H-E-B to enter DFW market proper with Plano, Frisco stores

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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by Greggo »

I get them going for the lucrative, growing northern suburbs. But from a distribution standpoint, adding a store or 2 to the south or in central Dallas would be more efficient. (And, yes, I know they’re already sending trucks up for Central Market.) They own lots of land citywide and could also acquire a dark box or two in locations they deem viable. They’ve done it before in Austin and Houston, then opened after a remodel and/or expansion. Also I’m kind of surprised how slow they are going and how long they are predicting from groundbreaking to completion — more than a year. They’re super successful, though, so clearly they are confident on their approach.
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by DFWRetaileWatcher »

Greggo wrote: June 9th, 2021, 10:10 am I get them going for the lucrative, growing northern suburbs. But from a distribution standpoint, adding a store or 2 to the south or in central Dallas would be more efficient. (And, yes, I know they’re already sending trucks up for Central Market.) They own lots of land citywide and could also acquire a dark box or two in locations they deem viable. They’ve done it before in Austin and Houston, then opened after a remodel and/or expansion. Also I’m kind of surprised how slow they are going and how long they are predicting from groundbreaking to completion — more than a year. They’re super successful, though, so clearly they are confident on their approach.
You have a point.

Although people are happy that H-E-B has finally expanded into DFW proper and they have been super successful with their expansions in the past, from reading the facebook comments and the articles, they're certainly not establishing much goodwill amongst the broader customer base with what seems to be a slow expansion (especially by opening the first locations in high income / high growth far northern suburbs that already have plenty of good grocery options).
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by DFWRetaileWatcher »

H-E-B's land grab in DFW continues:

Still no sign of them moving into Dallas proper or Dallas County any time soon though.

H-E-B buys land in fast-growing Forney

https://www.dallasnews.com/business/ret ... ng-forney/
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by biggins »

H-E-B is buying 43 acres in Melissa for (presumably) a new store, just north of McKinney, and within 40 miles of the Oklahoma border. Really pushing the boundaries from their Temple DC - I have to think a North Texas DC is in the works in the near future. H-E-B seems to be focusing on the far northern suburbs for their Metroplex push, as mentioned above. Hoping for one near my home in Rowlett soon - that drive to Waxahachie once a month is a bit of a beating.

H-E-B eyeing property north of Dallas
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by pseudo3d »

biggins wrote: March 24th, 2022, 6:41 am H-E-B is buying 43 acres in Melissa for (presumably) a new store, just north of McKinney, and within 40 miles of the Oklahoma border. Really pushing the boundaries from their Temple DC - I have to think a North Texas DC is in the works in the near future. H-E-B seems to be focusing on the far northern suburbs for their Metroplex push, as mentioned above. Hoping for one near my home in Rowlett soon - that drive to Waxahachie once a month is a bit of a beating.

H-E-B eyeing property north of Dallas
There's some speculation that H-E-B is leaning in toward the land ownership side of the business rather than the retail side. The whole experience has deteriorated as a whole, especially as they lean in more and more toward Curbside. Their Plus/GM expansion, like Kroger Marketplace, has effectively stopped. I remember when H-E-B was actually trying to move and more and more toward soft goods, so much so that in presentations they actually considered stores like T.J. Maxx to be competition, at least, future competition.
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by storewanderer »

It seems like at this point they just keep teasing an expansion that never happens...

The market keeps growing. There should be very ample opportunities. I am starting to wonder if they are scared of something in DFW...

Look at WinCo- they opened Texas distribution in 2017 and at this point they are serving 14 stores out of that distribution center. They entered the market and got all those stores up during the decade or however long it has been that HEB is teasing an expansion. I do think a WinCo vs. HEB match would be a very interesting thing to watch. The 2 HEB units I visited south? of Dallas weren't exactly upscale and were pretty lacking on service departments. Pricing was rock bottom and really I think they are sort of trying to do the same general thing WinCo does.

