HEB hires Mabrie Jackson as public affairs executive for North Texas

[architect]

Got an interesting bit of news from this morning: HEB has announced that they have hired Mabrie Jackson to lead public affairs and community outreach for their North Texas region. She is currently the CEO of the North Texas Commission, and has extensive history both in the corporate and non profit sectors in the DFW area. She enters into the new position in March, so I am curious if we will see an HEB move-in announcement sometime shortly after.

DMN Article: http://bizbeatblog.dallasnews.com/2016/ ... h-e-b.html

[pseudo3d]

HEB's not going to move in until they build a DC, but when they do, they are going to hit hard and fast. They want to build full line stores, but that's a risky proposition. Albertsons attempt in Houston with that mindset failed hard even if many didn't have dubious locations. In the meantime, Albertsons/Tom Thumb should be on the defensive and start making moves so they can whether the storm. Kroger should be fine, but if they let the ABS/TT team fight back, then they could stand a lot to lose.

[architect]

HEB's not going to move in until they build a DC, but when they do, they are going to hit hard and fast. They want to build full line stores, but that's a risky proposition. Albertsons attempt in Houston with that mindset failed hard even if many didn't have dubious locations. In the meantime, Albertsons/Tom Thumb should be on the defensive and start making moves so they can whether the storm. Kroger should be fine, but if they let the ABS/TT team fight back, then they could stand a lot to lose.

HEB actually built a DC in Temple a few years back specifically to serve future DFW stores. However, if a DFW expansion goes well, I would expect them to build another DC closer to the Metroplex to reduce transportation costs. I do agree that this may be ABS/TT's last chance to regain market share as many people in the DFW area are itching for an HEB entry. As a result, HEB would likely be able to pick up at least a decent market share almost overnight if the stores are well merchandised and tailored to the market.

[pseudo3d]

The market leaders, Tom Thumb and Kroger are both card stores, and the "no-card" advertising is used in H-E-B. If the Tom Thumb stores followed that principle as well before H-E-B comes in and starts at least temporarily an EDLP program, that should buy them time before H-E-B starts to do real damage. However, one should note that Kroger was the first to call quits in areas where H-E-B was...it pulled out of San Antonio and the Interstate 35 corridor in the early 1990s, far before Albertsons did (Albertsons pulled out of San Antonio in 2002 before calling it quits entirely in 2007...except for the New Braunfels store, which stuck around until 2011). The reason why Houston is different was because Kroger has deep roots stretching back to the Henke & Pillot acquisition in the 1960s.

[architect]

The market leaders, Tom Thumb and Kroger are both card stores, and the "no-card" advertising is used in H-E-B. If the Tom Thumb stores followed that principle as well before H-E-B comes in and starts at least temporarily an EDLP program, that should buy them time before H-E-B starts to do real damage. However, one should note that Kroger was the first to call quits in areas where H-E-B was...it pulled out of San Antonio and the Interstate 35 corridor in the early 1990s, far before Albertsons did (Albertsons pulled out of San Antonio in 2002 before calling it quits entirely in 2007...except for the New Braunfels store, which stuck around until 2011). The reason why Houston is different was because Kroger has deep roots stretching back to the Henke & Pillot acquisition in the 1960s.

I completely agree with you on Tom Thumb starting an EDLP program; that could be the ticket they need to fend off HEB and also take market share from Kroger. The DFW market grocey market is interesting, as Kroger has the largest overall market share outside of Wal-Mart. However, in many older areas of Dallas (especially the Park Cities and North Dallas), Tom Thumb has a market share lead over Kroger simply due to the fact that they have more legacy stores. Then, on the Fort Worth dies of the Metroplex, Albertsons continues to be successful while Tom Thumb only has a couple of stores. The jury is still out on Albertsons pricing since the merger, but if the past is any indication, they are much higher than HEB or Kroger. As a result, I could see a scenario where HEB runs most of the suburban Albertsons stores out of business due to both better pricing and amenities. However, if the Tom Thumb stores step up their game, they could continue to be successful in areas that are either well established (making new store construction nearly impossible) or very upscale (as ultra-rich Dallas shoppers may see HEB as too low-brow for them). In addition, Albertsons could also expand the Market Street brand further, which would likely compete well against HEB.

