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

[pseudo3d]

https://www.axios.com/local/houston/202 ... rket-share
https://archive.ph/6d7YV

Admittedly, this is only by 0.1% but H-E-B has expanded enormously in Houston over the last past 15 years while Kroger has slacked off on building stores in the last ten (I could probably count the number of stores Kroger opened in the last decade on my fingers, possibly one hand). H-E-B's stores outperform Kroger's stores on a per-store basis but this is still surprising to hear: this is what it looked like a year ago with H-E-B leading Kroger by 3.9%. (Randalls unfortunately hasn't gained much since the last time, though did receive +0.1 market share).

4% is a huge drop and I would like to think that this is less smart moves by Kroger and more to the fact that a lot of H-E-B's practices (overcrowded stores, heavy emphasis on Curbside service, removal of popular products) have caused customers to spend more money at Kroger, but I'm not really sure.

[ClownLoach]

https://www.axios.com/local/houston/202 ... rket-share
https://archive.ph/6d7YV

Admittedly, this is only by 0.1% but H-E-B has expanded enormously in Houston over the last past 15 years while Kroger has slacked off on building stores in the last ten (I could probably count the number of stores Kroger opened in the last decade on my fingers, possibly one hand). H-E-B's stores outperform Kroger's stores on a per-store basis but this is still surprising to hear: this is what it looked like a year ago with H-E-B leading Kroger by 3.9%. (Randalls unfortunately hasn't gained much since the last time, though did receive +0.1 market share).

4% is a huge drop and I would like to think that this is less smart moves by Kroger and more to the fact that a lot of H-E-B's practices (overcrowded stores, heavy emphasis on Curbside service, removal of popular products) have caused customers to spend more money at Kroger, but I'm not really sure.

Another Axios and Chain Store Guide article probably not worth the pixels it's posted with. Where are the sources for the data? They refer to averages, and averages don't mean anything. These same guys tried to claim Target was one of the largest food retailers in Dallas Fort Worth metroplex based on total store volume before, a meaningless statistic. This time they think their share is very small, but Houston is one of their better markets which is why they have opened so many new stores there and used it to launch their new prototype. Once again they reference total store volume which is skewed easily. Market share of what is always the question. Garbage, garbage, garbage.

[storewanderer]

This seems like a large swing.

Kroger has some Marketplace units scattered around Houston... they need more to compete with HEB. Those are the only of their stores that are at a level to properly compete with most HEBs.

I didn't really get the feeling Kroger was "going for the sales" aggressively if you know what I mean, when I was in Houston last year... it was just the usual Kroger program... usual ads... decent center store pricing with good private label mix, decent enough produce, unexciting bakery/deli... definitely some variables in center store mix there in Houston compared to Dallas at Kroger though.

[ClownLoach]

This seems like a large swing.

Kroger has some Marketplace units scattered around Houston... they need more to compete with HEB. Those are the only of their stores that are at a level to properly compete with most HEBs.

I didn't really get the feeling Kroger was "going for the sales" aggressively if you know what I mean, when I was in Houston last year... it was just the usual Kroger program... usual ads... decent center store pricing with good private label mix, decent enough produce, unexciting bakery/deli... definitely some variables in center store mix there in Houston compared to Dallas at Kroger though.

If anyone thinks H-E-B is falling behind, I have a bridge to sell them.

This junk article once again uses chain average and store counts. It claims grocery share but acknowledges it's calculating total store volume for Costco. I guess there's no difference between food, clothing and electronics? I thought it was an apples to oranges comparison... (yes that was bad) Based on this they might as well include PetSmart since all those stores sell pet food and PetSmart has some human snacks by the register.

Meaningless and worthless article. It's like the one that claimed Aldi was out selling Ralphs in all parts of SoCal a few years ago. Pure comedy.

[buckguy]

The people who do these surveys never reveal the methodology and the way they define Metro areas can be a little odd. What matters over time is using the same sampling methods and being able to look at year over year trends and have some idea of what differences between chains would be within measurement error. Without the additional information, these findings can't be taken too seriously. There are very few things that result in a big change in market share in the short run., unless someone initiates a price war, acquires a competitor, etc.

[ClownLoach]

The people who do these surveys never reveal the methodology and the way they define Metro areas can be a little odd. What matters over time is using the same sampling methods and being able to look at year over year trends and have some idea of what differences between chains would be within measurement error. Without the additional information, these findings can't be taken too seriously. There are very few things that result in a big change in market share in the short run., unless someone initiates a price war, acquires a competitor, etc.

The Axios articles appear to operate the same way. They pull up the entire company sales figures then determine the average revenue per store for the chain. Then they multiply that average by the store count in a region. They repeat this activity for each chain using the company average revenue per store. Then they can add up all the totals and do the math to figure out market share.

The problem is that this is no more accurate than throwing darts at a board. For example let's say the average Kroger does $59M as this article mentioned. Do you think the average Houston store does more than $59M or less? That's a million dollars a week per store. This is where it gets very messy. Once again the average Costco does about $150M a year, this article quoted slightly less than that which might be accurate based on last year. But again do we know if Costco underperforms or outperforms chain average in Houston? I don't know but the presence of lots of Sam's makes me suspect they would be on the lower end. But then knowing how little Sam's do in comparison per store - how could they possibly be within 1% of each other? In California a Costco doing $150M a year would be considered a very slow store as most do $250M a year. Target and Walmart both have wild variations in volume, some very slow stores, some small formats, some supercenters. This article just multiplies the average for the company by the store count, but we do know Target has invested a ton in growing the Houston market and surrounding suburbs with SuperTarget locations dominating the store count. So again skewed results.

Basically they don't reveal their data sources or any kind of references, and then doing simple calculations of company wide average results for these companies seems to net almost exactly what they quote. Averages are meaningless and using them to state market share makes their statistics very unreliable.

[pseudo3d]

This seems like a large swing.

Kroger has some Marketplace units scattered around Houston... they need more to compete with HEB. Those are the only of their stores that are at a level to properly compete with most HEBs.

I didn't really get the feeling Kroger was "going for the sales" aggressively if you know what I mean, when I was in Houston last year... it was just the usual Kroger program... usual ads... decent center store pricing with good private label mix, decent enough produce, unexciting bakery/deli... definitely some variables in center store mix there in Houston compared to Dallas at Kroger though.

If anyone thinks H-E-B is falling behind, I have a bridge to sell them.

It's like political polls, if there's a consistent methodology and numbers start shifting around, either someone flubbed or there's enough of a flex that's a toss-up. Because H-E-B is a private company, they keep their financials close, but anecdotally they DID underperform, and when you erode the overall grocery experience sooner or later that comes back to haunt you.

[pseudo3d]

This article just multiplies the average for the company by the store count, but we do know Target has invested a ton in growing the Houston market and surrounding suburbs with SuperTarget locations dominating the store count. So again skewed results.

Huh? In the past ten years, Target has built just five stores (including a smaller-format one around 70k square feet in a former Randalls) in the entire area, and none of them have been SuperTarget format. All of the stores have more or less been remodeled to standard formats.

[HoustonRetail]

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

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

[pseudo3d]

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

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

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