Could we ever see a Publix-HEB merger (or Wegmans)?

[architect]

Just a thought: with all of the consolidation taking place in the grocery industry right now, could anyone see Publix, HEB or Wegmans becoming a merger target? These players are arguably the most influential privately-owned traditional grocers in the country, and all three have attractive business fundamentals (a growing store base, good to excellent stores which are profitable, a non-unionized workforce, and generally well-respected by their customer base). Personally, I could easily see HEB and Publix merging if one chain's leadership ever decides to sell. Both chains have dominant market share in many of their regions (Publix owns almost all of Florida and is a major player in much of the South, HEB covers San Antonio and Austin and is also a major player in Houston) and have also figured out how to cater to similar demographics (Hispanics, high-end shoppers, etc.). The two chains are also somewhat compatible geographically, with only a couple of smaller Southern states separating their territories (which could easily be infilled).

[wnetmacman]

I don't see HEB leaving Texas (again) any time soon. They tried a lone store in Lake Charles, LA that didn't make it but a couple of years. I also don't see the Butt family relinquishing control of the company.

I don't see Publix merging with anyone. They have managed to grow largely on organic expansion, with some acquisitions (from Albertsons and the like) along the way.

Having said that, money is talking these days. Mergers are the norm, not the exception. I would never say never on any possibility. If you had told me that Albertsons and Safeway would have been one company today, I'd have laughed you out of the room.

[ValuedCustomer]

Having been in all three I agree they are among the very best in the biz but they're all different. Publix is very limited, in my opinion compared to the other two. They've never attempted to pull off a Central Market type operation (which is comparable to Wegmans or Whole Foods) and are pretty conservative in their presentation and product mix. Their store brands are really limited and not quick to change (unlike competitor Kroger around here who is always mixing it up). The last HEB I went into (in San Angelo, Texas) was gigantic and at least twice as big as the biggest Publix while not as extravagant as a Wegmans (well, it was San Angelo so maybe their stores in Austin or Houston are more upscale). I don't see any of these three combining.

[klkla]

Just a thought: with all of the consolidation taking place in the grocery industry right now, could anyone see Publix, HEB or Wegmans becoming a merger target?

As far as being 'targets' for mergers that might be unlikely because they're all pretty tightly held from an ownership standpoint.

Publix - Is owned by their employees. Their shares are not publicly traded so it would have to be an all cash offer and get the support from their current and past employees & management which is highly unlikely at this time.

HEB - Is privately owned and therefore not publicly traded. Would have to be an all cash offer, as well.

Wegmans - Is privately owned by the Wegman family. Same as above.

Unlike a public company, these companies are not required legally to evaluate all offers and it would be impossible to do a hostile takeover of HEB and Wegmans and almost impossible to do a hostile takeover of Publix.

[pseudo3d]

Publix, at this point, is probably the biggest single chain today to have all of its stores under a single name. But they are vastly different stores.

Publix is a upper-middle class supermarket with their main power being "best at what we do", which works very well for them. Their stores rarely go past 55k square feet.

Wegmans is an upscale-leaning "destination" supermarket with a focus on presentation and huge site plans. They rarely go below 70k square feet.

H-E-B is a bit like Publix but it plays its own game. They heavily push a Texas angle which would have to be retooled for other markets. Expansion has been slow as they choke out competition. They own San Antonio, they pretty much own Austin (Randalls, Safeway's Texas brand maintains a rather distant second), and they made incredible in-roads into Houston that no "foreign" competitor has done without buying someone out. They also have a distinct collection of formats, like Central Market (their upscale Whole Foods-type store, come for the great beer & wine/perishables department, stay because stores are a claustrophobic maze), Mi Cocina (Hispanic-oriented), Joe V's Smart Shop (discount), H-E-B Plus (expanded GM, goes past 100k square feet usually...best comparison would be Kroger Marketplace), and the rank and file H-E-B stores, which ALL have such incredible variation, to the point where some of them act like a clone/knockoff of Wegmans, and some of them are so, well, "undersized" that you'll wonder why they were H-E-B stores at all (some used to be "H-E-B Pantry", kind of a Food Lion-sized operation). I've been in an H-E-B with NO perishables departments and a wine department smaller than a king-sized bed, and I've been in an H-E-B where there were fresh squeezed juices and $300 cheese wheels. The vast variety of the things that stores have or don't have is fascinating but it makes for a wildly inconsistent store. The last non-local H-E-B I visited was one made out of a former Albertsons and much like the Albertsons that was there, was completely unremarkable in almost every way.


