Albertsons to reopen former Minyard/Fiesta in Irving

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Re: Albertsons to reopen former Minyard/Fiesta in Irving

Post by storewanderer »

I think that is neat they are opening a new Albertsons. I am a bit confused given they've taken the banner off some stores in TX and converted them to Tom Thumb. I think they are having second thoughts about converting stores to Safeway banners. As they should.

$2.6 million is enough to clear the floor, cement it, and remodel the departments including some new refrigeration. The store looks like in terms of department size and layout that it could be worked with... exterior is not great.
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Re: Albertsons to reopen former Minyard/Fiesta in Irving

Post by pseudo3d »

storewanderer wrote: April 13th, 2022, 8:06 pm I think that is neat they are opening a new Albertsons. I am a bit confused given they've taken the banner off some stores in TX and converted them to Tom Thumb. I think they are having second thoughts about converting stores to Safeway banners. As they should.

$2.6 million is enough to clear the floor, cement it, and remodel the departments including some new refrigeration.
As far as I know, only one store converted to Tom Thumb, and it is true that no Albertsons stores have opened recently...but then again, all the stores that have opened recently were a better fit for Tom Thumb anyway, with the exception of maybe the Heath store, but again, the openings have been so few and far between this really shouldn't be seen as a way for determining the brand going forward. There are a handful of Albertsons stores in Dallas-Fort Worth that have gotten remodeled or are getting remodeled without swapping the name too.
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Re: Albertsons to reopen former Minyard/Fiesta in Irving

Post by storewanderer »

pseudo3d wrote: April 13th, 2022, 9:09 pm

As far as I know, only one store converted to Tom Thumb, and it is true that no Albertsons stores have opened recently...but then again, all the stores that have opened recently were a better fit for Tom Thumb anyway, with the exception of maybe the Heath store, but again, the openings have been so few and far between this really shouldn't be seen as a way for determining the brand going forward. There are a handful of Albertsons stores in Dallas-Fort Worth that have gotten remodeled or are getting remodeled without swapping the name too.
Given Dallas was a market where Albertsons was a market leader actually in first marketshare position in the late 90's (perhaps the only time that ever happened other than in Boise), you would think the name has some value there...

The store growth under the Albertsons name with new stores in places like Las Vegas, El Paso, and Boise makes sense to me. Kind of interesting to see it happening in Dallas. Although just one store it is kind of a big deal given the company barely opens a dozen new stores in a year across the entire chain. I think they should grow the Albertsons banner in SoCal also but someone there seems to love Vons (yuck). OR/WA/NorCal- fine, just use Safeway. Though I think in Southern Oregon the Albertsons name is stronger, they'd all work fine as Safeway. Eastern Washington is a toss up but what they are doing in the tri cities (Kelso/Pasco/Kennewick) converting what was primarily an Albertsons market to Safeway banner (Safeway largely failed in those markets decades ago) shows the intentions of the Northwest Region.
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Re: Albertsons to reopen former Minyard/Fiesta in Irving

Post by SoleOwnerOfMyName »

DFWRetaileWatcher wrote: April 10th, 2022, 7:08 pm
But that doesn't explain why H-E-B seems more willing to go head-to-head against Kroger with their initial entrance into DFW and seems hesistant to open stores that would compete directly with Tom Thumb / Albertsons.
Perhaps some combination of:

1) People stuck with Albertsons/Tom Thumb as their closest store are more likely to drive many more miles to go to HEB than are people whose closest store is a Kroger.

2) If Kroger has higher profit margin in DFW due to their primary conventional competitor Albertsons/Tom Thumb's "Everyday Sky High Prices - Guaranteed!" format combined with mediocre stores, then going after Kroger's DFW margin by opening nice stores offering actual price competition might have a downstream impact on Kroger's ability to remain as competitive in Houston where HEB and Kroger both have large shares of the market.

