Tom Thumb to enter Waxahachie

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Re: Tom Thumb to enter Waxahachie

Post by storewanderer »

retailfanmitchell019 wrote: January 11th, 2023, 8:24 pm
storewanderer wrote: January 11th, 2023, 7:20 pm Well that is how HEB does volume. They push cheap products out. I have said it before; HEB is no Hy Vee and is no Publix either. That is why I can't wait to watch HEB vs. WinCo play out. I am not a Texan so I know what side of that team I am rooting for, and which side of that team I think has a better store. But HEB and WinCo strategy is completely different. HEB has proven they will penetrate an area. WinCo does not use that strategy and typically locates stores few and far between.
HEB seems to have a cult following in Texas. I could see why: they have huge stores, they manufacture their own goods, and they are still family owned. Great quality also.
That is why I think they'd be a great buyer for Albertsons/Market Street/Tom Thumb DFW assuming the Kroger merger fails.
It is clear as HEB ramps up in Dallas there is going to be a lot of fall out. I think Kroger is in an okay position with the Marketplace Stores they've built, they'd be in a better position had they built more, but I don't think Tom Thumb/Albertsons is in a great position except in areas that are basically not possible for a new competitor to move into (though Sprouts, Trader Joes, etc. seem to find ways to fit into such areas).

I am waiting for the HEB vs. WinCo match up (opened in close proximity to one another). It will be great.
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Re: Tom Thumb to enter Waxahachie

Post by pseudo3d »

storewanderer wrote: January 11th, 2023, 8:55 pm
retailfanmitchell019 wrote: January 11th, 2023, 8:24 pm
storewanderer wrote: January 11th, 2023, 7:20 pm Well that is how HEB does volume. They push cheap products out. I have said it before; HEB is no Hy Vee and is no Publix either. That is why I can't wait to watch HEB vs. WinCo play out. I am not a Texan so I know what side of that team I am rooting for, and which side of that team I think has a better store. But HEB and WinCo strategy is completely different. HEB has proven they will penetrate an area. WinCo does not use that strategy and typically locates stores few and far between.
HEB seems to have a cult following in Texas. I could see why: they have huge stores, they manufacture their own goods, and they are still family owned. Great quality also.
That is why I think they'd be a great buyer for Albertsons/Market Street/Tom Thumb DFW assuming the Kroger merger fails.
It is clear as HEB ramps up in Dallas there is going to be a lot of fall out. I think Kroger is in an okay position with the Marketplace Stores they've built, they'd be in a better position had they built more, but I don't think Tom Thumb/Albertsons is in a great position except in areas that are basically not possible for a new competitor to move into (though Sprouts, Trader Joes, etc. seem to find ways to fit into such areas).

I am waiting for the HEB vs. WinCo match up (opened in close proximity to one another). It will be great.
The most biggest chink in the armor is the public expecting that every H-E-B opened will be this 100k+ square foot palace with an in-store eatery, which couldn't be farther from the truth. I believe they bought the former Albertsons in Redbird or the plot of land next to it--and not only will that store probably not be upscale, but will be up against stiff competition with a WinCo.

Going back to the main topic, Tom Thumb in Waxahachie will be an interesting acid test to help see if this "H-E-B is unstoppable" myth is really true or not.
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Re: Tom Thumb to enter Waxahachie

Post by jamcool »

[
Well, there is an independent in town...but the funny thing is H-E-B's mix isn't actually that good, at least as their square footage would suggest. They push their own store brand extensively, as well. My Plus store in Kyle, TX has lots of store-brand yellow mustard that took up 40 slots in the shelf between three sizes. In comparison, French's got six, and an additional bargain-basement brand owned by H-E-B took up two more.
[/quote]

Sounds like the pre 90s Safeway-most of what they sold was Safeway brands.
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Re: Tom Thumb to enter Waxahachie