And of course, since they're all owned by employees or families, they're not going to be takeover candidates or merger candidates.

[wnetmacman]

H-E-B is a bit like Publix but it plays its own game. They heavily push a Texas angle which would have to be retooled for other markets. Expansion has been slow as they choke out competition. They own San Antonio, they pretty much own Austin (Randalls, Safeway's Texas brand maintains a rather distant second), and they made incredible in-roads into Houston that no "foreign" competitor has done without buying someone out. They also have a distinct collection of formats, like Central Market (their upscale Whole Foods-type store, come for the great beer & wine/perishables department, stay because stores are a claustrophobic maze), Mi Cocina (Hispanic-oriented), Joe V's Smart Shop (discount), H-E-B Plus (expanded GM, goes past 100k square feet usually...best comparison would be Kroger Marketplace), and the rank and file H-E-B stores, which ALL have such incredible variation, to the point where some of them act like a clone/knockoff of Wegmans, and some of them are so, well, "undersized" that you'll wonder why they were H-E-B stores at all (some used to be "H-E-B Pantry", kind of a Food Lion-sized operation). I've been in an H-E-B with NO perishables departments and a wine department smaller than a king-sized bed, and I've been in an H-E-B where there were fresh squeezed juices and $300 cheese wheels. The vast variety of the things that stores have or don't have is fascinating but it makes for a wildly inconsistent store. The last non-local H-E-B I visited was one made out of a former Albertsons and much like the Albertsons that was there, was completely unremarkable in almost every way.

This is probably the best description of HEB I've ever seen. They are horribly inconsistent between stores. The store in Orange, TX is tiny, barely 25,000 sq. ft. and it has almost nothing, compared to the 70,000 s.f. Kroger down the street. Closer to San Antonio, they tend to get more attention. I got dizzy in the one Central Market store I went to in Houston, owing to the forced zig-zag pattern they make you go through.

Publix, at this point, is probably the biggest single chain today to have all of its stores under a single name. But they are vastly different stores.

Publix is a upper-middle class supermarket with their main power being "best at what we do", which works very well for them. Their stores rarely go past 55k square feet.

I wouldn't call them 'upper-middle class'. More like 'everybody who can afford to live in Florida'. And their stores are actually fairly consistent across the board. I went in stores in Orlando and Tallahassee in 2014, and they were remarkably similar, though marketed to the specific area. The Orlando store was just off Disney's Maingate West, and had a ton of tourist-ly merchandise, where the Tallahassee store sits next to Florida State University and was merchandised to that clientele. It was also the store where the famous location where Jameis Winston infamously stole crab legs.

I don't know much about Wegmans, and haven't been in one of their stores, but my understanding is one word: huge.

[arizonaguy]

