Breaking: HEB buys 6 Minyard Sun Fresh stores in DFW

[storewanderer]

Just like I thought, this is quite a checkmate. It won't be so hard for HEB to pick up stores in the suburbs. Add to that WinCo building more stores. It is fortunate Kroger has done a good bit of new store development in the past 5 years because once HEB gets rolling into the mix of developing stores in the areas with land/growth it is going to be a lot harder for the Safeway/Kroger groups to add as many stores.

I wonder if Albertsons tried to buy those stores back like they did the Haggens...

I also wonder if Kroger pulled out of buying that one store when they learned HEB was in play for the others... not sure why that should matter if they liked the location.

[pseudo3d]

Well that is certainly an interesting form of "checkmate" for Albertsons in their attempt to sell the stores to a weak operator. Sell to a weak operator and that weak operator ends up going bust and selling them to the strongest possible operator.

Too bad it is just 6 stores but that could be enough to cause them some unanticipated headaches.

Would have loved to see this happen to some of the Haggens, too bad there are no strong players in those markets.

So how is this HEB buy of these stores going to impact Albertsons? Are these mostly "infill" type locations where land is not so easy to come by, or?

Well, whatever happens in DFW at this point is what Albertsons makes of it. H-E-B was always going to come one way or another and when they did it would be fast and hard. Selling to the big competitors was always a threat, even back when the Plano MSFM was sold to Kroger. The idea that a weak competitor would last long is foolhardy.

Albertsons could play their cards right: the purchase of United was supposed to (partly) be a defense against H-E-B and of course trying to adjust price and merchandise mix would be instrumental in fighting back, or they could do little and watch H-E-B erode their defenses. It should be noted that it hasn't always been a loss scenario against H-E-B...they held on in Austin until 2007 when they sold to H-E-B (which had been there much longer than Albertsons ever had), they held on in San Antonio until 2002 (a long time considering they were in H-E-B's home turf and living off the legacy from Skaggs, plus they outlasted pretty much every other grocer there), and although they did leave Houston at about the time H-E-B was coming in, it was already a lost cause whether H-E-B opened or not.

With this announcement, the countdown is now on. They have at least an existing strong store base and were first in the market, something no other market got (and they are still growing). WinCo is one to watch out for, though I'm not sure what impact it will have...it currently has 7 stores and building a DC in Denton. Based on the reviews, WinCo is most likely to put the biggest hurt on Walmart Neighborhood Market, which Walmart has had in Dallas for a number of years and grew between 2006 and 2014 at Albertsons' stores expense.

[wnetmacman]

Well that is certainly an interesting form of "checkmate" for Albertsons in their attempt to sell the stores to a weak operator. Sell to a weak operator and that weak operator ends up going bust and selling them to the strongest possible operator.

Too bad it is just 6 stores but that could be enough to cause them some unanticipated headaches.

Would have loved to see this happen to some of the Haggens, too bad there are no strong players in those markets.

So how is this HEB buy of these stores going to impact Albertsons? Are these mostly "infill" type locations where land is not so easy to come by, or?

Well, whatever happens in DFW at this point is what Albertsons makes of it. H-E-B was always going to come one way or another and when they did it would be fast and hard. Selling to the big competitors was always a threat, even back when the Plano MSFM was sold to Kroger. The idea that a weak competitor would last long is foolhardy.

Albertsons could play their cards right: the purchase of United was supposed to (partly) be a defense against H-E-B and of course trying to adjust price and merchandise mix would be instrumental in fighting back, or they could do little and watch H-E-B erode their defenses. It should be noted that it hasn't always been a loss scenario against H-E-B...they held on in Austin until 2007 when they sold to H-E-B (which had been there much longer than Albertsons ever had), they held on in San Antonio until 2002 (a long time considering they were in H-E-B's home turf and living off the legacy from Skaggs, plus they outlasted pretty much every other grocer there), and although they did leave Houston at about the time H-E-B was coming in, it was already a lost cause whether H-E-B opened or not.

