Tom Thumb to enter Waxahachie

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Re: Tom Thumb to enter Waxahachie

Post by pseudo3d »

SoleOwnerOfMyName wrote: January 19th, 2023, 9:34 pm
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."
Again, the Waco stores are going to be different than the Dallas stores, and legacy stores/markets are different animals than newer ones. In Waco, Albertsons never gained much ground, Kroger was never an issue, and Winn-Dixie operated about three or four stores in the area before disappearing when the Texas division was closed. They can get away with planting blue-collar H-E-B stores in Waco. They probably won't be able to do the same in Dallas.

There are two different issues at play here, the main topic: Will Tom Thumb being able to survive in Waxahachie, and the off-topic, will H-E-B dominate Dallas? The first issue seems more on the management of Albertsons than anything (not confident with that) but the second issue is an entirely different beast. Plus, Albertsons and H-E-B co-exist in Cleburne, how would you explain that?
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Re: Tom Thumb to enter Waxahachie

Post by SoleOwnerOfMyName »

pseudo3d wrote: January 19th, 2023, 9:09 pm

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.
HEB has not promised anybody anything with regard to the former Albertsons location it purchased in the Redbird area. HEB did not announce the purchase of that property - the local news media reported it, most likely based on public records searches. HEB has explicitly stated that they do not currently have plans for that property.

Per a local neighborhood news site:

https://oakcliff.advocatemag.com/2022/0 ... -red-bird/

"A spokeswoman for the grocer told reporter Maria Halkias the purchase is part of the company’s land portfolio for long-term growth.

“We recently purchased property in the southern sector of Dallas County in anticipation of future growth. No construction date has been set,” Mabrie Jackson told her.

Besides H-E-B and Central Market, the company also operates two other grocery chains, Mi Tienda and Joe V’s Smart Shop, and is also looking to expand those brands in the Dallas market in the future, the newspaper [The Dallas Morning News] reported."


HEB has owned various parcels of land in the D/FW area for many years. And it has stated in numerous articles that, just because it buys land, does not mean that it will necessarily result in a store being built on it.

There was a period where HEB owned a plot of land in a very poor, low-income section of Fort Worth that made no sense to me for an HEB location - until I learned about Joe V's. Last time the local media provided a list of area land parcels owned by HEB, that location was no longer on the list. But there is now another plot of land in Fort Worth, a long-abandoned 1970s vintage Safeway store, that, while not as poor, still makes no sense neither in terms of demographics nor in the visibility and accessibility of the location. But, here too, a Joe V's might make sense. Also, in this location - unlike Redbird or the other one I mentioned - there is a move towards gentrification and redevelopment moving in its direction such, that, perhaps in a decade or so, it will be a more desirable location.
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Re: Tom Thumb to enter Waxahachie

Post by SoleOwnerOfMyName »

pseudo3d wrote: January 19th, 2023, 9:51 pm Plus, Albertsons and H-E-B co-exist in Cleburne, how would you explain that?
I don't know enough about Cleburne to comment. But there is also an Albertsons that co-exists with an HEB in Burleson, Tx, a suburb of Fort Worth down the highway from Cleburne with vastly larger retail options.

Also, not far from the HEB is a Kroger Marketplace and a Walmart Supercenter. So that Albertsons has lots of what I would consider superior competitors in the Burleson market in terms of product selection and/or price.

The Albertsons is located on the other end of Burleson 4.6 miles away. At this hour in the middle of the night, per Google Maps, the drive to the HEB from the Albertsons is 9 minutes. At 5:30 in the evening, per Google Maps it can take up to 18 minutes.

Assuming that the Albertsons in Burleson is not more price competitive than its counterparts in the rest of D/FW as a result of HEB, my guess is it is able to coexist the same way that the last remaining Randalls in Houston/Austin have managed to co-exist and how Albertsons/Tom Thumb has managed to survive in D/FW: convenience.

The Burleson HEB is where I go to stock up on HEB items if I am not planning to make a trip to Waco/Austin/Houston anytime soon. I drive to Burleson via I-35. Getting from I-35, which the Albertsons is near, to the HEB involves multiple stop lights, some of which seem to take forever. And, as much as I love HEB, if one only needs one or two items or even five or six, I can imagine that going there, even without having to drive far, can be a bit of a hassle. Not only is the store VERY large, but it is also usually very crowded.