3) Knocking off Albertsons/Tom Thumb will be easy - for the same reason that Randall's in Houston and Austin are no longer a factor and are just coasting on the declining wind their last, best, legacy locations for as long as they turn a profit. Knock them out first in DFW and Kroger will likely stand to benefit as well - which is not in HEB's long-term best interest. Weaken Kroger in DFW first and they will likely be in less of a position to capitalize on Albertsons/Tom Thumb's inevitable Randall's style demise.
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Re: Albertsons to reopen former Minyard/Fiesta in Irving

Post by SoleOwnerOfMyName »

storewanderer wrote:
I really think WinCo has thrown a bit of a curve in HEB's plans. It was bold for WinCo to make the expansion move they did, given the ongoing "HEB is coming" talk. Too much talk and too little action from HEB, I guess. At least something is finally happening, though the cynical side of me says I'll believe it when I see a store actually operating and selling groceries.
I have difficulty seeing Winco as being much of a factor for HEB. I do know that HEB takes them seriously due to a basket price comparison I once saw at the HEB Plus in Burleson vs the nearby Walmart vs the Winco in far south Fort Worth. But there are reasons why I just don't see Winco being a threat to HEB and suspect Winco has more to fear from HEB than vice versa.

First, HEB already has a larger share of the DFW market when one considers Central Market and the HEBs in counties to the immediate south and west of DFW. Per this thread from last year (https://www.retailwatchers.com/viewtopic.php?t=2913) HEB has 3.1 percent market share with 11 stores vs WinCo's 2.4 percent with 10 stores. And keep in mind that this is with Central Market which has a narrower appeal than a conventional HEB. And keep in mind that this is before HEB opens the three stores north of Dallas and the store planned for Forney east of Dallas and a store that is supposedly going to eventually open in Mansfield just southeast of Fort Worth. Meanwhile, WinCo's DFW expansion seems to be either on pause or there are no more locations planned. Instead they have been opening stores in Oklahoma.

Second, Winco's product selection - well, let's just say it is very mainstream and very underwhelming. Let's just say that in some respects that Walmart's and Aldi's is more upscale by comparison. That, in and of itself, is not a problem. Not everybody is interested in upscale groceries and not everybody is adventurous when it comes to groceries and regards a store offering specialty items as a value. Winco's core offering is they are VERY price competitive - their prices are about the same as and sometimes better than Walmart. And if one wishes to stock up on snack foods, frozen dinners and convenience food - Winco's the place. But guess what? You can get such stuff at Walmart too and at a Walmart price. And you can get such stuff at HEB too at priced that are very competitive with Walmart and sometimes lower. But at HEB you can also get a much wider selection including HEB store brands that sometimes offer unique items that that have no name brand equivalent.

So even with Winco's core market, which I assume tends to be price conscious working class families who buy lots of groceries, the question is whether their prices are so low that it makes sense to drive past a Walmart or an HEB to go to Winco. I am not knocking Winco and they do offer certain things that are unique to them such as a bulk section that offers more downscale offerings than Central Market's or Sprouts and has outstanding prices on items where they overlap. I have never tried their bulk coffee but, if it is any good, their prices on it are excellent. And they actually sell survivalist products in bulk and X number of years supply of food kits. So there will be some people who will be willing to make that drive. But how many? Keep in mind Winco has 10 DFW stores vs 93 for Walmart and 15 for HEB/Central Market once all of the already announced HEBs open up.
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Re: Albertsons to reopen former Minyard/Fiesta in Irving

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SoleOwnerOfMyName wrote: April 19th, 2022, 12:42 am

I have difficulty seeing Winco as being much of a factor for HEB. I do know that HEB takes them seriously due to a basket price comparison I once saw at the HEB Plus in Burleson vs the nearby Walmart vs the Winco in far south Fort Worth. But there are reasons why I just don't see Winco being a threat to HEB and suspect Winco has more to fear from HEB than vice versa.

First, HEB already has a larger share of the DFW market when one considers Central Market and the HEBs in counties to the immediate south and west of DFW. Per this thread from last year (https://www.retailwatchers.com/viewtopic.php?t=2913) HEB has 3.1 percent market share with 11 stores vs WinCo's 2.4 percent with 10 stores. And keep in mind that this is with Central Market which has a narrower appeal than a conventional HEB. And keep in mind that this is before HEB opens the three stores north of Dallas and the store planned for Forney east of Dallas and a store that is supposedly going to eventually open in Mansfield just southeast of Fort Worth. Meanwhile, WinCo's DFW expansion seems to be either on pause or there are no more locations planned. Instead they have been opening stores in Oklahoma.