With this announcement, the countdown is now on. They have at least an existing strong store base and were first in the market, something no other market got (and they are still growing). WinCo is one to watch out for, though I'm not sure what impact it will have...it currently has 7 stores and building a DC in Denton. Based on the reviews, WinCo is most likely to put the biggest hurt on Walmart Neighborhood Market, which Walmart has had in Dallas for a number of years and grew between 2006 and 2014 at Albertsons' stores expense.

I'm not ready to call 6 stores a coup just yet.

Every other player who was considered a strong, or at the very least, decent player in their own markets has come to Dallas and failed. Yes, in some cases (Food Lion) they were sabotaged by outside influences, and in some cases (Brookshire and Fleming), they weren't prepared for the market at all.

As you can now add Minyard officially to the list of defunct grocers in Wikipedia, let's see the official Dallas Tally:

Stores that currently exist in Dallas: Walmart, Albertsons/Tom Thumb, Kroger, HEB/Central Market, Market Street, Fiesta. (there are some I may be missing, but these are the main players)

Stores that no longer exist in Dallas: Skaggs Alpha Beta, Safeway, Winn Dixie, Food Lion, Fleming/Rainbow, Minyard (wow), Brookshire's/Super 1 Foods (except suburbs).

The second list includes some large and pretty strong players. I know the discussion has passed where we've talked about HEB's lone failure in Louisiana. Until they *do* succeed in Dallas, I won't write an obituary for Albertsons/Tom Thumb or anyone else there. It is just too early. Plus, the 6 stores they're getting aren't exactly high volume.They will have to work them hard to get them to be what they are in San Antonio and Houston. WinCo is also a formidable player, and they won't go down without a fight, as they've already shown.

I think these 6 will only be what we call in IT a minor nuisance. At least for a while. We shouldn't count out that HEB built their Houston market base on the Pantry stores, which weren't all that much to look at.

[pseudo3d]

Well that is certainly an interesting form of "checkmate" for Albertsons in their attempt to sell the stores to a weak operator. Sell to a weak operator and that weak operator ends up going bust and selling them to the strongest possible operator.

Too bad it is just 6 stores but that could be enough to cause them some unanticipated headaches.

Would have loved to see this happen to some of the Haggens, too bad there are no strong players in those markets.

So how is this HEB buy of these stores going to impact Albertsons? Are these mostly "infill" type locations where land is not so easy to come by, or?

Well, whatever happens in DFW at this point is what Albertsons makes of it. H-E-B was always going to come one way or another and when they did it would be fast and hard. Selling to the big competitors was always a threat, even back when the Plano MSFM was sold to Kroger. The idea that a weak competitor would last long is foolhardy.

Albertsons could play their cards right: the purchase of United was supposed to (partly) be a defense against H-E-B and of course trying to adjust price and merchandise mix would be instrumental in fighting back, or they could do little and watch H-E-B erode their defenses. It should be noted that it hasn't always been a loss scenario against H-E-B...they held on in Austin until 2007 when they sold to H-E-B (which had been there much longer than Albertsons ever had), they held on in San Antonio until 2002 (a long time considering they were in H-E-B's home turf and living off the legacy from Skaggs, plus they outlasted pretty much every other grocer there), and although they did leave Houston at about the time H-E-B was coming in, it was already a lost cause whether H-E-B opened or not.

With this announcement, the countdown is now on. They have at least an existing strong store base and were first in the market, something no other market got (and they are still growing). WinCo is one to watch out for, though I'm not sure what impact it will have...it currently has 7 stores and building a DC in Denton. Based on the reviews, WinCo is most likely to put the biggest hurt on Walmart Neighborhood Market, which Walmart has had in Dallas for a number of years and grew between 2006 and 2014 at Albertsons' stores expense.

I'm not ready to call 6 stores a coup just yet.

Every other player who was considered a strong, or at the very least, decent player in their own markets has come to Dallas and failed. Yes, in some cases (Food Lion) they were sabotaged by outside influences, and in some cases (Brookshire and Fleming), they weren't prepared for the market at all.