Problem is WinCo actually... opened stores... HEB just keeps talking and making random real estate purchases then not opening stores at said real estate. Not really sure if fallout that was expected to create an easier opening has just never happened and that is what HEB is waiting for or what. If HEB is so great and so powerful they shouldn't be waiting for competitor fallout to open; they should open right up and make the competitors fall out. It is obvious no competitor's buildings (except maybe a WinCo building or a Kroger Marketplace building) would really fit HEB so anything HEB does is going to have to be new construction.

I am also wondering if HEB is having more difficulty defending existing markets given all the changes in the industry (curbside, pick up, more Sprouts, more competition from Amazon, etc.) and as a result of that is not in a position to tackle DFW at this time. Also HEB has those stores in Mexico they run.
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by DFWRetaileWatcher »

storewanderer wrote: March 26th, 2022, 12:40 am It seems like at this point they just keep teasing an expansion that never happens...

The market keeps growing. There should be very ample opportunities. I am starting to wonder if they are scared of something in DFW...

Look at WinCo- they opened Texas distribution in 2017 and at this point they are serving 14 stores out of that distribution center. They entered the market and got all those stores up during the decade or however long it has been that HEB is teasing an expansion. I do think a WinCo vs. HEB match would be a very interesting thing to watch. The 2 HEB units I visited south? of Dallas weren't exactly upscale and were pretty lacking on service departments. Pricing was rock bottom and really I think they are sort of trying to do the same general thing WinCo does.

Problem is WinCo actually... opened stores... HEB just keeps talking and making random real estate purchases then not opening stores at said real estate. Not really sure if fallout that was expected to create an easier opening has just never happened and that is what HEB is waiting for or what. If HEB is so great and so powerful they shouldn't be waiting for competitor fallout to open; they should open right up and make the competitors fall out. It is obvious no competitor's buildings (except maybe a WinCo building or a Kroger Marketplace building) would really fit HEB so anything HEB does is going to have to be new construction.

I am also wondering if HEB is having more difficulty defending existing markets given all the changes in the industry (curbside, pick up, more Sprouts, more competition from Amazon, etc.) and as a result of that is not in a position to tackle DFW at this time. Also HEB has those stores in Mexico they run.
I don't think this is an entirely fair take.

H-E-B definitely seems to be serious about their expansion. They're now 3 stores under construction and they continue to present their plans to municipalities for additional stores (Melissa and Forney being the latest).

As far as existing buildings, H-E-B recently purchased an old Albertson's in Dallas' RedBird neighborhood (this was one of Albertson's "mega" stores) and a construction RFP has been issued for it. H-E-B does have (newly renovated) flagship stores the size of this particular building (56K sq. ft.), although they're on the small end compared to most H-E-B locations. See the location in Texas City for example.

Part of the issue is they're being extremely elusive about their expansion plans, and their moves revealed so far have had no rhyme or reason to them. I also do think they waited too long to move into the Dallas market. Walmart, WinCo and Target snatched up all the good real estate in the heart of the Metroplex while they were so focused on Houston and other small Texas markets. Plus, they missed out on an entire 2 decades where construction/financing costs and property taxes were relatively cheap. Now, they're dealing with exponentially worsening inflationary pressures across the entire organization that I'm sure is dampening their plans.

EDIT: One last point. I'm not sure what their goal ultimately was with Central Market (if I had to speculate, it was probably a feeble way to establish some name recognition in DFW without going full speed on expansion while most of their resources were funneled into conquering Houston), but I believe they overleveraged themselves with that marquee in Dallas. My understanding is that the DFW locations are rarely out of the red. I suppose after pouring so much money into them, H-E-B doesn't want to inenvitably cannibalize them by placing too many flagship stores nearby, at least not before they can get a solid (profitable) foothold on the market as a whole.
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by storewanderer »

DFWRetaileWatcher wrote: March 26th, 2022, 5:58 am

I don't think this is an entirely fair take.

H-E-B definitely seems to be serious about their expansion. They're now 3 stores under construction and they continue to present their plans to municipalities for additional stores (Melissa and Forney being the latest).