Second, Winco's product selection - well, let's just say it is very mainstream and very underwhelming. Let's just say that in some respects that Walmart's and Aldi's is more upscale by comparison. That, in and of itself, is not a problem. Not everybody is interested in upscale groceries and not everybody is adventurous when it comes to groceries and regards a store offering specialty items as a value. Winco's core offering is they are VERY price competitive - their prices are about the same as and sometimes better than Walmart. And if one wishes to stock up on snack foods, frozen dinners and convenience food - Winco's the place. But guess what? You can get such stuff at Walmart too and at a Walmart price. And you can get such stuff at HEB too at priced that are very competitive with Walmart and sometimes lower. But at HEB you can also get a much wider selection including HEB store brands that sometimes offer unique items that that have no name brand equivalent.

So even with Winco's core market, which I assume tends to be price conscious working class families who buy lots of groceries, the question is whether their prices are so low that it makes sense to drive past a Walmart or an HEB to go to Winco. I am not knocking Winco and they do offer certain things that are unique to them such as a bulk section that offers more downscale offerings than Central Market's or Sprouts and has outstanding prices on items where they overlap. I have never tried their bulk coffee but, if it is any good, their prices on it are excellent. And they actually sell survivalist products in bulk and X number of years supply of food kits. So there will be some people who will be willing to make that drive. But how many? Keep in mind Winco has 10 DFW stores vs 93 for Walmart and 15 for HEB/Central Market once all of the already announced HEBs open up.
Coffee is always a bit subjective but I find the bulk coffee or pre-bagged versions of that same coffee at WinCo to be quite good.

WinCo's product mix- you have to find the good aspects of it. There is a lot of junk. Also I do not like their private label much but it has some high points. For instance they have private label honey that is single source (product of USA), vs. most other private labels being a blend of honey from multiple countries. Move to private label olive oil and WinCo is only 2.52 a pint but it is the same as other private label olive oils a blend from multiple countries. The bakery french bread is scratch baked and it is pretty good, for .98, the best you can do. The deli is very basic but most lunchmeats at under $7/lb at a point where the cheapest ham in Safeway deli is 12.99/lb ("Primo Taglio") or Kroger Smiths at 9.49/lb (Private Selection) is again solid. They often have great deals (at least here in NV) on Northwest produced products- for instance this week they had Tillamook Yogurts at .38, Tillamook 8 ounce cheese shred or slice at 1.98 (Sargento at that price too) and they have more SKUs of those items than other stores here.

The basket comparison is exactly where WinCo comes in as a competitive factor. Let me give you an example here. A week and a half ago Wal Mart pushed down a price hike on dozen eggs. Wal Mart in Carson City, NV pushed the Dozen Large Great Value Standard White Eggs to 3.10 per dozen (price was under $2 before). Wal Mart locations in Reno kept selling this item for $1.91 until a few days ago when they finally did a price hike to $2.78. Why? Because WinCo held a $1.91 price on those eggs until a few days ago too (then went up to the 2.78, at which point Wal Mart decided to increase too). I see this type of thing happen on item after item.

WinCo is a competitor that plays the game on price. They double down on price and they will hold prices down and force competitors to either hold prices down too or look stupid. This will absolutely impact HEB. WinCo's pricing is much stronger than Wal Mart's pricing. WinCo buys massive quantities of products and they are able to hold prices down longer due to how they buy/their store count (they buy as if they have 5-10 times the number of stores they have).

Is the model WinCo uses sustainable long term? As long as vendors keep working with them, and as long as the stores keep exceeding $1 million a week in volume it is. WinCo is a nightmare for Wal Mart on groceries (not so much on other categories like household and drug) and I think it will be a nightmare for HEB too, strictly due to their pricing behavior.

Over the years I always wondered, when WinCo was much smaller, why Safeway didn't just, you know, wipe them out. Safeway could have easily taken the 20 stores they had competing with WinCo in the 90's, put those on a super low price scale to run WinCo out of business, and be done with itself. The only reason anyone was going to WinCo was for price. But they didn't. Worse, Safeway provided private label dairy and bread to WinCo until about 2015 after Albertsons took over. Those items, which from time to time were even in Safeway labels (Lucerne) and other times in packer labels (Cascade Pride or Castle Crest) were sold at 1/2 to 1/3 the price Safeway charged for the same exact stuff.
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Re: Albertsons to reopen former Minyard/Fiesta in Irving

Post by pseudo3d »

SoleOwnerOfMyName wrote: April 18th, 2022, 11:40 pm
DFWRetaileWatcher wrote: April 10th, 2022, 7:08 pm
But that doesn't explain why H-E-B seems more willing to go head-to-head against Kroger with their initial entrance into DFW and seems hesistant to open stores that would compete directly with Tom Thumb / Albertsons.
Perhaps some combination of:

1) People stuck with Albertsons/Tom Thumb as their closest store are more likely to drive many more miles to go to HEB than are people whose closest store is a Kroger.