As you can now add Minyard officially to the list of defunct grocers in Wikipedia, let's see the official Dallas Tally:

Stores that currently exist in Dallas: Walmart, Albertsons/Tom Thumb, Kroger, HEB/Central Market, Market Street, Fiesta. (there are some I may be missing, but these are the main players)

Stores that no longer exist in Dallas: Skaggs Alpha Beta, Safeway, Winn Dixie, Food Lion, Fleming/Rainbow, Minyard (wow), Brookshire's/Super 1 Foods (except suburbs).

The second list includes some large and pretty strong players. I know the discussion has passed where we've talked about HEB's lone failure in Louisiana. Until they *do* succeed in Dallas, I won't write an obituary for Albertsons/Tom Thumb or anyone else there. It is just too early. Plus, the 6 stores they're getting aren't exactly high volume.They will have to work them hard to get them to be what they are in San Antonio and Houston. WinCo is also a formidable player, and they won't go down without a fight, as they've already shown.

I think these 6 will only be what we call in IT a minor nuisance. At least for a while. We shouldn't count out that HEB built their Houston market base on the Pantry stores, which weren't all that much to look at.

The Pantry stores were an interesting experiment and definitely was the backdoor to taking Houston. They didn't cause the demise of any supermarkets through those itself (again, Albertsons was on its way out, and it was hard for Randalls to do much of anything when it was too busy getting screwed over by Safeway), and the time and place for H-E-B Pantry Foods or anything like it has closed.

I agree it's too early and I think that we'll just have to wait and see. Maybe they can crush Albertsons/Tom Thumb. Maybe it will be a three-way race with Kroger. Maybe Albertsons/Tom Thumb will wise up and the end result will be that H-E-B and Albertsons/Tom Thumb actually bump off Kroger. And maybe H-E-B will be too full of itself and fail in Dallas.

In any case, I'm pretty sure these stores will not reopen as H-E-B anytime within the next year and definitely not in the next 9 months.

[wnetmacman]

Here is a link to the Dallas Morning News's article. Interestingly, they note that in the Dallas/Fort Worth area, Central Market will continue to be the primary format, and won't speculate what these 6 will be come.

Here comes H-E-B

[pseudo3d]

Here is a link to the Dallas Morning News's article. Interestingly, they note that in the Dallas/Fort Worth area, Central Market will continue to be the primary format, and won't speculate what these 6 will be come.

Here comes H-E-B

Central Market IS the primary format in Dallas because they've got five(!) of them in the Metroplex (compared to two in Austin, and one each in Houston and San Antonio) with about six of regular stores dancing out on the farther outskirts of town (including Corsicana), and at least a few of them are older, smaller stores.

I'm really not sure that H-E-B will open the stores as regular H-E-B stores either. Part of it is due to the disproportionate Central Market-to-H-E-B ratio should all of them open as H-E-B stores (including that other site in Dallas), and part of it is because I think H-E-B is smarter than that. Think about it...how many times has a grocery store chain hopped into an overcrowded market with the "It doesn't matter what other stores are already there, people will love us" mentality, only to high-tail it out when it doesn't work out?

(Answer: Lots.)

[klkla]

Well that is certainly an interesting form of "checkmate" for Albertsons in their attempt to sell the stores to a weak operator. Sell to a weak operator and that weak operator ends up going bust and selling them to the strongest possible operator.

Too bad it is just 6 stores but that could be enough to cause them some unanticipated headaches.

This situation does represent somewhat of a 'backfire' for Albertsons. Like Haggen, Minyard was chosen because there was a high likelihood of them failing. Which they did. But as the expression goes, 'Every action has an equal or greater reaction' and usually that isn't as easy to control. There's no question that HEB is a much better operator than Albertson's/Tom Thumb and most of these stores are in locations where Tom Thumb stores are benefitting from not having strong competition. That is about to change. It will be interesting to see what HEB does with these stores. I agree it's too bad there are only six stores involved.

[pseudo3d]

Well that is certainly an interesting form of "checkmate" for Albertsons in their attempt to sell the stores to a weak operator. Sell to a weak operator and that weak operator ends up going bust and selling them to the strongest possible operator.

Too bad it is just 6 stores but that could be enough to cause them some unanticipated headaches.

