2019 Retail Pacesetters: H-E-B builds local connections with its customers

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2019 Retail Pacesetters: H-E-B builds local connections with its customers

By Mark Hamstra - 05/07/2019
San Antonio-based H-E-B remains one of the nation’s foremost regional powerhouse retailers, beloved by its dedicated customer base across the broad state of Texas.

The company, which operates 400 stores in the Lone Star State and Mexico, is well-known for its local connections with consumers and its knack for tailoring stores to the individual neighborhoods it serves. Its website lists annual sales of $26 billion.

“H-E-B is always just incredibly impressive because they are able to play offense and defense at the same time,” said Neil Stern, senior partner at Chicago-based consulting firm McMillanDoolittle. “[Many companies] are trying to defend against the expansion of Aldi and all the other things they are having to deal with. But H-E-B, meanwhile, is able to successfully fend off all the competitors on its home turf, and at the same time be incredibly innovative, and that’s really a tough trick.”

One of the ways H-E-B has innovated historically has been through its varied formats that are tailored to serve the various demographic groups it serves, Stern said. “They have Joe V’s [Smart Shop] for price, they have Mi Tienda for [Hispanic shoppers], they have Central Market for upscale, and they have H-E-B Plus to go into nonfoods,” he said. “They have been very good at innovating to solve consumers’ needs through format.”

The chain also has been experimenting with services for those customers who prefer to shop online, with the rollout of its delivery and curbside pickup services.

“They are going after the omnichannel piece, while at the same time being very good at the basics — good at the core business,” Stern said. “They are absolutely a company that’s able to hit on all cylinders.”

H-E-B also seeks to be a partner for local producers. The chain recently launched its “2019 Quest for Texas Best,” marking the fifth year in a row that H-E-B has reached out to find the best local products made in its home state.

H-E-B’s tie-ins with such local sports teams as the San Antonio Spurs NBA basketball team generate considerable buzz through a series of humorous, local commercials and community events.

The company also has been expanding its in-store foodservice offering, with such concepts as a new taqueria — True Texas Tacos — that opened last year in a San Antonia store.

H-E-B offers an extensive pharmacy program, which includes specialty pharmacy for patients with complicated treatment needs, drug compounding services, and its H-E-B RxTRA Advantage program, offering pharmacy benefit management for local employers.

“H-E-B is the acknowledged leader in pharmacy in the Sun Belt, and consumers see pharmacy both in generics and branded as a real value,” said Burt Flickinger, managing director at New York-based Strategic Resource Group.

He cited efforts on the part of the company to ensure that its pharmacy offerings are competitively priced.

“They make sure that people on fixed and limited incomes can afford the key drugs,” Flickinger said. “So, H-E-B can go head to head with Walmart or Costco, or any kind of competitor, and win in pharma, which is the real credit to [chairman and CEO] Charles Butt’s brilliant leadership and strategic genius.”

This story is one of 20 profiles of retailers who are making a difference in the industry. To read more, click here