2) If Kroger has higher profit margin in DFW due to their primary conventional competitor Albertsons/Tom Thumb's "Everyday Sky High Prices - Guaranteed!" format combined with mediocre stores, then going after Kroger's DFW margin by opening nice stores offering actual price competition might have a downstream impact on Kroger's ability to remain as competitive in Houston where HEB and Kroger both have large shares of the market.

3) Knocking off Albertsons/Tom Thumb will be easy - for the same reason that Randall's in Houston and Austin are no longer a factor and are just coasting on the declining wind their last, best, legacy locations for as long as they turn a profit. Knock them out first in DFW and Kroger will likely stand to benefit as well - which is not in HEB's long-term best interest. Weaken Kroger in DFW first and they will likely be in less of a position to capitalize on Albertsons/Tom Thumb's inevitable Randall's style demise.
1) I'm not sure if that's actually the case. When I was living in an area without a convenient H-E-B, I almost always went to the nearby Kroger for groceries. The closest H-E-B was a Pantry store, and most of the time there was no reason to visit it, even if it did have some of the brands and items Kroger didn't carry.

2) You've got it backwards—Kroger would have a lower profit margin because the groceries are cheaper but makes up for it with higher traffic. Kroger is not small enough that H-E-B would have a huge impact on it, and has already separated its division from Houston's. If Kroger really is on shakier ground than assumed, we might have seen that through other divisions, and outside of a few isolated closures, nothing has happened to suggest it.

3) Randalls in Austin was never much of a threat to H-E-B, even in the early 1990s both AppleTree and Tom Thumb couldn't hold a candle to H-E-B (which had 40% market share, even combined AppleTree and Tom Thumb had half of that, not to mention how worse off the store conditions were), and by the time full H-E-B stores arrived in Houston, Randalls was being crippled by debt, Kroger ramping up with new Signature stores, and the squeeze of Albertsons, which moved in on Randalls' home turf. Many of H-E-B's full line stores opened in neighborhoods after they had already been killed off by Safeway's own choices.

As an additional counterpoint, a few markets in south Dallas survive with Kroger, Albertsons, and H-E-B…even College Station (a few hours away from the Dallas area) survived until 2011 with three stores, until the Albertsons lease was sold to H-E-B as part of another deal.

If it was so easy to clean up Tom Thumb/Albertsons, they would've reopened the stores they bought from Minyard Sun Fresh Market and gotten to work. Heck, maybe they could've gotten in on Tom Thumb when Safeway was disintegrating.

For a long time I wondered why they never got in when Tom Thumb and Albertsons were both weakened but before their marriage consummated, but I think I figured out the answer; their margins are razor thin. This works because H-E-B stores are regularly packed out. So if they open (or buy) a bunch of open of less-than-crowded stores on the margins they regularly operate on, they're screwed.
Meanwhile, WinCo's DFW expansion seems to be either on pause or there are no more locations planned. Instead they have been opening stores in Oklahoma.
Despite the growing population, adding new stores has been down for pretty much everyone even pre-COVID. No one has been making the moves on DFW while WinCo slows up for a second.
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Re: Albertsons to reopen former Minyard/Fiesta in Irving

Post by SoleOwnerOfMyName »

storewanderer wrote: April 19th, 2022, 1:10 am

WinCo is a competitor that plays the game on price. They double down on price and they will hold prices down and force competitors to either hold prices down too or look stupid. This will absolutely impact HEB. WinCo's pricing is much stronger than Wal Mart's pricing. WinCo buys massive quantities of products and they are able to hold prices down longer due to how they buy/their store count (they buy as if they have 5-10 times the number of stores they have).
That is definitely a problem for Walmart whose entire value proposition is the perception that they are the low-price store. Someone else being perceived as being less expensive than Walmart is definitely a threat to them. Indeed, I recall once reading an article where WinCo was described as a "Walmart killer."