This situation does represent somewhat of a 'backfire' for Albertsons. Like Haggen, Minyard was chosen because there was a high likelihood of them failing. Which they did. But as the expression goes, 'Every action has an equal or greater reaction' and usually that isn't as easy to control. There's no question that HEB is a much better operator than Albertson's/Tom Thumb and most of these stores are in locations where Tom Thumb stores are benefitting from not having strong competition. That is about to change. It will be interesting to see what HEB does with these stores. I agree it's too bad there are only six stores involved.

I think that because H-E-B is a better operator than Albertsons/Tom Thumb means that they won't all convert to H-E-B and begin to (or at least try to) drive their competition out. In the case of the Houston market, Albertsons invested enormous amounts of money in the market to try to gain a market share. It did not work. Sure, you can argue "they were overpriced and had bad locations" or something along those lines and you'd be right, but time and time again, we have had operators that believed they could succeed in markets through brute force store additions and a perceived attitude that they were better. (The list is long if you include a wide variety of markets--Smith's, Albertsons, Food Lion, Harris Teeter, Haggen, The Fresh Market, Fresh & Easy...I'm sure there are others).

I don't think anything will happen in a while...they'll close the stores and H-E-B will sit on the sites (possibly even short-term leasing) to prevent other operators from moving in. Opening the stores as H-E-B has a high risk for disaster especially if people have these stupidly unrealistic expectations like it's going to be "Wegmans of Texas" (citing H-E-B's largest and best stores, of which these won't be) while the stores start to underperform (they were never all that high volume) like the Kroger in the former Tom Thumb in Plano (and Kroger is a more competent retailer than Albertsons overall). They could continue to invest in Dallas but that's risky especially if their other markets get neglected as a result (like if WinCo or other operators decide to attack H-E-B's strongest markets like Waco, Austin, or San Antonio). Either way, pulling out of Dallas (especially if they had high store count) would result in a wave of bad publicity that will haunt H-E-B for years to come. I have confidence that H-E-B isn't stupid and actually has thought through all of this, and thus will go for the safer option of just slowly working their way up through the southern suburbs.

[klkla]

I think that because H-E-B is a better operator than Albertsons/Tom Thumb means that they won't all convert to H-E-B and begin to (or at least try to) drive their competition out. In the case of the Houston market, Albertsons invested enormous amounts of money in the market to try to gain a market share. It did not work. Sure, you can argue "they were overpriced and had bad locations" or something along those lines and you'd be right, but time and time again, we have had operators that believed they could succeed in markets through brute force store additions and a perceived attitude that they were better. (The list is long if you include a wide variety of markets--Smith's, Albertsons, Food Lion, Harris Teeter, Haggen, The Fresh Market, Fresh & Easy...I'm sure there are others).

I don't think anything will happen in a while...they'll close the stores and H-E-B will sit on the sites (possibly even short-term leasing) to prevent other operators from moving in. Opening the stores as H-E-B has a high risk for disaster especially if people have these stupidly unrealistic expectations like it's going to be "Wegmans of Texas" (citing H-E-B's largest and best stores, of which these won't be) while the stores start to underperform (they were never all that high volume) like the Kroger in the former Tom Thumb in Plano (and Kroger is a more competent retailer than Albertsons overall). They could continue to invest in Dallas but that's risky especially if their other markets get neglected as a result (like if WinCo or other operators decide to attack H-E-B's strongest markets like Waco, Austin, or San Antonio). Either way, pulling out of Dallas (especially if they had high store count) would result in a wave of bad publicity that will haunt H-E-B for years to come. I have confidence that H-E-B isn't stupid and actually has thought through all of this, and thus will go for the safer option of just slowly working their way up through the southern suburbs.

I don't know that much about the Texas market so I'm not disagreeing with you on any specific point. But HEB is a growing company in an industry that doesn't see much growth just like Wegman's and Publix. These three companies are perhaps the only traditional grocery store chains in the nation expanding primarily by building new stores.