Post by arizonaguy »

storewanderer wrote: January 11th, 2023, 8:55 pm
retailfanmitchell019 wrote: January 11th, 2023, 8:24 pm
storewanderer wrote: January 11th, 2023, 7:20 pm Well that is how HEB does volume. They push cheap products out. I have said it before; HEB is no Hy Vee and is no Publix either. That is why I can't wait to watch HEB vs. WinCo play out. I am not a Texan so I know what side of that team I am rooting for, and which side of that team I think has a better store. But HEB and WinCo strategy is completely different. HEB has proven they will penetrate an area. WinCo does not use that strategy and typically locates stores few and far between.
HEB seems to have a cult following in Texas. I could see why: they have huge stores, they manufacture their own goods, and they are still family owned. Great quality also.
That is why I think they'd be a great buyer for Albertsons/Market Street/Tom Thumb DFW assuming the Kroger merger fails.
It is clear as HEB ramps up in Dallas there is going to be a lot of fall out. I think Kroger is in an okay position with the Marketplace Stores they've built, they'd be in a better position had they built more, but I don't think Tom Thumb/Albertsons is in a great position except in areas that are basically not possible for a new competitor to move into (though Sprouts, Trader Joes, etc. seem to find ways to fit into such areas).

I am waiting for the HEB vs. WinCo match up (opened in close proximity to one another). It will be great.
I've only been in 2 HEB stores (one in Houston and a Plus in San Antonio) and I wasn't as impressed as I thought I'd be.

I have started shopping at WinCo more recently (there is a location less than 1/2 mile from my house) and I am starting to really like their mix.

WinCo is rather weak in perimeter departments (I think a typical Walmart SuperCenter has better perimeters). They do have some decent pre-made deli items. Where WinCo shines are the pricing / selection of center store items. It's far and away the best center store in the area.
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Re: Tom Thumb to enter Waxahachie

Post by storewanderer »

arizonaguy wrote: January 12th, 2023, 4:14 pm

I've only been in 2 HEB stores (one in Houston and a Plus in San Antonio) and I wasn't as impressed as I thought I'd be.

I have started shopping at WinCo more recently (there is a location less than 1/2 mile from my house) and I am starting to really like their mix.

WinCo is rather weak in perimeter departments (I think a typical Walmart SuperCenter has better perimeters). They do have some decent pre-made deli items. Where WinCo shines are the pricing / selection of center store items. It's far and away the best center store in the area.
WinCo perimeter will probably start to grow on you. Produce is pretty simple if it looks bad it is bad, if it doesn't look bad it may be okay; oddly this is a category I find they aren't priced very competitively on. I'm still not 100% on their beef, but their pork is fine. Chicken is prepack so it is what it is elsewhere. Deli lunchmeat is low quality; hot food is consistent with other stores (not great), some of the refrigerated heat and serve food is okay. Bakery is better than it looks- cookies baked in store are great; rolls/bagels/bread are ok if consumed same day they are baked; muffins terrible just like other chains out west.

I never would have shopped WinCo as much as I have the past couple years if Smiths could have figured out how to keep its shelves and departments stocked. Now at this point my perception is Smiths pricing is about 20% higher than WinCo and STILL has major in-stock issues and quality is about the same. Also I too find WinCo to have a better mix of center store items and at lower prices. But Wal Mart has a better mix of many center store items than Smiths or Safeway too so that isn't saying much. Why pay more for a lousy experience? If I want to pay more I'll go to an orderly store like Raleys or even Safeway.
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Re: Tom Thumb to enter Waxahachie

Post by SoleOwnerOfMyName »

storewanderer wrote: January 11th, 2023, 7:20 pm
Well that is how HEB does volume. They push cheap products out. I have said it before; HEB is no Hy Vee and is no Publix either. That is why I can't wait to watch HEB vs. WinCo play out. I am not a Texan so I know what side of that team I am rooting for, and which side of that team I think has a better store. But HEB and WinCo strategy is completely different. HEB has proven they will penetrate an area. WinCo does not use that strategy and typically locates stores few and far between.
I don't think Winco will be much of a factor for HEB. HEB might or might not be a factor for Winco.

