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 DFWRetaileWatcher »

storewanderer wrote: March 26th, 2022, 10:23 pm
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?
The newest Kroger store was a Marketplace format in McKinney (a far flung northern, but fast-growing suburb). All the newer DFW Kroger stores are, in fact, the Marketplace format. Most of them are in far flung suburbs (Denton, Forney, Mansfield, Frisco, Prosper, etc.), although there is 1 or 2 in north Fort Worth where there's still a fair amount of undeveloped land.

i'm not aware of any Kroger stores currently in development though, as the McKinney store opened in 2019. The newest grocery store is likely Brookshire's Fresh format that opened in Royse City (a far flung & fast-growing eastern suburb). The last new Walmart was built in 2018, while the last new Tom Thumbs were built in Dallas' Deep Ellum & Uptown neighborhoods in 2019.

There was a Dallas Morning News article back in September about the state of grocery retail in the Metroplex, and one of the highlights was the region is ripe for a disruptor to enter the market. Walmart is what it is, but the Kroger and Tom Thumb/Albertson's locations in the heart of DFW are pretty dated. While both companies have invested in some cosmestic renovations of these stores, they're not really modernized with the frills and aesthetics of a Kroger Marketplace, Market Street, Brookshire's FRESH or modernized HEBs. The thing is, Kroger and Tom Thumb are under no pressure to modernize these stores either without some other brand coming in to give them competition.
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by pseudo3d »

storewanderer wrote: March 26th, 2022, 10:23 pm
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?
It did take a while for H-E-B to infiltrate the Inner Loop area of Houston, but there were some other issues that helped them get a leg up there, specifically as they were able to jump in with new stores as neighborhoods were being redeveloped with denser housing (or other gentrification), the fact that Randalls or Albertsons never really took hold in the Inner Loop area anyway, and that Kroger as a whole began to stall out anyway.

In fact, a huge chunk of H-E-B's domination could be described as a series of lucky breaks...they were able to put the squeeze on AppleTree as the Safeway spin-off struggled in the no-mans land of having neither rock-bottom prices nor being large, modern stores...then came the downfall of Randalls under Safeway Incorporated...then came Albertsons pulling out due to the American Stores acquisition disaster...and then Kroger decides to stop trying to maintain its hold on the market.

This was almost 30 years past their entry into the market as H-E-B Pantry Foods.

With their small number of stores entering DFW, H-E-B could play their cards right so that if the stores underperform, they could just stop building, eat the losses, and still "win" by not pulling out of the market.
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by storewanderer »

pseudo3d wrote: March 27th, 2022, 4:16 pm

With their small number of stores entering DFW, H-E-B could play their cards right so that if the stores underperform, they could just stop building, eat the losses, and still "win" by not pulling out of the market.
I think this is it. And if Central Market is really losing money, that may also be why they are not wanting to make too hard of a push into the market.

I think HEB has been waiting for the competitors to collapse in DFW who just haven't collapsed. It is somewhat interesting how things have played out, to this point. I also don't think anyone saw WinCo entering DFW looking back 10 years, but they showed up pretty quick once they announced they were entering. I really think WinCo may be the wild card that threw a screw in HEB's plans. Even if WinCo only has 14 stores, if those 14 stores are doing $1 million a week in average sales (which is a low estimate) that is a good chunk of volume.
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by arizonaguy »

storewanderer wrote: March 27th, 2022, 7:24 pm
pseudo3d wrote: March 27th, 2022, 4:16 pm

With their small number of stores entering DFW, H-E-B could play their cards right so that if the stores underperform, they could just stop building, eat the losses, and still "win" by not pulling out of the market.
I think this is it. And if Central Market is really losing money, that may also be why they are not wanting to make too hard of a push into the market.

I think HEB has been waiting for the competitors to collapse in DFW who just haven't collapsed. It is somewhat interesting how things have played out, to this point. I also don't think anyone saw WinCo entering DFW looking back 10 years, but they showed up pretty quick once they announced they were entering. I really think WinCo may be the wild card that threw a screw in HEB's plans. Even if WinCo only has 14 stores, if those 14 stores are doing $1 million a week in average sales (which is a low estimate) that is a good chunk of volume.
Is WinCo still expanding in DFW? They came to Phoenix, caused the closure of a few marginal Albertsons / Safeway units and otherwise have become a complete non-factor here. I shop there because there because they have a store 1/2 mile from my house that has a well lit parking lot and is open at 10 - 11 pm (when every other store in my area is open). If it weren't for those factors I'd never shop there.
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by pseudo3d »

arizonaguy wrote: March 28th, 2022, 7:02 pm
storewanderer wrote: March 27th, 2022, 7:24 pm
pseudo3d wrote: March 27th, 2022, 4:16 pm

With their small number of stores entering DFW, H-E-B could play their cards right so that if the stores underperform, they could just stop building, eat the losses, and still "win" by not pulling out of the market.
I think this is it. And if Central Market is really losing money, that may also be why they are not wanting to make too hard of a push into the market.