HEB is generating a lot of revenue and has to keep expanding. But there aren't any major population centers left in Texas where they don't already have a major presence. According to the Dallas Morning News article referenced earlier in this thread they have bought twenty parcels of land in North Texas in addition to these stores over the last couple years. HEB obviously intends on becoming a force in the DFW metroplex and I would be surprised if they DIDN'T start opening HEB stores in addition to Central Market.

The Dallas Morning News article also mentioned that HEB is now #1 in market share in Houston. It wasn't all that long ago that they were a distant #4 in that market so obviously they're very good at implementing 'long term' strategies. I fully expect that to happen in North Texas, as well.

[pseudo3d]

I think that because H-E-B is a better operator than Albertsons/Tom Thumb means that they won't all convert to H-E-B and begin to (or at least try to) drive their competition out. In the case of the Houston market, Albertsons invested enormous amounts of money in the market to try to gain a market share. It did not work. Sure, you can argue "they were overpriced and had bad locations" or something along those lines and you'd be right, but time and time again, we have had operators that believed they could succeed in markets through brute force store additions and a perceived attitude that they were better. (The list is long if you include a wide variety of markets--Smith's, Albertsons, Food Lion, Harris Teeter, Haggen, The Fresh Market, Fresh & Easy...I'm sure there are others).

I don't think anything will happen in a while...they'll close the stores and H-E-B will sit on the sites (possibly even short-term leasing) to prevent other operators from moving in. Opening the stores as H-E-B has a high risk for disaster especially if people have these stupidly unrealistic expectations like it's going to be "Wegmans of Texas" (citing H-E-B's largest and best stores, of which these won't be) while the stores start to underperform (they were never all that high volume) like the Kroger in the former Tom Thumb in Plano (and Kroger is a more competent retailer than Albertsons overall). They could continue to invest in Dallas but that's risky especially if their other markets get neglected as a result (like if WinCo or other operators decide to attack H-E-B's strongest markets like Waco, Austin, or San Antonio). Either way, pulling out of Dallas (especially if they had high store count) would result in a wave of bad publicity that will haunt H-E-B for years to come. I have confidence that H-E-B isn't stupid and actually has thought through all of this, and thus will go for the safer option of just slowly working their way up through the southern suburbs.

I don't know that much about the Texas market so I'm not disagreeing with you on any specific point. But HEB is a growing company in an industry that doesn't see much growth just like Wegman's and Publix. These three companies are perhaps the only traditional grocery store chains in the nation expanding primarily by building new stores.

HEB is generating a lot of revenue and has to keep expanding. But there aren't any major population centers left in Texas where they don't already have a major presence. According to the Dallas Morning News article referenced earlier in this thread they have bought twenty parcels of land in North Texas in addition to these stores over the last couple years. HEB obviously intends on becoming a force in the DFW metroplex and I would be surprised if they DIDN'T start opening HEB stores in addition to Central Market.

The Dallas Morning News article also mentioned that HEB is now #1 in market share in Houston. It wasn't all that long ago that they were a distant #4 in that market so obviously they're very good at implementing 'long term' strategies. I fully expect that to happen in North Texas, as well.

Gaining the Houston market was part skill and part luck. They had managed throughout the 1990s to build H-E-B Pantry stores, small format stores (20-30k square foot stores, no service departments except meat and maybe a small bakery) that they were able to build quickly without much risk, and gaining their name in the market as well. The name issue isn't a problem, but they can't enter through H-E-B Pantry (the market kinda moved on), so they will be forced to build entirely with more expensive stores. Secondly, they got their market share basically handed to them by Safeway, as they had started to make some unfortunate changes with service and selection that drove customers off looking for a new option. (From what I've heard the revenue lost by Randalls and gained from H-E-B in the early 2000s was about equal). Now, if Tom Thumb/Albertsons really started to deteriorate (go really downhill, really fast) for reasons unrelated to H-E-B (which is possible at this point, though if it comes to that then it's going to mean more than just losing Dallas), then H-E-B could clean house.

Of course H-E-B is going to try to take Dallas (I never said they didn't), like I mentioned, but they're likely going to go with the "expand north from the southern suburbs and small towns" route, building up their "saved" store sites when the time is right. It's just going to take a while and those stores are going to be dark for some time.