As far as existing buildings, H-E-B recently purchased an old Albertson's in Dallas' RedBird neighborhood (this was one of Albertson's "mega" stores) and a construction RFP has been issued for it. H-E-B does have (newly renovated) flagship stores the size of this particular building (56K sq. ft.), although they're on the small end compared to most H-E-B locations. See the location in Texas City for example.

Part of the issue is they're being extremely elusive about their expansion plans, and their moves revealed so far have had no rhyme or reason to them. I also do think they waited too long to move into the Dallas market. Walmart, WinCo and Target snatched up all the good real estate in the heart of the Metroplex while they were so focused on Houston and other small Texas markets. Plus, they missed out on an entire 2 decades where construction/financing costs and property taxes were relatively cheap. Now, they're dealing with exponentially worsening inflationary pressures across the entire organization that I'm sure is dampening their plans.

EDIT: One last point. I'm not sure what their goal ultimately was with Central Market (if I had to speculate, it was probably a feeble way to establish some name recognition in DFW without going full speed on expansion while most of their resources were funneled into conquering Houston), but I believe they overleveraged themselves with that marquee in Dallas. My understanding is that the DFW locations are rarely out of the red. I suppose after pouring so much money into them, H-E-B doesn't want to inenvitably cannibalize them by placing too many flagship stores nearby, at least not before they can get a solid (profitable) foothold on the market as a whole.
Let's see if/when those 3 stores under construction actually open...

You are right, they definitely waited too long to move into the market. They should have probably swooped in back in 2008-2012 knowing the market would recover and likely are waiting for another serious recession/pullback that we predict will keep coming, but doesn't come. So as you point out now they deal with a situation where costs to purchase and construct are higher and there are fewer good sites available as competitors have been active.

The Central Market situation is one they will need to address. But aren't those stores extremely busy? I know the first couple were... I wonder if the profitability issue is because they cannot control expenses/labor due to the extremely high volume of customers? Also if customers are buying too many of the bargain priced center store items (Central Market had very aggressive pricing on the few mainstream groceries offered)? Maybe if they can shift some of the lower margin customers over to the regular HEB and focus the Central Market fully on the higher margin/gourmet purchases they could actually do better with those locations if they had fewer customers and used less labor.

In any case their entry into the market if/when they actually ever open some stores will be great news for the consumer especially when you have a market that has Wal Mart, Kroger, and WinCo present. It will be terrible news for the marginal quality and highest price in the market conventional operators in the market though. We know who that is.
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by DFWRetaileWatcher »

storewanderer wrote: March 26th, 2022, 11:04 am
DFWRetaileWatcher wrote: March 26th, 2022, 5:58 am

I don't think this is an entirely fair take.

H-E-B definitely seems to be serious about their expansion. They're now 3 stores under construction and they continue to present their plans to municipalities for additional stores (Melissa and Forney being the latest).

As far as existing buildings, H-E-B recently purchased an old Albertson's in Dallas' RedBird neighborhood (this was one of Albertson's "mega" stores) and a construction RFP has been issued for it. H-E-B does have (newly renovated) flagship stores the size of this particular building (56K sq. ft.), although they're on the small end compared to most H-E-B locations. See the location in Texas City for example.

Part of the issue is they're being extremely elusive about their expansion plans, and their moves revealed so far have had no rhyme or reason to them. I also do think they waited too long to move into the Dallas market. Walmart, WinCo and Target snatched up all the good real estate in the heart of the Metroplex while they were so focused on Houston and other small Texas markets. Plus, they missed out on an entire 2 decades where construction/financing costs and property taxes were relatively cheap. Now, they're dealing with exponentially worsening inflationary pressures across the entire organization that I'm sure is dampening their plans.

EDIT: One last point. I'm not sure what their goal ultimately was with Central Market (if I had to speculate, it was probably a feeble way to establish some name recognition in DFW without going full speed on expansion while most of their resources were funneled into conquering Houston), but I believe they overleveraged themselves with that marquee in Dallas. My understanding is that the DFW locations are rarely out of the red. I suppose after pouring so much money into them, H-E-B doesn't want to inenvitably cannibalize them by placing too many flagship stores nearby, at least not before they can get a solid (profitable) foothold on the market as a whole.
Let's see if/when those 3 stores under construction actually open...