I think HEB has been waiting for the competitors to collapse in DFW who just haven't collapsed. It is somewhat interesting how things have played out, to this point. I also don't think anyone saw WinCo entering DFW looking back 10 years, but they showed up pretty quick once they announced they were entering. I really think WinCo may be the wild card that threw a screw in HEB's plans. Even if WinCo only has 14 stores, if those 14 stores are doing $1 million a week in average sales (which is a low estimate) that is a good chunk of volume.
Is WinCo still expanding in DFW? They came to Phoenix, caused the closure of a few marginal Albertsons / Safeway units and otherwise have become a complete non-factor here. I shop there because there because they have a store 1/2 mile from my house that has a well lit parking lot and is open at 10 - 11 pm (when every other store in my area is open). If it weren't for those factors I'd never shop there.
In either 2018 or 2019, there were almost no new grocery builds of any sort in Dallas-Fort Worth. I think there was an Aldi, and a Tom Thumb in the suburbs. The actual market share shifted around a bit with Kroger making some gains at the expense of Albertsons/Tom Thumb/Market Street and Walmart, but as far as new construction went it was a stalemate.
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by storewanderer »

arizonaguy wrote: March 28th, 2022, 7:02 pm

Is WinCo still expanding in DFW? They came to Phoenix, caused the closure of a few marginal Albertsons / Safeway units and otherwise have become a complete non-factor here. I shop there because there because they have a store 1/2 mile from my house that has a well lit parking lot and is open at 10 - 11 pm (when every other store in my area is open). If it weren't for those factors I'd never shop there.
WinCo claimed to have 10 stores in DFW in 2018 and now has 14 stores so I guess they have opened 4 new stores (a quick search doesn't yield which stores would be the 4 newest stores).

Given that WinCo has opened a warehouse in TX, they need a certain number of stores to make the warehouse feasible, so it makes sense that they allocated more resources to TX to expand.

WinCo takes on little/no debt to expand so this is why their expansion happens in a rather slow but gradual manner. They expand when they can afford to open new stores.

I am not sure how WinCo supplies AZ (I was seeing dairy and bread that was being trucked from OR/WA when they first opened in AZ...). I think they only have a couple stores in Las Vegas too. And Reno is getting its 3rd WinCo shortly and they've been in this market for 22 years.

WinCo is a serious competitor that is able to move impressive volumes of product. I don't like their store atmosphere, customer service, food handling in places like service deli where employees reuse the same glove for customer after customer and touch the product, or private label program but I do really like their overall product mix, ability to keep items in stock consistently, and overall pricing. Also for what it is worth I haven't had any quality issues with fresh items I've purchased at WinCo for quite some time. I do see things that I would not buy due to appearance/condition but it seems if you know what you are doing you can find great fresh items at WinCo.

I would be curious if you were to stop shopping WinCo for a while if you would desire to go back again. And if so, what factors would cause you to desire to go back. My guess is there would be some products or prices, or the reliability on items being in stock, that would drive you back to WinCo if you were to stop going there for a while. That is what keeps happening to me.
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by pseudo3d »

storewanderer wrote: March 28th, 2022, 10:13 pm
arizonaguy wrote: March 28th, 2022, 7:02 pm

Is WinCo still expanding in DFW? They came to Phoenix, caused the closure of a few marginal Albertsons / Safeway units and otherwise have become a complete non-factor here. I shop there because there because they have a store 1/2 mile from my house that has a well lit parking lot and is open at 10 - 11 pm (when every other store in my area is open). If it weren't for those factors I'd never shop there.
WinCo claimed to have 10 stores in DFW in 2018 and now has 14 stores so I guess they have opened 4 new stores (a quick search doesn't yield which stores would be the 4 newest stores).

Given that WinCo has opened a warehouse in TX, they need a certain number of stores to make the warehouse feasible, so it makes sense that they allocated more resources to TX to expand.

WinCo takes on little/no debt to expand so this is why their expansion happens in a rather slow but gradual manner. They expand when they can afford to open new stores.

I am not sure how WinCo supplies AZ (I was seeing dairy and bread that was being trucked from OR/WA when they first opened in AZ...). I think they only have a couple stores in Las Vegas too. And Reno is getting its 3rd WinCo shortly and they've been in this market for 22 years.

WinCo is a serious competitor that is able to move impressive volumes of product. I don't like their store atmosphere, customer service, food handling in places like service deli where employees reuse the same glove for customer after customer and touch the product, or private label program but I do really like their overall product mix, ability to keep items in stock consistently, and overall pricing. Also for what it is worth I haven't had any quality issues with fresh items I've purchased at WinCo for quite some time. I do see things that I would not buy due to appearance/condition but it seems if you know what you are doing you can find great fresh items at WinCo.