But HEB is in the fortunate position of not having to play such a race to the bottom as there are a multitude of other reasons why people shop at HEB in addition to the fact that they offer low prices. HEB can merely have low prices - not necessarily the lowest prices - and its customer base is not going to be fazed. HEB has the luxury of deciding when and on what items to engage in price wars with.

Also, keep in mind that HEB is no stranger to price wars with a vastly larger competitor. Competition between Walmart and HEB has been downright brutal at times - especially in Mexico. Yet HEB has managed to maintain and grow its market share verses Walmart.

There are other reasons why I think HEB has no particular fear of WinCo and why WinCo would be more likely to fear HEB than the other way around.

Let's take a look at the DFW sales ranking from the other thread I linked to in my previous posting.

Image

Things get interesting if one divides the numbers in the store count column into the total sales column to come up with the DFW average sales per store for each chain. If one does so, the ranking for the various chains is quite different:

Central Market/HEB $66.13 million per store
Walmart $61.46 million per store
WinCo $55.42 million per store

Kroger $45.27 million per store
Target $39.80 million per store
Tom Thumb $29.16 million per store
Albertsons $27.72 million per store
Fiesta Mart $19.28 million per store
Walmart Neighborhood Market $17.02 million per store

Here is what I find fascinating: HEB tops sales per store despite the fact that six of its eleven DFW stores are Central Market locations(!!!). For those not familiar, Central Market is an HEB format with large stores devoted entirely to fresh and specialty items. Let's just say that you will not find Diet Coke or Doritos at Central Market. Let's just say that Central Market appeals far more to an upscale niche than it does the mainstream mass market.

A regular HEB store, by contrast, does have a very broad-based mass-market appeal so the inclusion of Central Market in those numbers definitely drives down their average sales per store in DFW.

How much so? Well, I became curious - and it also occurred to me that the DFW numbers for Walmart and WinCo might not be typical for those chains either. DFW is massively saturated with Walmart locations which will drive down their average per store numbers and Winco is still fairly new in the market.

Thus I turned to this ranking of top grocery retailers and broke each chain's nationwide numbers out on average per-store basis: https://www.supermarketnews.com/retail- ... lers-sales

HEB (USA Only) $31.75 billion 351 stores = $90.46 million per store
Walmart (Nationwide, includes Sam's Club) $433.9 billion sales/5342 stores = $81.22 million per store
WinCo (Nationwide) $8.93 billion 129 stores = $69.22 million per store

In all three cases, each chain's stores nationwide average higher sales per store than they do in DFW. But, here too, observe just how much higher the per store average is for HEB verses Walmart. WinCo is in a distant third.

Now, total sales does not tell the entire story - what matters in the long run is how much profit one earns on those sales. And WinCo's no-frills format does have certain advantages when it comes to lowering operational costs - particularly with regard to labor and marketing.

But when it comes to buying power - HEB certainly has just as much, if not more, leverage in that area as WinCo does, especially if one considers that these sales numbers do NOT include their several dozen Mexican stores which they stock with much of the merchandise they procure for their USA stores. If you look at the label on most (but not all) HEB store brand items, you will see descriptions in both English and Spanish and distributed by notices for both "H-E-B San Antonio" and "Supermercados Internationales H-E-B" out of Monterrey NL

Compare HEB's annual revenue of $31.75 billion to WinCo's $8.93 billion (both of which are dwarfed by Walmarts $433.9 billion). Add to this the fact that HEB has many years of experience contending with intense price wars with Walmart. Somehow, I think they will be able to hold their own with WinCo on any particular products that they might need to.

Now consider the overall market appeal of HEB versus WinCo beyond just price. HEB has an almost cult-like following in its markets for a reason. Unlike national chains, they really understand the particular tastes of the Texas market. and they stock their stores with products specially tailored to that market. National chains are not necessarily inclined to stock their stores with any such items that might not enjoy a similar level of success if sold in the states where the majority of their stores are located.

Not just that - in Texas a very significant percentage of the population consists of Mexican immigrants or descendants of Mexican immigrants. These are people who tend to have larger sized families than the typical USA household and they are big-time buyers of groceries as they are much more likely to eat at home than the average USA household. This is a market that is very particular about certain things - for example, Mexican immigrant shoppers place a much higher value on fresh produce than does the typical USA household. And one will notice that when it comes to both quality and price, it is extremely difficult to beat the produce sections found in most HEB stores. HEB knows this market very well as a result of operating a large number of stores in Mexico that are as large and nice as their Texas counterparts.

