The Rise of HEB in Houston

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wnetmacman
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The Rise of HEB in Houston

Post by wnetmacman »

Moved from A Third Urban Tom Thumb into its own topic.
pseudo3d wrote:
architect wrote:
pseudo3d wrote:I had no idea how concentrated Tom Thumb is, even with a few store closures under Safeway. I'm pretty sure Tom Thumb was doing the heavy lifting in the pre-2015 Safeway Texas Division.
I think that I have mentioned this before, but Tom Thumb is heavily concentrated in the Park Cities, North Dallas and the established northern suburbs (Richardson and Plano especially). Due to the fact that many of these area developed in the 60's-70's at the latest and have remained upscale (often driven by good schools), Tom Thumb has been able to maintain a steady stream of upper class shoppers to these legacy stores, allowing them to be immensely successful. On the other hand, Randalls largely developed as Houston was beginning to suburbanize, and since many of Houston's inner-ring suburban neighborhoods trended downhill as wealthy shoppers moved further outward, many of the chain's early stores lost their primary customer base and were forced to close (especially when Safeway began to implement the upscale-leaning Lifestyle remodels). Also, in Houston, Kroger has been more of a constant threat to Randalls, along with HEB more recently; which explains the difference in the overall recent success of the two chains.
It was a little different than that, as during the 1990s, Kroger and Randalls did fight for #1, partially because Randalls at the time had a much better fleet of stores compared to Kroger, which was still pushing around a fleet of Greenhouses that weren't getting any newer. That began to change under the Signature program, and had Randalls not crumbled under Safeway, it's likely they would still be fighting with Kroger today and H-E-B wouldn't have been able to get the grip they did. A lot of the 2005 closures (pre-Lifestyle, but just barely) were in rougher neighborhoods or neighborhoods that wouldn't tend to support a Randalls (like Spring Branch or Sharpstown), and even if they did close, then the company would certainly be on the cutting edge of new suburbs and wealthy inner suburbs. (Safeway did not carry on this tradition, though they made a few token attempts at first, and they did give us the Midtown store amid a sea of bad decisions).
pseudo3d wrote:
wnetmacman wrote:
pseudo3d wrote: It was a little different than that, as during the 1990s, Kroger and Randalls did fight for #1, partially because Randalls at the time had a much better fleet of stores compared to Kroger, which was still pushing around a fleet of Greenhouses that weren't getting any newer. That began to change under the Signature program, and had Randalls not crumbled under Safeway, it's likely they would still be fighting with Kroger today and H-E-B wouldn't have been able to get the grip they did. A lot of the 2005 closures (pre-Lifestyle, but just barely) were in rougher neighborhoods or neighborhoods that wouldn't tend to support a Randalls (like Spring Branch or Sharpstown), and even if they did close, then the company would certainly be on the cutting edge of new suburbs and wealthy inner suburbs. (Safeway did not carry on this tradition, though they made a few token attempts at first, and they did give us the Midtown store amid a sea of bad decisions).
HEB began to take hold in Houston way before the fall of Randalls. They had begun their onslaught of Pantry stores to get their name out. Then Albertsons failed, and they got several newer, larger stores from that. That's what fueled their rise. Randalls getting bought out by and slowly disintegrated by Safeway didn't hurt them, but it wasn't the main factor. The Randalls failure helped Kroger more than anyone else.
Not to continue derailing the topic, but I disagree. H-E-B Pantry stores were not direct competition for Randalls and Kroger, at least anymore than ALDI is today (yeah, I know ALDI stores are even smaller than H-E-B Pantry stores but I digress), and they were cheap to build because they didn't have real departments (no deli, bakery, pharmacy, florist, etc.). If H-E-B closed them all in 2000 (as they began to phase out the Pantry stores), then it wouldn't be a huge financial burden/embarrassment. Randalls had gotten bought in 1999 and from what I've heard, quality immediately began to go down, upsetting customers. About the same time, Kroger had surpassed Randalls with its Signature stores. With Randalls going down and Safeway not exploiting new suburbs (they did build a few stores but not very many), it was time for H-E-B to roll. Albertsons never really had a good place in the market (because brute-force never really works--they were basically investing enormous funds of money for a fraction of market share) and were largely absorbed by Kroger or independents, and H-E-B only took maybe, what, four stores initially? (And most of those opened in 2002, well after Randalls had started to fall) When Randalls announced closing most of its stores in 2005 (and the subsequent lease non-renewals for others), that was it, H-E-B plowed through them. I have been told personally that H-E-B's business was almost entirely from displaced Randalls business.

If Randalls had NOT been taken over by Safeway and was in good financial standing, then they and Kroger would continue to spar for #1 and #2, and what would've come in instead would be Wal-Mart Neighborhood Markets, which never got very far into Houston due to the three-way race between H-E-B, Randalls, and Kroger. H-E-B Pantry probably would've eventually closed down (the stores that H-E-B built often were to replace two or three other Pantry stores, not just one) and would've been regarded as an "experiment" on H-E-B's part.
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