H-E-B augments home delivery through Favor Delivery acquisition

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H-E-B augments home delivery through Favor Delivery acquisition

By Michael Johnsen - 02/16/2018
H‑E‑B on Thursday augmented its on-demand home delivery service through its acquisition of Favor Delivery, headquartered in Austin. Favor Delivery will become a wholly owned subsidiary of H-E-B.

The terms of the transaction were not disclosed.

"I am thrilled to have H‑E‑B join forces with another well‑respected and innovative Texas company," Martin Otto, H‑E‑B COO, said. "We share similar values, including a commitment to excellence in customer service and to our greatest resource – our people. Over the past two years, we have established a strong working relationship with Favor that has proven to be immensely successful for both companies. We see a unique opportunity with this partnership to support and accelerate each other's growth through the sharing of experience, insight and resources."

"Convenience matters to consumers and retailers have to keep up. So, it's no surprise to me that H-E-B made a play to acquire an already successful technology company built around convenience to compete with the likes of Instacart," Casey Gannon, vice president marketing Shopgate, said. "H-E-B now has the opportunity to create personalized experiences based on their buyers' behavior using sensor data native to their phones and beacon technology within stores. They'll know how close their buyers are to stores and what they do when in-store, allowing them to cater to consumers' preferences using a mobile-first environment."

Favor will continue to operate independently as a separate brand led by CEO and president, Jag Bath. H‑E‑B will retain all of Favor's employees and its 50,000 Runners, who operate as contract delivery drivers.

With this partnership, H‑E‑B accelerates its path to become a digital retail industry leader in Texas, enabling customers to choose how they shop, pay for and receive products. The partnership also complements H‑E‑B's brick‑and‑mortar operations by growing its online presence to meet customers' evolving needs and expectations.

Founded in 2013, Favor has quickly expanded its presence to 50 cities across the state of Texas, where it is currently the best-rated home delivery service. In 2017, Favor more than doubled its footprint across the state and became the first U.S. on-demand delivery company to achieve profitability at scale.

"We could not be more excited to be part of H‑E‑B," Bath said. "I am incredibly proud of our team's success and the business we have built at Favor. H‑E‑B's extensive resources, capital and retail food industry experience will enable us to further build on our momentum and significantly accelerate our growth throughout Texas."

With Favor, H‑E‑B gains access to a best‑in‑class consumer‑facing technology and the on‑demand company's advanced home delivery system. H‑E‑B will also leverage Favor's data‑driven approach to capture valuable insights to deliver the best customer experience possible.

This transaction is the latest in a series of strategic investments in technology and partnerships that H‑E‑B has forged to enhance its digital and delivery offerings in Texas. Home grocery delivery is already a key pillar of its offering through HEBtoYou. H‑E‑B also already offers customers the convenience of "Curbside Pickup" at over 100 stores, a service that enables customers to order online and have their groceries delivered right to their cars, and HEB.com offers customers the ability to order and ship grocery, drugstore and general merchandise products to 48 states and military bases worldwide.