I suspect WinCo's Texas operations have higher distribution costs for its DFW stores than does HEB. WInCo operates a distribution center in Denton, north of Dallas which serves its 10 DFW stores plus 3 in Oklahoma City and one in Tulsa. HEB serves its DFW stores from a distribution center in Temple. According to a 2020 press release announcing an expansion of that distribution center, it, at the time served 50 stores between Austin and DFW. DFW is at the far range of that distribution center - but Temple is closer to HEB's DFW stores, which already outnumber WinCos than Denton is to the three stores in OKC and much closer than Denton is to Tulsa.

On top of that, just based on my observation, DFW has historically never gone in a big way for bland, boring stores that offer the trade-off of rock bottom prices. I remember when Food Lion came to town in the 1990s loudly saying that they were going to take over due to their competitors all operating large, inefficient and thus expensive stores. They came to town with tiny, bland stores that were lower in price - and the market pretty much yawned. The stores struggled until the ABC hit piece against Food Lion pretty much ended the chain's time in Texas. Back in the day, Tom Thumb enjoyed a very nice share of the market despite having the highest prices. But, back in the day, Tom Thumb had the nicest stores, large for their time, and offered a premium shopping experience - before even Walmart started stocking specialty foods, Tom Thumb was one of the few places one could find many items. (Today they still have high prices but stores that are merely mediocre by today's standards - "Tom Thumb: Albertson's quality...at Whole Foods prices!!") There are, of course, many people in DFW who are price conscious and will seek out the rock bottom price. But the market as a whole is not as price-conscious as it is in many other parts of the country.

So when HEB comes to town - I think the very same things that give them a cult following in other markets are going to go over very well in DFW. They offer large stores with a shopping experience second to none with products tailored to their particular market both at the high end of that market and the price-conscious end as well.
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Re: Albertsons to reopen former Minyard/Fiesta in Irving

Post by storewanderer »

SoleOwnerOfMyName wrote: April 20th, 2022, 7:43 pm

That is definitely a problem for Walmart whose entire value proposition is the perception that they are the low-price store. Someone else being perceived as being less expensive than Walmart is definitely a threat to them. Indeed, I recall once reading an article where WinCo was described as a "Walmart killer."

But HEB is in the fortunate position of not having to play such a race to the bottom as there are a multitude of other reasons why people shop at HEB in addition to the fact that they offer low prices. HEB can merely have low prices - not necessarily the lowest prices - and its customer base is not going to be fazed. HEB has the luxury of deciding when and on what items to engage in price wars with.

Also, keep in mind that HEB is no stranger to price wars with a vastly larger competitor. Competition between Walmart and HEB has been downright brutal at times - especially in Mexico. Yet HEB has managed to maintain and grow its market share verses Walmart.

There are other reasons why I think HEB has no particular fear of WinCo and why WinCo would be more likely to fear HEB than the other way around.

Let's take a look at the DFW sales ranking from the other thread I linked to in my previous posting.

Here is what I find fascinating: HEB tops sales per store despite the fact that six of its eleven DFW stores are Central Market locations(!!!). For those not familiar, Central Market is an HEB format with large stores devoted entirely to fresh and specialty items. Let's just say that you will not find Diet Coke or Doritos at Central Market. Let's just say that Central Market appeals far more to an upscale niche than it does the mainstream mass market.

But when it comes to buying power - HEB certainly has just as much, if not more, leverage in that area as WinCo does.

National chains are not necessarily inclined to stock their stores with any such items that might not enjoy a similar level of success if sold in the states where the majority of their stores are located.

This is a market that is very particular about certain things - for example, Mexican immigrant shoppers place a much higher value on fresh produce than does the typical USA household.

I suspect WinCo's Texas operations have higher distribution costs for its DFW stores than does HEB. WInCo operates a distribution center in Denton, north of Dallas which serves its 10 DFW stores plus 3 in Oklahoma City and one in Tulsa. HEB serves its DFW stores from a distribution center in Temple. According to a 2020 press release announcing an expansion of that distribution center, it, at the time served 50 stores between Austin and DFW. DFW is at the far range of that distribution center - but Temple is closer to HEB's DFW stores, which already outnumber WinCos than Denton is to the three stores in OKC and much closer than Denton is to Tulsa.

