Kroger surpasses H-E-B and Walmart for #1 market share in Houston

[ClownLoach]

I have to back pesudo3d up on this. The local rags have already paraded around this data and will likely have some trickle-down influence. Target has also built some large stores like Katy and New Caney, which have been lauded as being "huge" when, in reality, they're smaller than our existing Super Targets and only carry a standard P-Fresh array of groceries, and feature no service departments. In fact, multiple reviews of the New Caney store insist that it's a small Target, which it certainly is not (135k Sqft.).

That being said, the data and the methodology are questionable, but there is likely at least a grain of truth to it. Another important note for me was that Kroger outpaced Walmart as well, which was number 2 in 2022. HEB has been on a building streak, but their new stores are getting further and further out. Even in the closer suburbs like Katy, they built an EFC (fulfillment center) and a Joe V's (discount banner) rather than springing for a new store. Anecdotally, the consumer base both here and in San Antonio seems to be taking more issue with HEB. Price hikes on private label items have consumers buying name brand for usually only a few pennies more. Still, the problem is name brands at HEB are often priced similarly to the competition. I don't think HEB is on the way out, and I wouldn't be surprised if they were back on top next year, but I also think the tide is shifting. DFW is HEB's future, at least at the moment.

The other thing about the so-called "big" Target stores is that like modern H-E-B builds/remodels a lot of that space is dedicated to curbside/delivery. Of course, H-E-B isn't going anywhere, the land it holds alone is worth a fortune. At the same time, I'm not sure if DFW is the "future". H-E-B had to build up in Houston with the Pantry stores and mostly landed their original #1 market share through a number of happy accidents that befell its competition. In DFW, they seem to be going for the "Wegmans of Texas"-style approach with super-large, upscale-leaning stores (which I would have to disagree with, as their bakery selection has taken a nosedive after COVID and never recovered, and as for their delis, there isn't much to them), while more working-class neighborhoods like Redbird will be getting Joe V's.

Most major metros have had zero new full size Target stores over the last decade. Only small formats. The greater Houston area is one of the few to get full size stores. Target stopped building Super around 2010.

They are not building bigger back rooms for online stuff either. They instead are building the standard backroom but only half of it is merchandise now, using sliding racks to eliminate aisle space. They also increasingly are using storage trailers and containers like Walmart. They do seem to have less wide open wasted spaces in the new formats which I think drives a perception of being smaller.

[storewanderer]

I have to back pesudo3d up on this. The local rags have already paraded around this data and will likely have some trickle-down influence. Target has also built some large stores like Katy and New Caney, which have been lauded as being "huge" when, in reality, they're smaller than our existing Super Targets and only carry a standard P-Fresh array of groceries, and feature no service departments. In fact, multiple reviews of the New Caney store insist that it's a small Target, which it certainly is not (135k Sqft.).

That being said, the data and the methodology are questionable, but there is likely at least a grain of truth to it. Another important note for me was that Kroger outpaced Walmart as well, which was number 2 in 2022. HEB has been on a building streak, but their new stores are getting further and further out. Even in the closer suburbs like Katy, they built an EFC (fulfillment center) and a Joe V's (discount banner) rather than springing for a new store. Anecdotally, the consumer base both here and in San Antonio seems to be taking more issue with HEB. Price hikes on private label items have consumers buying name brand for usually only a few pennies more. Still, the problem is name brands at HEB are often priced similarly to the competition. I don't think HEB is on the way out, and I wouldn't be surprised if they were back on top next year, but I also think the tide is shifting. DFW is HEB's future, at least at the moment.

That issue on private label items no longer being cheaper than name brands is an issue at a lot of grocery chains now. It has been an issue at Safeway for the past 20 years and that pricing attitude has been translated over to Albertsons under the Safeway systems too. I really take issue with this. There is NO POINT to private label if it is going to be priced higher than or only pennies lower than the name brand. Don't even offer it if you can't price it lower. One chain where that is rarely an issue continues to be Kroger. They still "get it" when it comes to managing a private label program, merchandising it, pricing it, etc.

I think this is why we don't see much private label on categories like laundry, chips, even soda; the big brands run enough promotions that they'd keep undercutting private label. While most larger chains still have private label soda and Safeway/Kroger do push it to some degree, many smaller chains like Raleys out west don't even bother with it anymore.

I noticed massive price differences between HEB and Joe V's on private label items; like 30%+ differences. Joe V's had the absolute best pricing I've seen in any operator basically ever on numerous items- if they have the items you actually want to buy- and that is a big IF.

