HEB accelerates its growth with new decor departments

Inside the sprawling HEB plus! store at U.S. 281 and Evans Road, customers browse colorful throw pillows, rugs, vases, picture frames, chairs, ottomans, doormats and dried lavender boots.

Mirrors and wall hangings are displayed near table linens, lamps and plant stands under a sign that reads: ‘Welcome to your place of happiness’.

The new department, christened Home by HEB, is one of the San Antonio grocer last moves to develop its activity. While adding store locations — which it does by penetrating the Dallas-Fort Worth area — is a key avenue for growth, in mature markets like San Antonio, growth may require something new.

“Bringing higher-margin categories like home into the mix allows HEB to grow earnings without straying too far” from its geographic footprint, said Carol Spieckerman, president of retail consultancy Spieckerman Retail, based in Bentonville, Ark. “Retailers like Walmart and Target are using groceries as a traffic lure that results in sales in more profitable categories. Grocers like HEB can reverse this game by layering non-food categories.”

The strategy is not new. supermarket chains such as Hy-Vee based in Iowa, Ohio-based Kroger and others have been experimenting with new formats that add homewares, apparel and even fitness equipment. They know that expanding into these non-food categories provides a way to increase traffic, sales, and profits.

This year, HEB is entering the homeware segment. After launching the Home by HEB concept in April at its Walnut Avenue store in New Braunfels, the company has since expanded it to four other stores, in San Antonio, Brownsville, Burleson and Corpus Christi.

He plans to add it to about 27 stores across the state this year, including new stores in Frisco and Plano.

Two years of planning

Welcome by HEB has been in the works for nearly two years, said Sabina Israelian-Garcia, group vice president of general merchandise, pharmaceuticals and beauty.

“We’re always looking for new categories and always making sure we’re putting the best in front of our consumers,” she said.

At its San Antonio store, the approximately 2,500 square foot section of the 130,000 square foot store features more than 500 items and is among the largest Home by HEB departments.

It includes two brands: Haven + Key and Texas Proud. The former includes furniture, accent pieces and home textiles, and the latter includes items made by artisans and companies in Texas, such as leather goods from Lucio Tailoring Co. in San Antonio.

The company is known for adapting its stores to surrounding areas, and the home department will be no different, Israelian-Garcia said.

Beyond local connections, HEB has long capitalized on Texas’ source of pride, and its foray into home decor reflects this – wall art features the state flag, longhorn throw pillows carry the “Howdy” inscription and a screen features “God Bless Texas Signs”.

“From a product perspective and a brand perspective, we will continue to innovate and evolve over time, so customers can expect continued product freshness over time,” said Israeli-Garcia.

Why this makes sense

In the San Antonio area, where the company last opened a new store in 2020, HE-B’s expansion into non-food categories is needed to boost sales and profits, trade experts said. Retail. She and other grocers face increased competition in an industry with very thin margins and must go beyond traditional groceries to grow.

“Margins on non-food, including housewares, are much better and can bolster HE-B earnings,” said Neil Saunders, managing director of the retail division of the data company based in London. London. GlobalData analytics and consulting firm.

“If the supply is good, adding home products can help boost sales, as shoppers will explore the range as they go grocery shopping and will likely buy things in a more impulsive,” Saunders said.

Amid high gas prices, it’s also important for customers to do more of their shopping at one store – “providing yet another rationale for category expansion,” said Spieckerman, the consultant based in Arkansas.

Another diversification factor is that HEB has large stores, which allows it to test various concepts, said Venky Shankar, director of research at Center for Retail Studies at Texas A&M University.

“They have space, and after the pandemic, when people want to indulge and look around, why not try some concepts?” he said.

While HEB has built a loyal customer base in part by emphasizing its Texas ties through its product assortments, competitors such as Walmart and Target aren’t as proficient in this area, said Jon Hauptman, chief executive. principal of e-commerce at Inmar Intelligence, a retail analytics company in Winston-Salem, North Carolina

“They’ve built their entire business by appealing to local tastes and needs,” Hauptman said.

But with new product lines come new challenges. Managing housewares and décor involves a different business model than managing groceries, Hauptman added.

The speed at which an item is put on the shelf and purchased is much longer for non-food items, and higher gross margins are needed to offset the higher costs of routing and processing these items, he said. he declares.

“By getting the right people to do it and dedicating the resources and the space in the store, it’s possible to do it really well,” Hauptman said. “But it’s not easy.”

Other HE-B Efforts

HEB has experimented with other sections inside its stores.

Along with Home by HEB, the US 281 and Evans store features nearly 4,000 square feet dedicated to beauty items.

The company added the department in 2019. It includes cosmetics, hair products, and skincare, as well as testing stations and an interactive display where customers can pose for photos.

The store also has HE-B’s first True Texas BBQ restaurant on two floors, which provides another flow of customers who can come in for a bite to eat and stay for groceries.

It also has small boutiques in some of its stores: Mia’s Mirror, Bonita Brows Bar, Diamond Decks and River City Flooring.

And the company is pursuing other avenues to increase its results.

HEB is opening more health clinics, which offer primary care, nutrition and pharmacy, and physiotherapy services.

In May, it added its first clinic in Austin after opening sites in San Antonio and Houston, and said it “plans to expand rapidly throughout Texas with primary care and nutrition services over the next coming years”.

The clinic openings reflect “retailer pushes toward solutions and services, particularly in the area of ​​health and wellness,” Spieckerman said.

Also in Austin, HE-B’s Central Market opened what it calls a “meatless butcher” in April, the company’s response to the growing demand for plant-based foods. If it works there, it could be rolled out to other HE-B stores.

The company is also investing in curbside and delivery services by building more facilities and devoting more square footage in its stores to stocking and order picking.

“Convenience is another major area of ​​expansion for retailers,” and curbside and delivery services “add to HE-B’s convenience arsenal,” Spieckerman said.

Such moves are important as competition continues to grow for online shoppers. In recent days, for example, Kroger has reentered San Antonio with delivery-only service.

HEB opened an e-commerce distribution center in Leander in mid-July, the fifth it has built since 2018. The company plans to add more such facilities across Texas, including in Plano. , as it enters the Dallas-Fort Worth market with its first eponymous stores.

It has operated its high-end Central Market stores in North Texas since 2001, but not HEB stores. Its namesake stores in Frisco and Plano are set to open later this year, and two more under construction in McKinney and Allen are due for completion next summer.

HEB also continues to expand in its existing markets, particularly in the San Antonio area. New stores in Cibolo and near Fair Oaks Ranch are in the works.

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