As a thought: Could Minyard possibly sell some of their Sun Fresh properties in North Dallas to HEB if they continue to close stores? HEB might be willing to work on a tighter site (even if this would involve a complete store rebuild) if it would give them access to the more entrenched urban parts of Dallas.

[pseudo3d]

The market leaders, Tom Thumb and Kroger are both card stores, and the "no-card" advertising is used in H-E-B. If the Tom Thumb stores followed that principle as well before H-E-B comes in and starts at least temporarily an EDLP program, that should buy them time before H-E-B starts to do real damage. However, one should note that Kroger was the first to call quits in areas where H-E-B was...it pulled out of San Antonio and the Interstate 35 corridor in the early 1990s, far before Albertsons did (Albertsons pulled out of San Antonio in 2002 before calling it quits entirely in 2007...except for the New Braunfels store, which stuck around until 2011). The reason why Houston is different was because Kroger has deep roots stretching back to the Henke & Pillot acquisition in the 1960s.

I completely agree with you on Tom Thumb starting an EDLP program; that could be the ticket they need to fend off HEB and also take market share from Kroger. The DFW market grocey market is interesting, as Kroger has the largest overall market share outside of Wal-Mart. However, in many older areas of Dallas (especially the Park Cities and North Dallas), Tom Thumb has a market share lead over Kroger simply due to the fact that they have more legacy stores. Then, on the Fort Worth dies of the Metroplex, Albertsons continues to be successful while Tom Thumb only has a couple of stores. The jury is still out on Albertsons pricing since the merger, but if the past is any indication, they are much higher than HEB or Kroger. As a result, I could see a scenario where HEB runs most of the suburban Albertsons stores out of business due to both better pricing and amenities. However, if the Tom Thumb stores step up their game, they could continue to be successful in areas that are either well established (making new store construction nearly impossible) or very upscale (as ultra-rich Dallas shoppers may see HEB as too low-brow for them). In addition, Albertsons could also expand the Market Street brand further, which would likely compete well against HEB.

As a thought: Could Minyard possibly sell some of their Sun Fresh properties in North Dallas to HEB if they continue to close stores? HEB might be willing to work on a tighter site (even if this would involve a complete store rebuild) if it would give them access to the more entrenched urban parts of Dallas.

Unless something has changed very recently, the latest numbers do have the Albertsons/Tom Thumb/Market Street eke out a slightly higher market share than Kroger does. I don't think the "Albertsons driven out but not Tom Thumb" perception may be pre-mature, at least if the Albertsons/Tom Thumb stores stay on the ball. H-E-B is trying to figure out how the North Texas region works, as they tailor their stores to the neighborhood, which can either result in a great store (practically a Central Market, their upscale store) or a terrible one (practically a Joe V's Smart Shop, their low-end discount supermarket). The Central Market stores are in the area already (I think distribution is handled differently), and there are risks to entering: overestimating D-FW's want for H-E-B or disappointing everybody with sub-par stores for the neighborhood. The biggest disadvantage that Albertsons has is a lack of a bigger store format. It's uncommon to see an Albertsons store (under any brand) have over 70,000 square feet while Kroger and H-E-B have both GM formats that go well over 100,000 square feet. That problem is also what might prevent Randalls from regaining a good foothold in the Houston market. There's a chance that United could invent a new store format to hand-wave that problem away, but I wouldn't bet on it.

[storewanderer]

HEB will go after the lowest hanging fruit first. That is Albertsons and Tom Thumb. They have the lowest volume stores. Kroger locations typically do much higher volume. A Kroger doing $600,000 a week can afford to lose half of its business and still hang on (not well but at least hang on). An Albertsons doing $250,000 a week or a Tom Thumb doing $350,000 a week cannot afford to lose even 40% of its business and still hang on and HEB knows it. Kroger may be sitting on some of those $250,000-$350,000 a week locations also but those are mostly in dying areas with little growth and little risk of HEB entering; maybe risk of some new Save a Lots or Aldis but not HEBs.

The Market Streets all running similar volumes to the typical Kroger should also be able to hang on.

Albertsons everyday shelf pricing is terrible and that does not seem to be changing. In NorCal it is getting worse.

