H-E-B trying new tricks on Houston
H-E-B is testing a series of innovations on Houston shoppers that will likely influence stores in its higher-end Central Market division and others in the chain.
The San Antonio-based company’s newly renovated Central Market on Westheimer is piloting the new offerings, meant to align with shifts in consumer demand unfolding across the nation. The changes sharpen the store’s competitive edge against other retailers experimenting with new products and services to retain customers in the city’s cutthroat grocery market.
The $10 million overhaul, completed last week, added 10,000 square feet to the store. At 85,000 square feet, it’s now the largest location in the Central Market division.
“We’ve had other innovation projects, but nothing of this magnitude,” said Stephen Butt, Central Market’s president.
The company expanded the produce section by about a third in response to greater demand for fresh foods, making it largest and most diverse of all Central Market and H-E-B locations. Butt said the company will likely adapt certain aspects of the expansion to fit produce departments in other stores throughout the state.
The company also expanded its selection of olive oils, wine and international foods. And it equipped the store to make its own chocolate, which it might eventually ship to other Central Market locations.
“We felt like it was time to do significant innovation work to keep it very current with food trends and the changes in Houston’s demographics and competitive scene,” Butt said.
The company chose the Houston store to test its latest ideas because of the strength and diversity of its customer base. Foot traffic has consistently grown 2 percent to 3 percent each year since it opened in here in 2001, Butt said.
The renovations align with H-E-B’s expansion strategy in Houston, one of its key markets. Butt said the role of his division is to develop new ideas that might be suited for use across the company.
“We look for ways to export things we do at Central Market internally to other part of H-E-B,” he said.
Central Market’s appeal as a destination store with few locations has long given it an edge in the markets where it operates, but the Houston renovations better position it to compete with rivals such as Whole Foods and other more conventional retailers. H-E-B, Wal-Mart and Kroger are the largest players region, each claiming roughly a quarter of the local market.
The company’s investment in area indicates the strength of Houston’s grocery market, which became highly competitive in recent years as more retailers sought to capitalize on its growth and diversity. Kroger and H-E-B have competed especially aggressively, adding dozens of locations throughout the area.
“These companies continue to invest in innovation and they’re constantly trying to up the ante on customer service,” said Joe Williams, a grocer issues consultant with the Texas Retailers Association.
Kroger has for years tweaked its stores to allot more space to produce, organics and food prepared in-house for on-the-go customers seeking healthy meals. And H-E-B, which offers a large selection of local produce, often wins the battle on price.
The war shows no sign of easing. Wulfe & Co. anticipates that the sector this year will add 10 Aldi locations, six Krogers, three H-E-Bs and one Wal-Mart neighborhood supermarket, among others, driving nearly a quarter of the area’s projected retail expansion.
“This is a great test market to try new concepts and ideas and products,” said Ed Wulfe, the firm’s founder and CEO.