[pseudo3d]

I have to back pesudo3d up on this. The local rags have already paraded around this data and will likely have some trickle-down influence. Target has also built some large stores like Katy and New Caney, which have been lauded as being "huge" when, in reality, they're smaller than our existing Super Targets and only carry a standard P-Fresh array of groceries, and feature no service departments. In fact, multiple reviews of the New Caney store insist that it's a small Target, which it certainly is not (135k Sqft.).

That being said, the data and the methodology are questionable, but there is likely at least a grain of truth to it. Another important note for me was that Kroger outpaced Walmart as well, which was number 2 in 2022. HEB has been on a building streak, but their new stores are getting further and further out. Even in the closer suburbs like Katy, they built an EFC (fulfillment center) and a Joe V's (discount banner) rather than springing for a new store. Anecdotally, the consumer base both here and in San Antonio seems to be taking more issue with HEB. Price hikes on private label items have consumers buying name brand for usually only a few pennies more. Still, the problem is name brands at HEB are often priced similarly to the competition. I don't think HEB is on the way out, and I wouldn't be surprised if they were back on top next year, but I also think the tide is shifting. DFW is HEB's future, at least at the moment.

That issue on private label items no longer being cheaper than name brands is an issue at a lot of grocery chains now. It has been an issue at Safeway for the past 20 years and that pricing attitude has been translated over to Albertsons under the Safeway systems too. I really take issue with this. There is NO POINT to private label if it is going to be priced higher than or only pennies lower than the name brand. Don't even offer it if you can't price it lower. One chain where that is rarely an issue continues to be Kroger. They still "get it" when it comes to managing a private label program, merchandising it, pricing it, etc.

I think this is why we don't see much private label on categories like laundry, chips, even soda; the big brands run enough promotions that they'd keep undercutting private label. While most larger chains still have private label soda and Safeway/Kroger do push it to some degree, many smaller chains like Raleys out west don't even bother with it anymore.

I noticed massive price differences between HEB and Joe V's on private label items; like 30%+ differences. Joe V's had the absolute best pricing I've seen in any operator basically ever on numerous items- if they have the items you actually want to buy- and that is a big IF.

The problem is that H-E-B tends to discontinue the name brand for the store brand, which is a HUGE line. Some items have their own identity (their ice cream line is decent) but for a vast majority it is not. It's to the point where excepting some of the non-food departments (toys, accessories, YETI cooler knockoffs) that an average 55k square feet Randalls has just about the same in terms of product availability. Kroger can keep the store brand lower but it's not in love with its own brand like HEB is.

And the "in love with its own brand" is a very real issue. They introduced an H-E-B Brand Shop display in about 50 stores but it was a big failure. I'm told within a matter of months they quietly took down the displays and just gave the merchandise to employees.

[HoustonRetail]

I have to back pesudo3d up on this. The local rags have already paraded around this data and will likely have some trickle-down influence. Target has also built some large stores like Katy and New Caney, which have been lauded as being "huge" when, in reality, they're smaller than our existing Super Targets and only carry a standard P-Fresh array of groceries, and feature no service departments. In fact, multiple reviews of the New Caney store insist that it's a small Target, which it certainly is not (135k Sqft.).

That being said, the data and the methodology are questionable, but there is likely at least a grain of truth to it. Another important note for me was that Kroger outpaced Walmart as well, which was number 2 in 2022. HEB has been on a building streak, but their new stores are getting further and further out. Even in the closer suburbs like Katy, they built an EFC (fulfillment center) and a Joe V's (discount banner) rather than springing for a new store. Anecdotally, the consumer base both here and in San Antonio seems to be taking more issue with HEB. Price hikes on private label items have consumers buying name brand for usually only a few pennies more. Still, the problem is name brands at HEB are often priced similarly to the competition. I don't think HEB is on the way out, and I wouldn't be surprised if they were back on top next year, but I also think the tide is shifting. DFW is HEB's future, at least at the moment.

That issue on private label items no longer being cheaper than name brands is an issue at a lot of grocery chains now. It has been an issue at Safeway for the past 20 years and that pricing attitude has been translated over to Albertsons under the Safeway systems too. I really take issue with this. There is NO POINT to private label if it is going to be priced higher than or only pennies lower than the name brand. Don't even offer it if you can't price it lower. One chain where that is rarely an issue continues to be Kroger. They still "get it" when it comes to managing a private label program, merchandising it, pricing it, etc.

I think this is why we don't see much private label on categories like laundry, chips, even soda; the big brands run enough promotions that they'd keep undercutting private label. While most larger chains still have private label soda and Safeway/Kroger do push it to some degree, many smaller chains like Raleys out west don't even bother with it anymore.

I noticed massive price differences between HEB and Joe V's on private label items; like 30%+ differences. Joe V's had the absolute best pricing I've seen in any operator basically ever on numerous items- if they have the items you actually want to buy- and that is a big IF.