I doubt that Winco would somehow do better in D/FW after HEB's entry in the market than they did prior to HEB's arrival. And Winco has hardly set the D/FW grocery market on fire - as of 2021 it only had a 2.4 percent market share. It also seems to have stopped expanding in the D/FW area. No new stores have been added in a few years and the only new locations served by its Denton, Texas distribution center have been in Oklahoma and Texarkana.

I don't know how Winco's D/FW stores have performed on an individual basis. But to make a significant market-wide impact they would need to expand their store count by a few multiples. They are just too far apart from each other to be viable in vast areas of the market for even the demographics that would find their stores highly appealing.

Winco locating stores so far apart might work in other markets. But D/FW is different in that it has the densest concentration of Walmarts of any market in the world. If one pulls up a map of all local Walmart locations, it is hard to find a spot where the distance to multiple Walmart locations is not in the low single digits of miles. Winco does have very competitive pricing - roughly the same or a bit lower than Walmart. But it is not low enough that it makes sense on a strict price basis to spend extra money on gas (or time in D/FW traffic which is often very frustrating) to go well out of one's way to bypass multiple Walmarts for a Winco. And Winco's product selection is limited. Not as limited as Aldi, but far more limited than Walmart.

HEB certainly has plenty of experience fighting price wars if Winco makes an attempt to start one. Moreover, one of HEB's advantages is no two HEBs are alike. The company spends a lot of time studying the market area for each store they open and tailors its product mix and store amenities accordingly. They have multiple lines of highly popular in-house brands, some of which appeal to high-end customers and others that appeal to extremely price-conscious customers. HEB only operates in Texas and Northern Mexico - so, unlike national chains, it is able to devote its focus exclusively on understanding and selling items that appeal to those markets.

If a given Winco location were to cut into a nearby HEB location because of pricing, HEB would have the flexibility to counter it and still offer items of local appeal that people wouldn't be able to get from Winco. Meanwhile, Winco isn't set up to have the flexibility to appeal to local/regional tastes to the degree HEB is.

The REAL battle in D/FW isn't going to be over Winco's 2.4 percent of the market. The real battle will be between HEB and Walmart which, by far, has the largest share of the market. I read many years ago that the reason why Walmart built such a dense concentration of stores in D/FW was so that they could serve as a "firewall" making it extremely expensive for HEB to expand into the market. I suspect that is why HEB has limited its focus in the market to its high-end Central Market concept for so many years. My hunch is that their timing now might have something to do with Walmart's focus these days being tied up trying to compete with Amazon nationwide rather than fighting bloody price wars with a regional chain
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Re: Tom Thumb to enter Waxahachie

Post by pseudo3d »

SoleOwnerOfMyName wrote: January 19th, 2023, 6:21 pm
storewanderer wrote: January 11th, 2023, 7:20 pm
Well that is how HEB does volume. They push cheap products out. I have said it before; HEB is no Hy Vee and is no Publix either. That is why I can't wait to watch HEB vs. WinCo play out. I am not a Texan so I know what side of that team I am rooting for, and which side of that team I think has a better store. But HEB and WinCo strategy is completely different. HEB has proven they will penetrate an area. WinCo does not use that strategy and typically locates stores few and far between.
I don't think Winco will be much of a factor for HEB. HEB might or might not be a factor for Winco.

I doubt that Winco would somehow do better in D/FW after HEB's entry in the market than they did prior to HEB's arrival. And Winco has hardly set the D/FW grocery market on fire - as of 2021 it only had a 2.4 percent market share. It also seems to have stopped expanding in the D/FW area. No new stores have been added in a few years and the only new locations served by its Denton, Texas distribution center have been in Oklahoma and Texarkana.

I don't know how Winco's D/FW stores have performed on an individual basis. But to make a significant market-wide impact they would need to expand their store count by a few multiples. They are just too far apart from each other to be viable in vast areas of the market for even the demographics that would find their stores highly appealing.

