H-E-B considers advance real estate purchases a key part of its strategy for offering low prices in its stores.
Herron also said it’s important to note that not all of its land purchases end up meeting the requirements for a store.
“For the time being, Central Market will continue to be our primary format and growth vehicle for the D-FW area,” she said.
H-E-B, which operates five Central Market specialty food stores in the Dallas area, has land-banked 16 North Texas sites, Smith said.
Positioning for growth
In 2009, the company opened a distribution center in Temple to serve its stores around Waco. The warehouse supplies six H-E-B stores in smaller towns along this region’s southern perimeter in Burleson, Granbury and Waxahachie.
The company expanded that facility in 2012, raising speculation that it was planning to enter the Dallas market.
The company’s stores already cover much of the state of Texas. “They absolutely dominate Austin and San Antonio and apparently Houston soon,” Smith said.
Supermarket News, a grocery trade magazine, published a story this month with the headline: “How H-E-B became Houston’s hometown grocer.”
Ed Wulfe, chief executive of Wulfe & Co., a Houston real estate brokerage, said H-E-B has been “systematically growing in Houston. They are very careful and conservative. They studied the market and had a game plan.”
H-E-B came into Houston in the 1990s with small 20,000-square-foot Pantry stores. In the 2000s, it started building H-E-B stores there.
In recent years, H-E-B has been neck-and-neck with Kroger and Wal-Mart in Houston, each with market shares of about 20 percent. H-E-B is expected to take the lead in Houston soon.
Many industry watchers believe the H-E-B store on Interstate 10 in the Spring Branch area of Houston is the grocery store with the highest sales volume in the state.
Wal-Mart watching
H-E-B has become one of the 10 largest grocers in the U.S., according Supermarket News.With annual sales of $22.6 billion last year, it operates 373 stores, including 50 in Mexico. The company has been led by chairman and CEO Charles Butt, grandson of the founder, since the 1970s.
Wal-Mart executives have long pointed to the chain as one of its smartest competitors. Wal-Mart operates 130 Supercenters and Neighborhood Market stores in North Texas.
Carol Johnston, a Wal-Mart senior vice president over store operations, said she has worked across the country for Wal-Mart, but she believes that “H-E-B does some of the best work.”
The best retailers admit learning from their competition. Johnston said she has learned a lot from watching H-E-B, ranging from how it sets its soda shelves to understanding what Easter means to the Hispanic customer.
Wal-Mart now stocks cascarones this time of year, for example. The Supercenter on Webb Chapel in Dallas, which has a large Hispanic customer base, will sell more than 4,000 of the confetti egg cartons at $1.87 this Easter, said Sonya Hostetler, Wal-Mart’s regional vice president in Dallas.
The Supercenter on Webb Chapel is the company’s smallest in the state and an example of how Wal-Mart is trying to be as nimble as H-E-B. The parcel was only big enough for an 88,000-square-foot Supercenter, but Wal-Mart went ahead and built it, Johnston said.
Johnston says she also expects H-E-B to expand into North Texas soon. “When they do, we’re not going to roll over,” she said.
H-E-B and Kroger, which now has larger Signature stores and Marketplace stores that sell general merchandise, have made it tougher for Wal-Mart in the Houston market.
For years, Randalls was Houston’s hometown store. Safeway bought the company in 1999, when it also owned the Tom Thumb chain in Dallas. Now Randalls and Tom Thumb are owned by Albertsons-Safeway after a merger completed in February.
It may just be a coincidence, but H-E-B scrapped its Pantry concept and started building its big stores in Houston just after Randalls was sold to Safeway. Now that Albertsons has acquired Safeway, H-E-B may see an entry point in Dallas.
Herron said she wouldn’t conclude that the company’s Houston growth provides a road map for a potential D-FW market entry.
“If and when we do, it would be custom-built for D-FW and not modeled after another market,” Herron said. “H-E-B values innovation, creativity and specific tailoring to the communities we serve.”
That’s not lip service.
1945 store
One of H-E-B’s oldest stores in San Antonio is on Nogalitos Street, which it opened in 1945. In January, the company expanded that store to 62,000 square feet, almost three times its previous size. To stay in the neighborhood, the company knew it had to expand up, not out, so it created the first multi-level H-E-B.
The H.E. Butt Grocery Co. is known for tailoring its stores to the neighborhood, both in size and amenities. It’s not a cookie-cutter chain but is uniformly known for price, selection, variety, its private-label foods, and fresh produce and meats.
Birth of Central Market
When the grocery business was criticized for sameness in the early 1990s, Butt took it personally and challenged his staff to come up with a new store. The idea was to create a model that didn’t stock traditional supermarket brands such as Coke, Cheerios, Charmin and Tide. They came up with Central Market, based in Dallas and led by Butt’s nephew Stephen Butt.
In February, H-E-B opened a 91,000-square-foot store on San Felipe and Fountain View in a tony neighborhood near the Houston Galleria. It has an in-store restaurant called Table 57. Store shelves include gourmet and everyday food, and one exterior wall is a vertical garden with 22,000 live plants.
“Wal-Mart is scared of H-E-B,” Smith said last week when she was the featured speaker at a meeting of CREW Dallas, a nonprofit group of women in commercial real estate. “I would be. They are the most nimble grocer in the state.”
No comments:
Post a Comment