[pseudo3d]

HEB will go after the lowest hanging fruit first. That is Albertsons and Tom Thumb. They have the lowest volume stores. Kroger locations typically do much higher volume. A Kroger doing $600,000 a week can afford to lose half of its business and still hang on (not well but at least hang on). An Albertsons doing $250,000 a week or a Tom Thumb doing $350,000 a week cannot afford to lose even 40% of its business and still hang on and HEB knows it. Kroger may be sitting on some of those $250,000-$350,000 a week locations also but those are mostly in dying areas with little growth and little risk of HEB entering; maybe risk of some new Save a Lots or Aldis but not HEBs.

The Market Streets all running similar volumes to the typical Kroger should also be able to hang on.

Albertsons everyday shelf pricing is terrible and that does not seem to be changing. In NorCal it is getting worse.

I wouldn't be that pessimistic. First off, in Cleburne, Albertsons, H-E-B, and Kroger all compete, much like the situation in College Station used to be. Secondly, the market situation in Dallas-Fort Worth is vastly different than the situations elsewhere.

In San Antonio, H-E-B was always the top dog since it has its founding there. Kroger pulled out in the early 1990s with Albertsons (a mainstay since the Skaggs Albertsons days, which were sent to Albertsons) closing in 2002.

In Austin, H-E-B has also maintained a presence since at least the 1950s (if not earlier). I'm not sure when Albertsons came in, but they left in 2006-2007. Randalls today maintains a distant 2nd place and is amalgamated from Tom Thumb (which it bought and rebranded the Dallas stores) and Safeway (which were later AppleTree, which Randalls closed and reopened under their name), which all happened in the early 1990s. Kroger left years earlier.

In Waco-Temple-Killeen, Albertsons never had much of a major presence. The one in Waco was a former Skaggs store and never penetrated the market. Once again, H-E-B dominated because it was always there. I'm not sure there even was a Kroger in those cities.

In College Station-Bryan, Kroger and Safeway had a presence in the 1980s and before (much like Houston), but Albertsons came in during the early 1990s with both a new store and a purchase of a former Skaggs Albertsons (which back with Skaggs). H-E-B Pantry came in around that time but it was small, and H-E-B built its first store in 2002. Albertsons closed one of its three stores in 2006 (a 2002 location in Bryan in a redeveloped shopping center, even Walmart Neighborhood Market couldn't make a go of it), the next one in 2008 (because Wal-Mart bought it for expansion of their store, they would end up demolishing part of it and using it for storage), and finally the last and largest one in 2011 when it was sold as a package deal to H-E-B (when H-E-B wanted the Kerrville store), as by that time there wasn't one in miles around.

In Houston, Albertsons entered a crowded market in the mid-1990s, where it was fighting against Randalls, H-E-B Pantry, Kroger, Rice Epicurean, and Fiesta. It may be easy to blame H-E-B on Albertsons' demise, but the first one came in January 2001 and no more than six more opened that year, while Albertsons had over 30-40 stores. It had become obvious by late 2001 that Albertsons wasn't going to work out in Houston, even though full-sized H-E-B stores hadn't reached market penetration.

In Dallas-Fort Worth, Albertsons has been there since the mid-1980s and weathered the cuts by Albertsons LLC, with Tom Thumb there even longer. Blitzing the market with no-frills stores to be upgraded later will not work for H-E-B in Houston, nor are they on their home turf where they can use that as leverage against new competitors. It's unlikely that H-E-B will fail spectacularly and get run out of town, but all they've got is word of mouth both good and bad. They've got Central Market there, which is a fantastic grocery store (though with a crazy layout and a too pretentious product line-up). The worst thing that could happen is that people get their hopes up, H-E-B shortchanges them with "C" grade stores for their neighborhoods (they've got internal store layouts and product mixes) while Tom Thumb and Albertsons upgrade their offerings. Just as people would like to see H-E-B in town, others aren't too impressed, and others are unhappy that H-E-B basically has a monopoly in San Antonio, a significant part of Austin, and Waco-Temple-Killeen and would rather keep their grocery market mix.