On top of that, just based on my observation, DFW has historically never gone in a big way for bland, boring stores that offer the trade-off of rock bottom prices.
I am not surprised with the figures for Central Market. That is a perimeter heavy format selling a lot of fresh products and getting large ticket transactions. Similar to how Whole Foods sometimes has the highest volume stores in a given market, similar idea there.

I think WinCo is doing fine in Dallas based on the numbers you have. Basically they are averaging just over $1 million a week. Considering WinCo's format with limited/bottom dollar fresh offerings, limited non food and not real effective at moving it, and knowing they skew toward a price conscious customer, that tells me they are capturing a lot of customers in their stores. WinCo probably needs to grow in the market, but they are rarely a market leader. WinCo will also open stores quite a ways from distribution, that has been how they do business for years. They send full truckloads to one store so it works out for them (vs. low volume conventional operators who will have a truck stop at many locations to drop a few pallets at each). But they show up in a way that they are a "pest" to other chains who market as having low prices and that is going to be a problem for HEB just like Wal Mart. I'd be curious how WinCo's numbers in Oklahoma are. I think going in there was a risky move but given the competition there it looked like it should be a slam dunk, but I'm not sure it has been. I notice they accept credit cards in Oklahoma only, that right there tells me something is not going how it usually does for them.

Also WinCo does an excellent job capturing the hispanic customer in every market I've visited them in the west. They typically have large displays of low prices produce in the items that hispanics buy most, as well as a larger than typical aisle for packaged goods. Also their meat areas tend to have a large variety of meat sliced in a variety of ways again many thin cut packages to fit that market. HEB I am sure can out-do them but there will be customers who for various reasons will opt to shop at WinCo instead (location, familiarity, etc.) if they find the offering at WinCo meets their needs and is priced similarly to HEB.

Actually I could see HEB and WinCo getting into a very costly price war. HEB is larger so it likely has better ability to ride that out. Wal Mart doesn't seem to play ball much on price anymore. It isn't like it was 10-15 years ago where Wal Mart was steadily price comparing to WinCo and cutting prices all over the store. Now they only compare a handfull of items and don't seem to care about being higher priced than WinCo on a ton of center store.

Looking at WinCo's reviews online around DFW, their stores are very highly rated on Google Maps, etc. with high review counts. It appears most customers are very happy with them. But as you point out there are various reasons why these customers may end up happier with HEB. Looking at photos I see they have full aisle of hispanic items (double what they have out west) also seeing things like pinatas for sale (never seen those in a WinCo out west), and some other scattered items I don't recognize. So it appears WinCo is working with local vendors/regional suppliers and is merchandising this TX operation quite differently from how they do things out west.

So what happens? HEB opens by WinCo. WinCo loses 25% of business. Is $750k a week enough for WinCo? That I do not know but obviously it would be a pretty bad hit. It looks to me like WinCo needs to work very hard to get average store volumes up before HEB opens, so whatever volume loss HEB causes (I estimate 20%) will still keep their volume above $1 million a week.

WinCo has captured a lot of sales from me over the past two years, that would have otherwise gone to Kroger (Smiths). This has been for a variety of reasons- in stock at WinCo has been quite good, pricing seems to stay down at WinCo longer, and in some cases I have found brands of items or sizes of items at WinCo that I like that are not being carried at Smiths. Customer service at this WinCo I go to in South Reno, NV is absolutely terrible, food handling in the deli needs some pretty serious work, but none of those things are deal breakers for me. This store is well stocked, the produce staff does a good job with what it has, a couple recent meat purchases met my expectations for quality and were a great price, and I can usually have no wait to check out in the evening.

Honestly if 5 years ago the prices at Kroger were the same as WinCo, I'd actively avoid WinCo. Now, as I have shopped WinCo more, and found more things in their product mix I like to purchase that are not sold by Kroger, even if Kroger got pricing down to WinCo's levels, I would still go to WinCo sometimes (maybe not as often). This seems to be the trick with WinCo. They capture customers because of excellent basic center store product mix and price and that is their "trap." On first glance it is not impressive, you have to shop there more to find out what the deal is.

I think HEB vs. WinCo will be a very interesting war and I cannot wait to see it. I also think WinCo is ready for a fight.