Winco locating stores so far apart might work in other markets. But D/FW is different in that it has the densest concentration of Walmarts of any market in the world. If one pulls up a map of all local Walmart locations, it is hard to find a spot where the distance to multiple Walmart locations is not in the low single digits of miles. Winco does have very competitive pricing - roughly the same or a bit lower than Walmart. But it is not low enough that it makes sense on a strict price basis to spend extra money on gas (or time in D/FW traffic which is often very frustrating) to go well out of one's way to bypass multiple Walmarts for a Winco. And Winco's product selection is limited. Not as limited as Aldi, but far more limited than Walmart.

HEB certainly has plenty of experience fighting price wars if Winco makes an attempt to start one. Moreover, one of HEB's advantages is no two HEBs are alike. The company spends a lot of time studying the market area for each store they open and tailors its product mix and store amenities accordingly. They have multiple lines of highly popular in-house brands, some of which appeal to high-end customers and others that appeal to extremely price-conscious customers. HEB only operates in Texas and Northern Mexico - so, unlike national chains, it is able to devote its focus exclusively on understanding and selling items that appeal to those markets.

If a given Winco location were to cut into a nearby HEB location because of pricing, HEB would have the flexibility to counter it and still offer items of local appeal that people wouldn't be able to get from Winco. Meanwhile, Winco isn't set up to have the flexibility to appeal to local/regional tastes to the degree HEB is.

The REAL battle in D/FW isn't going to be over Winco's 2.4 percent of the market. The real battle will be between HEB and Walmart which, by far, has the largest share of the market. I read many years ago that the reason why Walmart built such a dense concentration of stores in D/FW was so that they could serve as a "firewall" making it extremely expensive for HEB to expand into the market. I suspect that is why HEB has limited its focus in the market to its high-end Central Market concept for so many years. My hunch is that their timing now might have something to do with Walmart's focus these days being tied up trying to compete with Amazon nationwide rather than fighting bloody price wars with a regional chain
H-E-B may tailor some stores differently, but even their high-end stores tend to be a bit stodgy with warehouse environments and very little in the way of wowing anybody with service departments. Plus, they tend to lean on their own brand quite heavily above brand-name products.

The real challenge will be if H-E-B has a less-than-high-end store that is closer to WinCo's consumer and product mix. As for Walmart, H-E-B definitely stifled the growth of Wal-Mart Neighborhood Market in Houston (only a handful of stores opened and even less are open today) with their Pantry stores but things aren't what they were in the early 1990s, and part of the problem is that H-E-B's reputation is now a liability, where they've got such a good reputation in some parts that anything less than a large, high-end store like what they're doing in Frisco (or their single Lubbock) will end up damaging their reputation and hurting enthusiasm for future stores.
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Re: Tom Thumb to enter Waxahachie

Post by SoleOwnerOfMyName »

pseudo3d wrote: January 12th, 2023, 7:40 am
The most biggest chink in the armor is the public expecting that every H-E-B opened will be this 100k+ square foot palace with an in-store eatery, which couldn't be farther from the truth. I believe they bought the former Albertsons in Redbird or the plot of land next to it--and not only will that store probably not be upscale, but will be up against stiff competition with a WinCo.
My guess is they won't put a full-fledged HEB in the Redbird location.

One of the news articles about HEB's expansion into the area quoted a company official saying that they anticipate serving the D/FW market with all of their formats.

HEB does have a couple of formats beyond Central Market which has been serving the D/FW market for many years now.

One that I suspect would be a good fit for the Redbird location is Joe V's Smart Shop

https://www.joevsmartshop.com/

Apparently, the format is doing well enough for them to have opened 9 locations in the Houston area. If you go to their website and browse their pricing for curbside pickup, you will see that they are very competitive on pricing. Many of their items are the same in-store brands found in conventional HEB stores such as HEB and Hill Country Fare. I suspect that they could snatch a lot of business from Aldi and from any Winco location that might be reasonably nearby. And, unlike Aldi, Joe V's carries national brand items in addition to in-house brands.