H-E-B is a bit like Publix but it plays its own game. They heavily push a Texas angle which would have to be retooled for other markets. Expansion has been slow as they choke out competition. They own San Antonio, they pretty much own Austin (Randalls, Safeway's Texas brand maintains a rather distant second), and they made incredible in-roads into Houston that no "foreign" competitor has done without buying someone out. They also have a distinct collection of formats, like Central Market (their upscale Whole Foods-type store, come for the great beer & wine/perishables department, stay because stores are a claustrophobic maze), Mi Cocina (Hispanic-oriented), Joe V's Smart Shop (discount), H-E-B Plus (expanded GM, goes past 100k square feet usually...best comparison would be Kroger Marketplace), and the rank and file H-E-B stores, which ALL have such incredible variation, to the point where some of them act like a clone/knockoff of Wegmans, and some of them are so, well, "undersized" that you'll wonder why they were H-E-B stores at all (some used to be "H-E-B Pantry", kind of a Food Lion-sized operation). I've been in an H-E-B with NO perishables departments and a wine department smaller than a king-sized bed, and I've been in an H-E-B where there were fresh squeezed juices and $300 cheese wheels. The vast variety of the things that stores have or don't have is fascinating but it makes for a wildly inconsistent store. The last non-local H-E-B I visited was one made out of a former Albertsons and much like the Albertsons that was there, was completely unremarkable in almost every way.

This is probably the best description of HEB I've ever seen. They are horribly inconsistent between stores. The store in Orange, TX is tiny, barely 25,000 sq. ft. and it has almost nothing, compared to the 70,000 s.f. Kroger down the street. Closer to San Antonio, they tend to get more attention. I got dizzy in the one Central Market store I went to in Houston, owing to the forced zig-zag pattern they make you go through.

Publix, at this point, is probably the biggest single chain today to have all of its stores under a single name. But they are vastly different stores.

Publix is a upper-middle class supermarket with their main power being "best at what we do", which works very well for them. Their stores rarely go past 55k square feet.

I wouldn't call them 'upper-middle class'. More like 'everybody who can afford to live in Florida'. And their stores are actually fairly consistent across the board. I went in stores in Orlando and Tallahassee in 2014, and they were remarkably similar, though marketed to the specific area. The Orlando store was just off Disney's Maingate West, and had a ton of tourist-ly merchandise, where the Tallahassee store sits next to Florida State University and was merchandised to that clientele. It was also the store where the famous location where Jameis Winston infamously stole crab legs.

I don't know much about Wegmans, and haven't been in one of their stores, but my understanding is one word: huge.

I've never thought anything special about either H-E-B or Publix.

Granted, the only Publix I've been in recently was in Nashville and the Kroger down the street seemed to be superior in almost every way.

I went to 2 H-E-Bs, a very nice H-E-B in Houston that, while it didn't "wow" me, seemed to have a great selection of perishables and was probably nicer than the run of the mill Kroger operation. It even had a "Central Market Cafe on the Run" that seemed impressive. I still preferred the Market Street I visited in Plano to the H-E-B in Houston, but it's not a bad store.

The other H-E-B I went to was an H-E-B Plus in a "lower-income" neighborhood in San Antonio. This store did not impress me in any way except for its extensive cookware department. The general merchandise was of a "dollar store" quality and the rest of the store was just not impressive.

Kroger is actually similar in tailoring stores to neighborhoods. My job takes me all around Phoenix and I've visited a good percentage of the Fry's stores around town (very interesting and very non-homogeneous Kroger chain) but most of the stores still have a very similar look/feel. H-E-B's 2 stores I visited were vastly different from one another.

I've never been to a Wegman's. They opened up in Northern Virginia a year or two after I moved to Arizona. While it's off topic, if you want a very unimpressive supermarket chain, try Giant-Landover. They offer nothing unique, they aren't (or at least weren't) very price competitive, and they seem to be losing market share to new entrants. Harris Teeter, Wegman's, etc. are having an easy time expanding in Northern Virginia primarily at Giant-Landover's expense. If Publix were to enter DC, I can see them purchasing Giant-Landover. The store sizes would be about right and they go after the exact same type of customer. Giant-Landover reminds me a lot of Albertsons in DFW, except that it's still mostly intact.

[pseudo3d]

By "vastly different", I mean between H-E-B and Publix, not Publix's other stores. Makes sense in context, doesn't it?