These low frills operators like WinCo have largely gone out of business all over the US; they were often the first stores to close when Wal Mart got heavy into grocery in a given market. Look at all those Cub franchisees (same exact stores as WinCo is) who went bust all over the US within months of major Wal Mart Supercenter openings in given markets. Same for Food 4 Less. Somehow WinCo has survived and thrived. They stand up to Wal Mart very well. They seem to know what they are doing. WinCo does not take out debt for growth, they open stores and territories as they can pay for stores and usually own the real estate the store sits on.
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Re: Albertsons to reopen former Minyard/Fiesta in Irving

Post by pseudo3d »

SoleOwnerOfMyName wrote: April 20th, 2022, 7:43 pm On top of that, just based on my observation, DFW has historically never gone in a big way for bland, boring stores that offer the trade-off of rock bottom prices. I remember when Food Lion came to town in the 1990s loudly saying that they were going to take over due to their competitors all operating large, inefficient and thus expensive stores. They came to town with tiny, bland stores that were lower in price - and the market pretty much yawned. The stores struggled until the ABC hit piece against Food Lion pretty much ended the chain's time in Texas. Back in the day, Tom Thumb enjoyed a very nice share of the market despite having the highest prices. But, back in the day, Tom Thumb had the nicest stores, large for their time, and offered a premium shopping experience - before even Walmart started stocking specialty foods, Tom Thumb was one of the few places one could find many items. (Today they still have high prices but stores that are merely mediocre by today's standards - "Tom Thumb: Albertson's quality...at Whole Foods prices!!") There are, of course, many people in DFW who are price conscious and will seek out the rock bottom price. But the market as a whole is not as price-conscious as it is in many other parts of the country.

So when HEB comes to town - I think the very same things that give them a cult following in other markets are going to go over very well in DFW. They offer large stores with a shopping experience second to none with products tailored to their particular market both at the high end of that market and the price-conscious end as well.
H-E-B Pantry was able to move in quickly on the Houston market and planted dozens of stores, while Food Lion maybe did a dozen (and came in after H-E-B). The Dallas "low-price, low-frills" store winner ultimately ended up being Wal-Mart Neighborhood Market, which had a few stores in Houston, but not very many.
One thing I still think you're missing is that there are essentially two classes of H-E-B, which we'll call "Class A" and "Class B" for simplicity. Class A is the nice stores, the ones that are crowded and almost universally loved. Big 100k+ square foot stores with Boar's Head, a big non-food section, some sort of counter-serve restaurant, etc. The Class A stores tend to compete with Kroger and Randalls in Houston.

Class B stores (both built-as and downgraded Class A stores) are the slightly smaller H-E-B stores that have more stuff than a Pantry…they still have a pharmacy, deli (may or may not have Boar's Head), and all that…but noticeably cut down on niceties and with a significantly downscaled merchandise mix. Class B competes with Walmart, Fiesta, and, I imagine, WinCo.

The problem is that H-E-B rarely builds Class B stores except to replace existing stores, and they don't seem to be building Class B stores in Dallas anytime soon. Hence, the Class A stores being built in the suburbs…and with WinCo filling the vacuum that H-E-B tends to occupy in other markets, H-E-B's time in Dallas is shaping up to be already different than its adventures in central Texas.

It's obvious to anyone H-E-B has D-FW in its sights but they haven't committed everything to it. H-E-B has several smaller sites (mostly former Albertsons) but apparently has no intention of reopening any time soon but also have not sub-leased them, so their intentions are unknown. I know the circumstances were different, but Albertsons started from the ground level in Houston (besides adjunct small towns, similar to what H-E-B has now) and opened about three dozen stores in the Houston area maybe over five years, and that obviously didn't end well…and with H-E-B there's even greater risks because they need almost every store to be a big hit to be able to work.

I guess H-E-B could eventually open them when they have a good hold on the market, but who knows if and when that could ever happen? Heck, I've seen speculation that they might start losing interest in the grocery business altogether and focus on being a landlord. (Not that this means that they'll go full Weingarten and offload their stores, but definitely shelving the Dallas market and opening up the buildings they own to grocery use again).

Basically, a lot of this boils down to the fact that H-E-B doesn't believe its own hype—that it's an unstoppable juggernaut in every market it enters, because it isn't.
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