You are right, they definitely waited too long to move into the market. They should have probably swooped in back in 2008-2012 knowing the market would recover and likely are waiting for another serious recession/pullback that we predict will keep coming, but doesn't come. So as you point out now they deal with a situation where costs to purchase and construct are higher and there are fewer good sites available as competitors have been active.

The Central Market situation is one they will need to address. But aren't those stores extremely busy? I know the first couple were... I wonder if the profitability issue is because they cannot control expenses/labor due to the extremely high volume of customers? Also if customers are buying too many of the bargain priced center store items (Central Market had very aggressive pricing on the few mainstream groceries offered)? Maybe if they can shift some of the lower margin customers over to the regular HEB and focus the Central Market fully on the higher margin/gourmet purchases they could actually do better with those locations if they had fewer customers and used less labor.

In any case their entry into the market if/when they actually ever open some stores will be great news for the consumer especially when you have a market that has Wal Mart, Kroger, and WinCo present. It will be terrible news for the marginal quality and highest price in the market conventional operators in the market though. We know who that is.
With Central Market, you have a ton of shoppers who are making small purchases. It's not the type of store where people make weekly grocery trips to, but instead for one-off items they can't get at a Tom Thumb or Kroger. On top of that, H-E-B already has to eat up higher distribution costs having to transport those product all the way from Temple. With all the frills they jam pack into these Central Markets and how aggressive H-E-B tends to be with their staffing, I'm not surprised they aren't that profitable. It may also explain why they've only committed to opening one CM each in Houston and San Antonio.

As far as Tom Thumb / Albertson's, ironically enough, I think they will feel the least amount of pressure from H-E-B's initial debut in DFW. They have the heart of the Metroplex on lock in terms of Market Share, and their store count trail of prertty drastically as you head out into the far flung suburbs, where H-E-B is building their stores. Yes, there wil be a small contingent of DFW residents (myself included) who will drive out of their way to shop at the new H-E-B stores, but I suspect the average person who doesn't live near these new H-E-B stores will decide that driving so far to shop there isn't worth their time/money.
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by storewanderer »

DFWRetaileWatcher wrote: March 26th, 2022, 2:46 pm

With Central Market, you have a ton of shoppers who are making small purchases. It's not the type of store where people make weekly grocery trips to, but instead for one-off items they can't get at a Tom Thumb or Kroger. On top of that, H-E-B already has to eat up higher distribution costs having to transport those product all the way from Temple. With all the frills they jam pack into these Central Markets and how aggressive H-E-B tends to be with their staffing, I'm not surprised they aren't that profitable. It may also explain why they've only committed to opening one CM each in Houston and San Antonio.

As far as Tom Thumb / Albertson's, ironically enough, I think they will feel the least amount of pressure from H-E-B's initial debut in DFW. They have the heart of the Metroplex on lock in terms of Market Share, and their store count trail of prertty drastically as you head out into the far flung suburbs, where H-E-B is building their stores. Yes, there wil be a small contingent of DFW residents (myself included) who will drive out of their way to shop at the new H-E-B stores, but I suspect the average person who doesn't live near these new H-E-B stores will decide that driving so far to shop there isn't worth their time/money.
It will be interesting to see. Typically the chains that follow the pattern of growth, are the chains that "win" a market long term. Chains that don't follow growth and stay in the mature areas tend to get bled out over time for one reason or another (locations get too old, neighborhoods deteriorate, etc.). This isn't always the case though and maybe DFW is one of those markets where it will work out.

I am also wondering why HEB is only selecting far flung suburbs and isn't trying to get more stores in more interior locations. It seems like they have had some real estate, and then let go of it, maybe the sites wouldn't hold a large enough store or they didn't want to redevelop/buy out surrounding tenants/etc.

Does Kroger have any new stores in development and when did the last new build Kroger open?
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