They also operate a Mexican-focused format called Mi Tienda.

https://mitiendatx.com/

This would certainly go after customers who currently shop at Fiesta Mart and other Hispanic grocers. But, since Mi Tienda only has two locations, both in the Houston area, my guess is they are still experimenting and tweaking the concept and thus would be unlikely to expand to the D/FW area any time soon.

My gut feeling is that bringing Joe V's to the D/FW area would be a great move for HEB. It would enable them to very effectively serve the entire spectrum of the market with Central Market serving the very high end, Joe V's serving those who are extremely price conscious and conventional HEB stores serving everybody in between with individual stores tailored to their area's specific demographics. And they would have great economies of scale in doing so using the same distribution center and truck fleet as well as their existing private label procurement. Joe V's sells items, including private labels, that HEB already carries in their conventional HEB stores. And the HEB stores that are located in higher-income areas carry many of the private label products that were created for Central Market.
Going back to the main topic, Tom Thumb in Waxahachie will be an interesting acid test to help see if this "H-E-B is unstoppable" myth is really true or not.
Well, a Tom Thumb store is, for all intents and purposes, a Randalls store with different letters used in a similar logo. Randall's bought out Tom Thumb and standardized a few things. When Safeway bought out Randall's, any remaining difference between the two chains was largely eliminated.

I seriously doubt that a Tom Thumb, by some inexplicable miracle, would be more successful against HEB than Randalls has been successful against HEB. And Randalls has hardly been successful against HEB - if it is even logically permissible anymore to utter the words "successful" and "Randalls" in the same sentence.

In Houston they are down to a handful of stores after once upon a time having been the market leader. In Austin, Randalls does seem to have held up better than in Houston. But it is hardly what I would regard as particularly successful. I suspect the reason it has managed to survive better there is that, in Austin, Randalls does not face additional competition from Kroger as it does in a big way in Houston.

Anytime I have been in an HEB, I have always seen people at the checkout lines with large baskets filled with groceries. I can't remember the last time I have ever seen that in a Tom Thumb. Even during their busiest periods, Tom Thumb stores only have a fraction of the number of shoppers one finds in an HEB. And most of those shoppers go through the checkout lines with handheld baskets with just a few items in them. Some shoppers have grocery carts - but you don't see them loaded the way that one does at an HEB.

And, of course, there is a reason. Tom Thumb's prices are high and, sometimes even absurdly high to the point they are almost comedic. Filling a grocery basket at Tom Thumb would quickly add up to a number of extra dollars versus elsewhere that most people would not regard as insignificant.

I suspect that the reason that their remaining stores have managed to survive is because they essentially function as large convenience stores. If a Tom Thumb/Randalls happens to be nearby and one only needs a handful of items, even though the prices might be absurdly higher, on a handful of items the savings of going to a Walmart or an HEB instead wouldn't justify the extra driving, time and hassle. But if one needed to buy a lot of items and was at all conscious about price, then the last place one would want go would be a Tom Thumb/Randalls. Plus, as somebody mentioned, if HEB doesn't carry a particular product or brand one likes and Tom Thumb/Randalls does offer it, that would be a reason to go there. In general, however, HEB carries the product selection it does because it is popular with large numbers of Texas shoppers. If Tom Thumb/Randall's overall product selection were in high demand in Texas, then even with its absurd prices, its market share wouldn't be as dismal as it is.
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Re: Tom Thumb to enter Waxahachie

Post by pseudo3d »

SoleOwnerOfMyName wrote: January 19th, 2023, 7:45 pm
pseudo3d wrote: January 12th, 2023, 7:40 am
The most biggest chink in the armor is the public expecting that every H-E-B opened will be this 100k+ square foot palace with an in-store eatery, which couldn't be farther from the truth. I believe they bought the former Albertsons in Redbird or the plot of land next to it--and not only will that store probably not be upscale, but will be up against stiff competition with a WinCo.
My guess is they won't put a full-fledged HEB in the Redbird location.

One of the news articles about HEB's expansion into the area quoted a company official saying that they anticipate serving the D/FW market with all of their formats.