I would be curious if you were to stop shopping WinCo for a while if you would desire to go back again. And if so, what factors would cause you to desire to go back. My guess is there would be some products or prices, or the reliability on items being in stock, that would drive you back to WinCo if you were to stop going there for a while. That is what keeps happening to me.
WinCo still has ten stores in DFW; the other four are in Oklahoma. While WinCo might be a fly in the ointment as far as H-E-B domination of DFW is concerned, WinCo isn't going south toward Waco-Temple-Killeen, where demographically the stores can find a niche, but H-E-B is a strong competitor. Basically, south of Dallas, H-E-B absolutely rules. Kroger still has a strong Houston division (extending east to Beaumont and north to College Station, but coverage is spotty), Randalls is still holding out in Austin and Houston, a motley crew of independents run under the radar (particularly in small towns where H-E-B doesn't go), and of course, Walmart is everywhere, but H-E-B has a lock otherwise.

Surprises happen everywhere, though, who thought Brookshire Bros. would enter into College Station, now a sizeable market with five H-E-B stores and a Costco opening later this year?
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by storewanderer »

pseudo3d wrote: March 29th, 2022, 8:09 am

WinCo still has ten stores in DFW; the other four are in Oklahoma. While WinCo might be a fly in the ointment as far as H-E-B domination of DFW is concerned, WinCo isn't going south toward Waco-Temple-Killeen, where demographically the stores can find a niche, but H-E-B is a strong competitor. Basically, south of Dallas, H-E-B absolutely rules. Kroger still has a strong Houston division (extending east to Beaumont and north to College Station, but coverage is spotty), Randalls is still holding out in Austin and Houston, a motley crew of independents run under the radar (particularly in small towns where H-E-B doesn't go), and of course, Walmart is everywhere, but H-E-B has a lock otherwise.

Surprises happen everywhere, though, who thought Brookshire Bros. would enter into College Station, now a sizeable market with five H-E-B stores and a Costco opening later this year?
WinCo is an interesting competitor. However they are very effective. They will impact HEB. And HEB will impact them. And that seems to fall right into what you are observing where WinCo is pushing in the geographical direction opposite of the geographical direction they would meet HEB in.

WinCo is recently looking to open in Texarkana.
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by pseudo3d »

storewanderer wrote: March 30th, 2022, 11:02 pm
pseudo3d wrote: March 29th, 2022, 8:09 am

WinCo still has ten stores in DFW; the other four are in Oklahoma. While WinCo might be a fly in the ointment as far as H-E-B domination of DFW is concerned, WinCo isn't going south toward Waco-Temple-Killeen, where demographically the stores can find a niche, but H-E-B is a strong competitor. Basically, south of Dallas, H-E-B absolutely rules. Kroger still has a strong Houston division (extending east to Beaumont and north to College Station, but coverage is spotty), Randalls is still holding out in Austin and Houston, a motley crew of independents run under the radar (particularly in small towns where H-E-B doesn't go), and of course, Walmart is everywhere, but H-E-B has a lock otherwise.

Surprises happen everywhere, though, who thought Brookshire Bros. would enter into College Station, now a sizeable market with five H-E-B stores and a Costco opening later this year?
WinCo is an interesting competitor. However they are very effective. They will impact HEB. And HEB will impact them. And that seems to fall right into what you are observing where WinCo is pushing in the geographical direction opposite of the geographical direction they would meet HEB in.

WinCo is recently looking to open in Texarkana.
Looking at WinCo's geographic spread, they tend to cluster in metropolitan areas, and the next viable "metropolitan area" to the south would be the Waco area, but H-E-B has had a total lock in it for decades, and even Albertsons never got more than one (three if you count Temple-Killeen) into the city at the height of its store count. They probably could do it, but their business model seems to be to put more than one in an area, but compounding this is that H-E-B is more easy to adapt its stores to the lower-end that WinCo goes for.

Could it be done? Probably. But right now, Oklahoma seems to be far easy pickings as far as WinCo expansion goes.
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Re: H-E-B to enter DFW market proper with Plano, Frisco stores

Post by storewanderer »

pseudo3d wrote: April 2nd, 2022, 8:19 am

Looking at WinCo's geographic spread, they tend to cluster in metropolitan areas, and the next viable "metropolitan area" to the south would be the Waco area, but H-E-B has had a total lock in it for decades, and even Albertsons never got more than one (three if you count Temple-Killeen) into the city at the height of its store count. They probably could do it, but their business model seems to be to put more than one in an area, but compounding this is that H-E-B is more easy to adapt its stores to the lower-end that WinCo goes for.

Could it be done? Probably. But right now, Oklahoma seems to be far easy pickings as far as WinCo expansion goes.
WinCo doesn't exactly cluster quickly in most cases, but over time they have clustered some metro areas. They are in a lot of small-ish markets specifically in Northern California, Idaho, and Oregon.

WinCo can easily open one store in a market. The way WinCo works- little to no advertising (no routine advertising at all), they deliver full truckloads of product to the stores when they do deliveries, their volume is so high when they negotiate with vendors that a vendor negotiating with a single WinCo is like negotiating with 2-3 conventional stores... they can easily support a single store in an area.

Keep in mind on the volume comment when you have WinCo doing $1 million a week in sales that is virtually all grocery. There is no pharmacy and limited drug in these stores. Perimeter bakery/deli doesn't strike me as overly high volume either. WinCo moves packaged grocery items/dairy/beverages in extreme sales volumes.
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