You're right that everyone is having the same issue with store brand pricing. HEB is no exception and has spent the last two or so years completely realigning who produces their store brands, even going so far as to integrate things like chips vertically. However, HEB's reliance on store brands as a draw often dictates that items are stocked at a ratio of 2:1 Private Label:National. It's not unusual for there to only be a single national brand selection for an item, and in certain situations, slow seller, low volume store, HEB's brands may be your only option. I'm sure it's been discussed before, but HEB goes so far as to have about 5 " economy levels" of grocery branding. It's not unreasonable to find Economax, Hill Country Fare, HEB, HEB Select, and Central Market product varieties all for sale in a larger store. As for Joe V's, they are still dirt cheap, but again, it comes with limits like you mentioned; those stores usually only carry about 10k SKUs."

Like pseudo3d mentioned being in love with their own brand is an issue. What people truly love is the pricing. Making tortilla chips in the shape of Texas is a neat trick, but the price point drives the sales there.

[storewanderer]

I have to back pesudo3d up on this. The local rags have already paraded around this data and will likely have some trickle-down influence. Target has also built some large stores like Katy and New Caney, which have been lauded as being "huge" when, in reality, they're smaller than our existing Super Targets and only carry a standard P-Fresh array of groceries, and feature no service departments. In fact, multiple reviews of the New Caney store insist that it's a small Target, which it certainly is not (135k Sqft.).

That being said, the data and the methodology are questionable, but there is likely at least a grain of truth to it. Another important note for me was that Kroger outpaced Walmart as well, which was number 2 in 2022. HEB has been on a building streak, but their new stores are getting further and further out. Even in the closer suburbs like Katy, they built an EFC (fulfillment center) and a Joe V's (discount banner) rather than springing for a new store. Anecdotally, the consumer base both here and in San Antonio seems to be taking more issue with HEB. Price hikes on private label items have consumers buying name brand for usually only a few pennies more. Still, the problem is name brands at HEB are often priced similarly to the competition. I don't think HEB is on the way out, and I wouldn't be surprised if they were back on top next year, but I also think the tide is shifting. DFW is HEB's future, at least at the moment.

That issue on private label items no longer being cheaper than name brands is an issue at a lot of grocery chains now. It has been an issue at Safeway for the past 20 years and that pricing attitude has been translated over to Albertsons under the Safeway systems too. I really take issue with this. There is NO POINT to private label if it is going to be priced higher than or only pennies lower than the name brand. Don't even offer it if you can't price it lower. One chain where that is rarely an issue continues to be Kroger. They still "get it" when it comes to managing a private label program, merchandising it, pricing it, etc.

I think this is why we don't see much private label on categories like laundry, chips, even soda; the big brands run enough promotions that they'd keep undercutting private label. While most larger chains still have private label soda and Safeway/Kroger do push it to some degree, many smaller chains like Raleys out west don't even bother with it anymore.

I noticed massive price differences between HEB and Joe V's on private label items; like 30%+ differences. Joe V's had the absolute best pricing I've seen in any operator basically ever on numerous items- if they have the items you actually want to buy- and that is a big IF.

You're right that everyone is having the same issue with store brand pricing. HEB is no exception and has spent the last two or so years completely realigning who produces their store brands, even going so far as to integrate things like chips vertically. However, HEB's reliance on store brands as a draw often dictates that items are stocked at a ratio of 2:1 Private Label:National. It's not unusual for there to only be a single national brand selection for an item, and in certain situations, slow seller, low volume store, HEB's brands may be your only option. I'm sure it's been discussed before, but HEB goes so far as to have about 5 " economy levels" of grocery branding. It's not unreasonable to find Economax, Hill Country Fare, HEB, HEB Select, and Central Market product varieties all for sale in a larger store. As for Joe V's, they are still dirt cheap, but again, it comes with limits like you mentioned; those stores usually only carry about 10k SKUs."

Like pseudo3d mentioned being in love with their own brand is an issue. What people truly love is the pricing. Making tortilla chips in the shape of Texas is a neat trick, but the price point drives the sales there.

I thought the private label program was excellent, and well assorted. But there were some items I did not buy due to price reasons.

This is not unlike how Wegmans does things where they heavily push private label, typically at strong prices, and have few national brand options.

Taking away the national brand gives the store brand pricing power; this is something Safeway figured out back in the early 2000's and used as a heavy trick to make itself look exceptionally profitable even as Kroger and Wal Mart were eating them alive in various markets in TX, AZ, CO, NV, etc. and the strategy completely turned off customers in IL/PA who didn't want the private labels. You take away the name brand and then you charge the same high price for the private label as you did for the name brand and your profit explodes when you have a captive customer in a place like CA. HEB may think the customers are captive in TX but I would say they are not.