HEB does have a couple of formats beyond Central Market which has been serving the D/FW market for many years now.

One that I suspect would be a good fit for the Redbird location is Joe V's Smart Shop

https://www.joevsmartshop.com/

Apparently, the format is doing well enough for them to have opened 9 locations in the Houston area. If you go to their website and browse their pricing for curbside pickup, you will see that they are very competitive on pricing. Many of their items are the same in-store brands found in conventional HEB stores such as HEB and Hill Country Fare. I suspect that they could snatch a lot of business from Aldi and from any Winco location that might be reasonably nearby. And, unlike Aldi, Joe V's carries national brand items in addition to in-house brands.

They also operate a Mexican-focused format called Mi Tienda.

https://mitiendatx.com/

This would certainly go after customers who currently shop at Fiesta Mart and other Hispanic grocers. But, since Mi Tienda only has two locations, both in the Houston area, my guess is they are still experimenting and tweaking the concept and thus would be unlikely to expand to the D/FW area any time soon.

My gut feeling is that bringing Joe V's to the D/FW area would be a great move for HEB. It would enable them to very effectively serve the entire spectrum of the market with Central Market serving the very high end, Joe V's serving those who are extremely price conscious and conventional HEB stores serving everybody in between with individual stores tailored to their area's specific demographics. And they would have great economies of scale in doing so using the same distribution center and truck fleet as well as their existing private label procurement. Joe V's sells items, including private labels, that HEB already carries in their conventional HEB stores. And the HEB stores that are located in higher-income areas carry many of the private label products that were created for Central Market.
Going back to the main topic, Tom Thumb in Waxahachie will be an interesting acid test to help see if this "H-E-B is unstoppable" myth is really true or not.
Well, a Tom Thumb store is, for all intents and purposes, a Randalls store with different letters used in a similar logo. Randall's bought out Tom Thumb and standardized a few things. When Safeway bought out Randall's, any remaining difference between the two chains was largely eliminated.

I seriously doubt that a Tom Thumb, by some inexplicable miracle, would be more successful against HEB than Randalls has been successful against HEB. And Randalls has hardly been successful against HEB - if it is even logically permissible anymore to utter the words "successful" and "Randalls" in the same sentence.

In Houston they are down to a handful of stores after once upon a time having been the market leader. In Austin, Randalls does seem to have held up better than in Houston. But it is hardly what I would regard as particularly successful. I suspect the reason it has managed to survive better there is that, in Austin, Randalls does not face additional competition from Kroger as it does in a big way in Houston.

Anytime I have been in an HEB, I have always seen people at the checkout lines with large baskets filled with groceries. I can't remember the last time I have ever seen that in a Tom Thumb. Even during their busiest periods, Tom Thumb stores only have a fraction of the number of shoppers one finds in an HEB. And most of those shoppers go through the checkout lines with handheld baskets with just a few items in them. Some shoppers have grocery carts - but you don't see them loaded the way that one does at an HEB.

And, of course, there is a reason. Tom Thumb's prices are high and, sometimes even absurdly high to the point they are almost comedic. Filling a grocery basket at Tom Thumb would quickly add up to a number of extra dollars versus elsewhere that most people would not regard as insignificant.

I suspect that the reason that their remaining stores have managed to survive is because they essentially function as large convenience stores. If a Tom Thumb/Randalls happens to be nearby and one only needs a handful of items, even though the prices might be absurdly higher, on a handful of items the savings of going to a Walmart or an HEB instead wouldn't justify the extra driving, time and hassle. But if one needed to buy a lot of items and was at all conscious about price, then the last place one would want go would be a Tom Thumb/Randalls. Plus, as somebody mentioned, if HEB doesn't carry a particular product or brand one likes and Tom Thumb/Randalls does offer it, that would be a reason to go there. In general, however, HEB carries the product selection it does because it is popular with large numbers of Texas shoppers. If Tom Thumb/Randall's overall product selection were in high demand in Texas, then even with its absurd prices, its market share wouldn't be as dismal as it is.
I think you're off the mark in a few places. Despite many locations in the chain being heavy Hispanic areas, Mi Tienda has only seen two locations, one in a former H-E-B (that was an Albertsons before) and one new-build in a former Woolco. And the latter was well over a decade ago. Joe V's also hasn't seen much expansion beyond a flurry of store sites in the early 2010s and some of those were even planned out as full H-E-B stores (not all of them, one went into a former Kmart and one is located in a former Service Merchandise).