[veteran+]

H-E-B is a bit like Publix but it plays its own game. They heavily push a Texas angle which would have to be retooled for other markets. Expansion has been slow as they choke out competition. They own San Antonio, they pretty much own Austin (Randalls, Safeway's Texas brand maintains a rather distant second), and they made incredible in-roads into Houston that no "foreign" competitor has done without buying someone out. They also have a distinct collection of formats, like Central Market (their upscale Whole Foods-type store, come for the great beer & wine/perishables department, stay because stores are a claustrophobic maze), Mi Cocina (Hispanic-oriented), Joe V's Smart Shop (discount), H-E-B Plus (expanded GM, goes past 100k square feet usually...best comparison would be Kroger Marketplace), and the rank and file H-E-B stores, which ALL have such incredible variation, to the point where some of them act like a clone/knockoff of Wegmans, and some of them are so, well, "undersized" that you'll wonder why they were H-E-B stores at all (some used to be "H-E-B Pantry", kind of a Food Lion-sized operation). I've been in an H-E-B with NO perishables departments and a wine department smaller than a king-sized bed, and I've been in an H-E-B where there were fresh squeezed juices and $300 cheese wheels. The vast variety of the things that stores have or don't have is fascinating but it makes for a wildly inconsistent store. The last non-local H-E-B I visited was one made out of a former Albertsons and much like the Albertsons that was there, was completely unremarkable in almost every way.

This is probably the best description of HEB I've ever seen. They are horribly inconsistent between stores. The store in Orange, TX is tiny, barely 25,000 sq. ft. and it has almost nothing, compared to the 70,000 s.f. Kroger down the street. Closer to San Antonio, they tend to get more attention. I got dizzy in the one Central Market store I went to in Houston, owing to the forced zig-zag pattern they make you go through.

Publix, at this point, is probably the biggest single chain today to have all of its stores under a single name. But they are vastly different stores.

Publix is a upper-middle class supermarket with their main power being "best at what we do", which works very well for them. Their stores rarely go past 55k square feet.

I wouldn't call them 'upper-middle class'. More like 'everybody who can afford to live in Florida'. And their stores are actually fairly consistent across the board. I went in stores in Orlando and Tallahassee in 2014, and they were remarkably similar, though marketed to the specific area. The Orlando store was just off Disney's Maingate West, and had a ton of tourist-ly merchandise, where the Tallahassee store sits next to Florida State University and was merchandised to that clientele. It was also the store where the famous location where Jameis Winston infamously stole crab legs.

I don't know much about Wegmans, and haven't been in one of their stores, but my understanding is one word: huge.

If I may expound on your statement: "I wouldn't call them 'upper-middle class'. More like 'everybody who can afford to live in Florida'."

More like there is no other place to shop so you "have to" afford to shop there...........LOL

[BillyGr]

I don't know much about Wegmans, and haven't been in one of their stores, but my understanding is one word: huge.

Wegmans sort of has two different models.

Most of the areas they operate (say NJ and south and Boston area) they are relatively newer stores (last 10-15 years) and generally follow what you suggest (huge with lots of prepared and fancy foods and other items like cookware and such). This is what generally leads people to consider them a more expensive store, and those "specialty" items certainly can be. However your traditional grocery items tend to be quite competitive with other stores in the area (perhaps partially that they tend to carry a smaller assortment of varieties in these areas, so get better deals - almost a modified version of the Aldi model of limited selection and volume).

However, if you get up into areas in NY around their home (Rochester) you will find a mixture of these "Super" stores with some older and thus smaller stores that they have had for years and kept, either due to lack of expansion space or being a smaller area where a larger store is not far away, thus the smaller store is more for local everyday use.
One reason why with the often discussed question of some agreement between them & Price Chopper not to open in each other's areas it seems that those two could, if they wished, combine at some future point, as Price Chopper has a similar plan (newer stores/renovations tending towards the Wegmans fancy model while still retaining smaller stores in the Albany/Schenectady/Troy city areas where space doesn't allow larger stores rather than just leaving them totally as many chains have done with city areas.