One thing I wonder is the items in private label they are pricing higher, are they "special" items - like those TX shaped chips, or items HEB manufactures itself? Or are we talking commodity items like canned vegetables, sugar, flour, which are 100% the same regardless of who's private label it is?

[HoustonRetail]

That issue on private label items no longer being cheaper than name brands is an issue at a lot of grocery chains now. It has been an issue at Safeway for the past 20 years and that pricing attitude has been translated over to Albertsons under the Safeway systems too. I really take issue with this. There is NO POINT to private label if it is going to be priced higher than or only pennies lower than the name brand. Don't even offer it if you can't price it lower. One chain where that is rarely an issue continues to be Kroger. They still "get it" when it comes to managing a private label program, merchandising it, pricing it, etc.

I think this is why we don't see much private label on categories like laundry, chips, even soda; the big brands run enough promotions that they'd keep undercutting private label. While most larger chains still have private label soda and Safeway/Kroger do push it to some degree, many smaller chains like Raleys out west don't even bother with it anymore.

I noticed massive price differences between HEB and Joe V's on private label items; like 30%+ differences. Joe V's had the absolute best pricing I've seen in any operator basically ever on numerous items- if they have the items you actually want to buy- and that is a big IF.

You're right that everyone is having the same issue with store brand pricing. HEB is no exception and has spent the last two or so years completely realigning who produces their store brands, even going so far as to integrate things like chips vertically. However, HEB's reliance on store brands as a draw often dictates that items are stocked at a ratio of 2:1 Private Label:National. It's not unusual for there to only be a single national brand selection for an item, and in certain situations, slow seller, low volume store, HEB's brands may be your only option. I'm sure it's been discussed before, but HEB goes so far as to have about 5 " economy levels" of grocery branding. It's not unreasonable to find Economax, Hill Country Fare, HEB, HEB Select, and Central Market product varieties all for sale in a larger store. As for Joe V's, they are still dirt cheap, but again, it comes with limits like you mentioned; those stores usually only carry about 10k SKUs."

Like pseudo3d mentioned being in love with their own brand is an issue. What people truly love is the pricing. Making tortilla chips in the shape of Texas is a neat trick, but the price point drives the sales there.

I thought the private label program was excellent, and well assorted. But there were some items I did not buy due to price reasons.

This is not unlike how Wegmans does things where they heavily push private label, typically at strong prices, and have few national brand options.

Taking away the national brand gives the store brand pricing power; this is something Safeway figured out back in the early 2000's and used as a heavy trick to make itself look exceptionally profitable even as Kroger and Wal Mart were eating them alive in various markets in TX, AZ, CO, NV, etc. and the strategy completely turned off customers in IL/PA who didn't want the private labels. You take away the name brand and then you charge the same high price for the private label as you did for the name brand and your profit explodes when you have a captive customer in a place like CA. HEB may think the customers are captive in TX but I would say they are not.

One thing I wonder is the items in private label they are pricing higher, are they "special" items - like those TX shaped chips, or items HEB manufactures itself? Or are we talking commodity items like canned vegetables, sugar, flour, which are 100% the same regardless of who's private label it is?

Don't get me wrong. HEB does have high standards when it comes to private labels, and when I shop there, the majority of what I buy is their brand. Honestly, I've even had Economax buys that were totally fine, but savings and shrinking down to only pennies sometimes mean the store brands are losing allure in that sense.

The Safeway private label snafu also hit Texas. Tom Thumb and Randalls had both carried Loblaw's President's Choice items, in addition to some Randalls-branded items manufactured by Topco. All Safeway brands were wiped out, and customers openly revolted. It was enough that for a few years, Safeway products were specially branded as Randalls to help appease upset shoppers. Those were some of the darkest years for Randalls.

The price increases are across the store. The specialty items and the commodities have all been hit; in some cases, they've gone the shrinkflation route, especially with HBA products like shampoo and soap. You're right about HEB thinking they've got a hold on the Texas consumer, and well, in certain areas (San Antonio), they really do. I wouldn't doubt we see more expansion of Joe V's in the future.

H-E-B Texas-Shaped White Corn Tortilla Chips, 14 oz (Curbside Prices)

HEB Houston Division Price: $3.10

Joe V's Price: $2.13

[pseudo3d]

This is not unlike how Wegmans does things where they heavily push private label, typically at strong prices, and have few national brand options.

The nice things I have heard about Wegmans revolves around their perishables, not the center store. H-E-B's perishables are better than Kroger's I think in a lot of ways, but there's a lot left to be desired--the bakery had some nicer items that I haven't since COVID started, the delis lack food-by-the-pound or plate, can't speak for the meat or seafood but they seem to be staffed. H-E-B does have a lot more samples than its competition though, can't fault them for that.