Add to that several minutes of drive time and the frustration of being stuck at stoplights, if one only needs a few things and there is a nearby Albertsons that happens to have them - then it makes sense to go to the Albertsons, Which is why, on occasion, I go to Tom Thumb instead of driving the extra distance and dealing with the hassle inherent in getting something in Walmart. It is the same reason that I sometimes go to the neighborhood 7-11 and pay prices that might be higher than even Albertsons/Tom Thumb.

As for Cleburne, per Google Maps the HEB and Albertsons (which I wasn't even aware existed in Cleburne until you mentioned it) are located about 3.1 miles from each other. Right now, in the middle of the night, it says it takes 8 minutes to get from one to the other. At 5:30 PM it can take up to 14 minutes. I suspect a similar factor is at play in Cleburne, as well.

If you recall, the article about the Tom Thumb opening in Waxahachie mentioned it is going to be located in a shopping center in a different part of town. From the article:

"“This development is demand-driven, on the north side of Waxahachie where there’s been substantial new housing,” said Robert Horton, founder and president of his development company. “Residents surrounding the site will be able to drive into the shopping center without getting onto Highway 77.”

Waxahachie residents complain that Highway 77 has become too congested in recent years. It’s the main street to reach two public schools and high-traffic retailers that include H-E-B, Walmart Supercenter and Target."


So, here too, Albertons/Tom Thumb's strategy seems to be that of being a large, high-priced convenience store.
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Re: Tom Thumb to enter Waxahachie

Post by storewanderer »

SoleOwnerOfMyName wrote: January 19th, 2023, 6:21 pm

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.

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.

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.
WinCo does not penetrate markets, that is not their style. Back when Wal Mart was price competitive on grocery and perishables with WinCo and the stores were doing a lot more price checks (they aren't anymore- WinCo is cheaper on grocery and perishables- start talking drug, pet, household and Wal Mart will in some cases be a better deal), you would find the Wal Marts within a couple miles of a WinCo location had significantly lower prices than Wal Mart locations that were not near a WinCo. So in my market in Reno that was a situation where though there were only 2 WinCo Stores, there were 4 Wal Mart Stores who were playing the "match or beat WinCo's prices" game and had lower prices all over the store than the other Wal Marts did.

Many of your comments about what you see at HEB- strong pricing, people filling up heaping cartfulls of groceries and tons of people doing that, is exactly what I see at WinCo. And that is why I think it will be so fun to watch WinCo.

You have done an excellent job pointing out the different angles HEB can take, and the post later in the thread with the quote from HEB management explaining how they have all these different formats/programs to target all of these different customers. WinCo has one format, basically, one program, they seem to apply across all stores. When I am out of town, I don't spend much time in WinCo because I almost feel like I'm back home when I go in. Some of the items are different though if I start looking around and in some cases if I'm not thrilled with the local options, when I actually want to buy items, I will go into the out of town WinCo.

I still think you will be surprised by the amount of trouble WinCo may be able to cause to the HEB Stores that are near them. They cause Wal Mart a lot of trouble too.

I would be curious what you see when you go to WinCo in DFW. Do you see heavy customer traffic and a lot of cartfulls going out? What customer demographic do you see shopping? What kind of movement do you see on perishables? When you walk center store looking at the shelves, does it appear private label products are moving or the branded products are moving? I find WinCo has great velocity on all food categories but pretty bad on non-food, and also quite low velocity on private label. A lot of secondary brands at great prices.

