pseudo3d wrote:It's just going to take a while and those stores are going to be dark for some time.
It's one thing to sit on a cheap parcel of land in the growing suburbs but quite different to sit on developed sites in wealthy densely populated areas where it's difficult for potential competitors to new open stores. Add to that the fact that your main competitor is a company that has a reputation for high prices, mediocre service and mediocre product quality and you would have to be lacking in business skills if you didn't see the benefit of moving as quickly as possible to get these stores up and running. HEB has proven themselves to not be lacking in business skills.
In addition, if the stores are leased HEB will have to continue paying rent, common area maintenance fees, utilities and property taxes on them.
I would think HEB already has a pretty good idea what they want to do with the sites. I would be pretty shocked if they are all dark one year from now. And if they are still dark one year from now I would bet they would at least be in the conversion process.
pseudo3d wrote:It's just going to take a while and those stores are going to be dark for some time.
It's one thing to sit on a cheap parcel of land in the growing suburbs but quite different to sit on developed sites in wealthy densely populated areas where it's difficult for potential competitors to new open stores. Add to that the fact that your main competitor is a company that has a reputation for high prices, mediocre service and mediocre product quality and you would have to be lacking in business skills if you didn't see the benefit of moving as quickly as possible to get these stores up and running. HEB has proven themselves to not be lacking in business skills.
In addition, if the stores are leased HEB will have to continue paying rent, common area maintenance fees, utilities and property taxes on them.
I would think HEB already has a pretty good idea what they want to do with the sites. I would be pretty shocked if they are all dark one year from now. And if they are still dark one year from now I would bet they would at least be in the conversion process.
In 2011, H-E-B bought the lease of an Albertsons in my town that had been hanging around as a single store with no other stores within a 150 mile radius and they still keep the lights on (despite being a "dark store", officially) over five years later (and the lease won't expire until 2022). And this being a nearly 80k square foot store (it was a former Randalls New Generation store) means that it must cost H-E-B something tangible. They hung on to another Albertsons in Austin (smaller and more dated than the aforementioned College Station store) for about three years after it was sold by LLC keeping it dark until it was finally leased by Goodwill and Planet Fitness (there's an H-E-B right across the street).
In the examples you cite, HEB has a reason to keep the stores dark: to keep competition out in markets where they already dominate.
In DFW, HEB does not have much of a reason to keep the stores dark right now. They could have some reason to keep the stores dark if they have new store sites near any of the Minyard locations they are buying (which it sounds like may be the case in 1 of 6 instances). Otherwise there is no reason to keep the stores dark.
storewanderer wrote:In the examples you cite, HEB has a reason to keep the stores dark: to keep competition out in markets where they already dominate.
In DFW, HEB does not have much of a reason to keep the stores dark right now. They could have some reason to keep the stores dark if they have new store sites near any of the Minyard locations they are buying (which it sounds like may be the case in 1 of 6 instances). Otherwise there is no reason to keep the stores dark.
Yes, the situation in DFW is different. And they may a take a third option by leasing it to a non-grocery third party (to keep the spaces "open" and turn a profit until the time comes), but my point still stands--them keeping a store dark for years paying rent and maintenance isn't a wholly preposterous theory.
I don't see them keeping the stores dark. That will also make people wonder why are those stores dark, oh, HEB is paying rent on a dark store. Why are the small businesses in that shopping center struggling/going out of business due to missing foot traffic from an anchor? Oh because HEB took a lease and now isn't opening the store.
These people in DFW need a positive first impression of HEB and the above would not create a positive first impression.
The key here is to get remodels done and get the stores opened back up. However long it takes them to do the level of remodel they feel is necessary, customers will be patient if they see work is happening.
storewanderer wrote:I don't see them keeping the stores dark. That will also make people wonder why are those stores dark, oh, HEB is paying rent on a dark store. Why are the small businesses in that shopping center struggling/going out of business due to missing foot traffic from an anchor? Oh because HEB took a lease and now isn't opening the store.
That is.....actually a depressingly accurate reflection on reality. H-E-B has also kept a Lacks dark in Abilene since the furniture chain went under about six years ago. They have existing just one store in the city (dominated by United Supermarkets), yet they keep the furniture store dark, and when asked about a few years ago, they just gave a "no comment".
These people in DFW need a positive first impression of HEB and the above would not create a positive first impression.
They do indeed and rushing to renovate and reopen a bunch of second-hand Tom Thumb and Albertsons stores will not do that either.
pseudo3d wrote:They do indeed and rushing to renovate and reopen a bunch of second-hand Tom Thumb and Albertsons stores will not do that either.
The difference has to do with demographics and barriers to entry. These are stores in areas that have a lot of people with a lot of disposable income. Add to that the difficulty in finding similar properties in these neighborhoods. They would be foolish to let these stores sit dark when they could be generating sales and profits.
pseudo3d wrote:They do indeed and rushing to renovate and reopen a bunch of second-hand Tom Thumb and Albertsons stores will not do that either.
The difference has to do with demographics and barriers to entry. These are stores in areas that have a lot of people with a lot of disposable income. Add to that the difficulty in finding similar properties in these neighborhoods. They would be foolish to let these stores sit dark when they could be generating sales and profits.
Like I said, they could rent those stores out to third parties while they prepare a more proper entry. I know the prospect of a grocery store keeping dark stores like this is a bit unorthodox (and it fits into their existing playbook), but they are one of the few traditional supermarket chains that are expanding, and if you're playing to win (and not just content to have a presence), then you have to plan strategically, even if it doesn't feel like they're playing "fair".
I didn't say anything about 'fair'. If you have good locations open them! Make Money! I don't know if that's not the way things work in Texas but it does pretty much everyplace else.
The thing is, as far as the average consumer is aware, HEB would be just the at least third reincarnation of the store at the property. This is a pretty bad position to be in cause people just assume, "Oh Albertsons didn't make it, and then that Sun store sucked and also didn't make it, this store probably sucks and it isn't going to make it either". Granted, HEB has a little brand recognition in DFW, but a majority of people still would assume this. Also, just like Albertsons selling to SaveMart or Haggen, a majority of these stores were not the cream of the crop. They were mostly low volume stores as Tom Thumb/Albertsons and although this could due to mismanagement, mismanagement usually stems from low volume in the first place. Minyard's did not help improve the reputation for these stores that is likely already bad.
If they want to break this notion, they can do a few things. HEB doesn't want to be seen as attempt three for these locations, they want to be seen as a new grocer to the market that is well run and very competitive.
1) Use the Central Market brand at these locations. Central Market already has a high recognition and reputation in the market and would cancel out any of the bad effects the previous stores had on this property.
2) Completely refurbish the entire store, including expanding and possibly even demolishing the old building. If they take their time and invest money into these stores, people will look at them as a much more confident and successful competitor. As far as most are concerned, it's a brand new store and the reputation of the old store is erased.
3) Rent the store out to a non-grocer and build a new store close by. By doing this they eliminate a site for a possible competitor and make a little profit on the side.
Simply plopping the HEB logo on the side of a building with a bad reputation is setting them up for failure no matter who they are.