[architect]

HEB will go after the lowest hanging fruit first. That is Albertsons and Tom Thumb. They have the lowest volume stores. Kroger locations typically do much higher volume. A Kroger doing $600,000 a week can afford to lose half of its business and still hang on (not well but at least hang on). An Albertsons doing $250,000 a week or a Tom Thumb doing $350,000 a week cannot afford to lose even 40% of its business and still hang on and HEB knows it. Kroger may be sitting on some of those $250,000-$350,000 a week locations also but those are mostly in dying areas with little growth and little risk of HEB entering; maybe risk of some new Save a Lots or Aldis but not HEBs.

The Market Streets all running similar volumes to the typical Kroger should also be able to hang on.

Albertsons everyday shelf pricing is terrible and that does not seem to be changing. In NorCal it is getting worse.

In my observation, when an Albertsons or Tom Thumb store is located nearby a Kroger in the DFW area, the Kroger usually has substantially more traffic. For example, in the area I live in Richardson, there is a Kroger and a Tom Thumb located a cross-street apart. At 5:30 in the afternoon, the Tom Thumb may have 10-15 cars parked outside on a good day, while the Kroger parking lot is usually full. There is another nearby instance of a Kroger-Albertsons pairing with a similar situation. The only areas where Kroger seems to be trailing are cases in which a store is severely undersized or outdated (the Kroger in Addison is a prime example of this, a former Winn-Dixie). The main factor that could hurt Kroger initially is the fact that when HEB decides to expand, they will likely expand initially in the suburbs, where Kroger is the most successful. Tom Thumb is much more entrenched in the more established parts of Dallas, which will likely be more challenging for HEB to expand into due to the scarcity of store sites.

One retailer that has not been mentioned yet is Wal-Mart. In my opinion, they could possibly lose the most with their Neighborhood Markets, especially if HEB meets/beats them on pricing like they have a history of doing.

[pseudo3d]

HEB will go after the lowest hanging fruit first. That is Albertsons and Tom Thumb. They have the lowest volume stores. Kroger locations typically do much higher volume. A Kroger doing $600,000 a week can afford to lose half of its business and still hang on (not well but at least hang on). An Albertsons doing $250,000 a week or a Tom Thumb doing $350,000 a week cannot afford to lose even 40% of its business and still hang on and HEB knows it. Kroger may be sitting on some of those $250,000-$350,000 a week locations also but those are mostly in dying areas with little growth and little risk of HEB entering; maybe risk of some new Save a Lots or Aldis but not HEBs.

The Market Streets all running similar volumes to the typical Kroger should also be able to hang on.

Albertsons everyday shelf pricing is terrible and that does not seem to be changing. In NorCal it is getting worse.

In my observation, when an Albertsons or Tom Thumb store is located nearby a Kroger in the DFW area, the Kroger usually has substantially more traffic. For example, in the area I live in Richardson, there is a Kroger and a Tom Thumb located a cross-street apart. At 5:30 in the afternoon, the Tom Thumb may have 10-15 cars parked outside on a good day, while the Kroger parking lot is usually full. There is another nearby instance of a Kroger-Albertsons pairing with a similar situation. The only areas where Kroger seems to be trailing are cases in which a store is severely undersized or outdated (the Kroger in Addison is a prime example of this, a former Winn-Dixie). The main factor that could hurt Kroger initially is the fact that when HEB decides to expand, they will likely expand initially in the suburbs, where Kroger is the most successful. Tom Thumb is much more entrenched in the more established parts of Dallas, which will likely be more challenging for HEB to expand into due to the scarcity of store sites.

One retailer that has not been mentioned yet is Wal-Mart. In my opinion, they could possibly lose the most with their Neighborhood Markets, especially if HEB meets/beats them on pricing like they have a history of doing.

Like Albertsons, Walmart Neighborhood Market never really got far in Houston, there's only 10 of them, and only three (two after this month) are located inside the "Beltway", which isn't even close to the nucleus of the "Loop". The closest one is maybe 13 miles (by car) from downtown. In D-FW, their numbers are maybe closer to 40, a good number of them former Albertsons sites. They were able to gain traction because the market wasn't competitive...with just Kroger, the implosion of Minyard (the original Minyard Food Stores), and the weakening of Tom Thumb and Albertsons, left an easy-to-exploit hole.