What I would like to figure out is if WinCo plus HEB will somehow be a very significant blow to Wal Mart. For instance, do you see a scenario where a consumables customer would select Wal Mart over WinCo to shop? I do- the customer who wants drugs, pharmacy, household, pet items is very likely to go to Wal Mart instead of WinCo. Now, does HEB do better with those drug, pharmacy, household, and pet categories than WinCo (based on my memory, they do)? This is a case where I see a group of shoppers who already abandoned Wal Mart for WinCo, and now there will be another group of shoppers who will abandon Wal Mart for HEB. I am just not convinced as many customers will abandon WinCo for HEB as you think. My guess is the customers who don't like some of the quirks of WinCo like lack of regional brands, no credit cards, etc. already don't shop there but those shoppers are very likely to consider HEB.
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Re: Tom Thumb to enter Waxahachie

Post by biggins »

Isn't Winco still all debit card only? I pile purchases on my CC for the points/miles and pay the balance off each month, and I suspect I'm not alone. For that alone, shopping at Winco is a nonstarter for me. Meanwhile, HEB gets a minimum of two $250-350 trips a month out of my family.
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Re: Tom Thumb to enter Waxahachie

Post by storewanderer »

biggins wrote: January 20th, 2023, 7:00 am Isn't Winco still all debit card only? I pile purchases on my CC for the points/miles and pay the balance off each month, and I suspect I'm not alone. For that alone, shopping at Winco is a nonstarter for me. Meanwhile, HEB gets a minimum of two $250-350 trips a month out of my family.
Yes, WinCo also ended acceptance of credit cards in Tulsa back in 2022.

So WinCo seems to be fully hitched to this debit card only policy. They also do not accept Contactless payments which is not good. Some franchise Food 4 Less units in California also continue a debit card only policy. Not many other businesses at this point are stuck on this anymore; even Arco has largely caved (still a few out there on debit only but not many).

I used to limit my WinCo shopping due to the lack of credit card acceptance as well. The problem I have now is even when I factor in the benefit of the credit card rewards (let's say 5% back), it is not unusual for WinCo's pricing to be so much lower than these other grocery stores that I still come out ahead using WinCo on more items now, more and more items, than in the past.

I have been surprised WinCo has not been able to work a deal on credit card acceptance.
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Re: Tom Thumb to enter Waxahachie

Post by biggins »

H‑E‑B isn’t taking Tom Thumb coming to Waxahachie lying down, they have announced an expansion of their existing Waxahachie store to 127,000 SF and that it will transform into their Plus! format. Interesting on two fronts in that we haven’t seen the larger format in North Texas outside of the Burleson store and this marks the second expansion of the Waxahachie H‑E‑B in ten years.

HEB announces plan for Waxahachie store expansion
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Re: Tom Thumb to enter Waxahachie

Post by veteran+ »

biggins wrote: February 7th, 2023, 6:46 am H‑E‑B isn’t taking Tom Thumb coming to Waxahachie lying down, they have announced an expansion of their existing Waxahachie store to 127,000 SF and that it will transform into their Plus! format. Interesting on two fronts in that we haven’t seen the larger format in North Texas outside of the Burleson store and this marks the second expansion of the Waxahachie H‑E‑B in ten years.

HEB announces plan for Waxahachie store expansion
You guys are so lucky in Texas with these huge stores!

8-)
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Re: Tom Thumb to enter Waxahachie

Post by biggins »

veteran+ wrote: February 7th, 2023, 9:38 am
biggins wrote: February 7th, 2023, 6:46 am H‑E‑B isn’t taking Tom Thumb coming to Waxahachie lying down, they have announced an expansion of their existing Waxahachie store to 127,000 SF and that it will transform into their Plus! format. Interesting on two fronts in that we haven’t seen the larger format in North Texas outside of the Burleson store and this marks the second expansion of the Waxahachie H‑E‑B in ten years.

HEB announces plan for Waxahachie store expansion
You guys are so lucky in Texas with these huge stores!

8-)
We can't have stores smaller than a typical Buc-ee's :D
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Re: Tom Thumb to enter Waxahachie

Post by pseudo3d »

veteran+ wrote: February 7th, 2023, 9:38 am
biggins wrote: February 7th, 2023, 6:46 am H‑E‑B isn’t taking Tom Thumb coming to Waxahachie lying down, they have announced an expansion of their existing Waxahachie store to 127,000 SF and that it will transform into their Plus! format. Interesting on two fronts in that we haven’t seen the larger format in North Texas outside of the Burleson store and this marks the second expansion of the Waxahachie H‑E‑B in ten years.

HEB announces plan for Waxahachie store expansion
You guys are so lucky in Texas with these huge stores!

8-)
Bigger isn't necessarily better. I don't see anyone getting excited over 150k+ square feet Walmarts...
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