Promising an H-E-B then pulling the rug out from under them and opening a discount bag-your-own grocery store harm their brand equity just as bad, if not worst, then a low-end H-E-B.

"I seriously doubt that a Tom Thumb, by some inexplicable miracle, would be more successful against HEB than Randalls has been successful against HEB."

The way that Tom Thumb and Randalls developed were very different, and while Randalls built stores in up-and-coming neighborhoods, Tom Thumb cultured its reputation in affluent neighborhoods of Dallas, and by the end of Safeway Inc. as we knew it, Tom Thumb was much more successful in Dallas than Randalls was in Houston, especially since Randalls stopped building stores right around the time H-E-B was emerging with full-service stores....and the circumstances that led to H-E-B's rise in Houston cannot be replicated in Dallas-Fort Worth.

In any case, Tom Thumb/Randalls in Dallas is different than Tom Thumb/Randalls in Houston, as is Publix-Miami different than Publix-Orlando, and so one must assume that H-E-B Dallas and H-E-B Houston will be different as well. Secondly, it is also a true fact that a retailer's belief that going into a new market means success can be replicated...in this specific case a bit of a reverse situation since it's Albertsons encroaching on an H-E-B turf for the first time in decades...is always a risky gamble.
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Re: Tom Thumb to enter Waxahachie

Post by SoleOwnerOfMyName »

pseudo3d wrote: January 19th, 2023, 7:42 pm The real challenge will be if H-E-B has a less-than-high-end store that is closer to WinCo's consumer and product mix. As for Walmart, H-E-B definitely stifled the growth of Wal-Mart Neighborhood Market in Houston (only a handful of stores opened and even less are open today) with their Pantry stores but things aren't what they were in the early 1990s, and part of the problem is that H-E-B's reputation is now a liability, where they've got such a good reputation in some parts that anything less than a large, high-end store like what they're doing in Frisco (or their single Lubbock) will end up damaging their reputation and hurting enthusiasm for future stores.
But does HEB build anything but large stores in urban areas these days? The only smaller HEB stores I have seen in urban areas have been older locations which, I understand, typically get expanded or relocated whenever it is feasible for them to do so.

I was recently in one of the Waco HEB stores - a city where all of the HEBs are large. Waco is hardly a high-end city and the part of town this particular HEB was located in is hardly high-end.

The Federal Reserve website, of all places, recently had an interview with HEB's president.

https://www.dallasfed.org/research/swe/ ... 4/swe2204d

It has a passage that I think provides important context about HEB's approach:

"The average grocery company usually chooses to serve a [particular] customer segment. So, we know where Whole Foods is going to be, and which customers and which neighborhoods they’re going to serve. We know where the Dollar stores are going to be, where Trader Joe’s is going to be.

We’ve chosen to serve a state rather than a segment of customers; we are trying to serve everybody in areas of Texas (and Mexico). In our markets, that means being successful by reaching every different income level and demographic.

We do that by tailoring our stores, trying to have each store be the best store for a neighborhood with the items that the neighborhood will like most. We also believe we should be multiformat, meaning that in Dallas we have Central Market—and now H-E-B—or in Houston we have Mi Tienda and Joe V’s.

Many strategists will say you’re either low price or you’re differentiated. Whole Foods has high service and quality, but they’re also high priced. That’s the trade-off people often think of—cost or quality. The Dollar stores are theoretically lower price—although they’re not that low—and the quality is not quite as good. Many people think that’s the normal trade-off."
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