Texas' HEB finds success in the face of tough competition from Wal-Mart

DSN Retailing Today, April 25, 2005 by Debbie Howell

In Texas, the state with the largest number of Wal-Mart supercenters, Sam's Clubs and Neighborhood Markets, pressure to compete with the world's largest retailer has spawned a variety of innovative formats from traditional supermarket operators. Texas-based HEB, one of the few grocers that's been able to maintain market share in the face of Wal-Mart, last year launched a new format called HEB Plus that combines its conventional food operation with several new or expanded general merchandise categories.

Three HEB Plus stores in the Texas cities of San Juan, Waco and Austin are larger than HEB's typical supermarket of 70,000 square feet. About 10,000 items were added--mostly in general merchandise--to stock these stores averaging 109,000 square feet. New service features have included ear piercing, party planning and a cooking demo station.

Merchandise found at the Waco store includes home entertainment, books, party goods, baby department, home and garden, toys and cookware. Other amenities are a drive-through pharmacy, bank, sushi bar, one-hour photo, floral department, beauty counter and gift registry.

HEB may have translated some of the learning from its upscale food format, Central Market, in launching HEB Plus. The 10-year-old Central Market concept, with seven locations in major Texas cities, has ventured into general merchandise through gift baskets that tie in with gourmet foods. Another unique general merchandise category is Healthy Living, featuring natural and homeopathic skin and body care and aromatherapy items.

Besides HEB, Texas-based grocery chain United Supermarkets launched a concept called Market Street in 1998 that closely resembles Central Market. One of the stores that opened in a Dallas suburb in 2003 featured a test culinary shop called The Dish. The selection includes gourmet cookware and utensils, dishes, gifts and products related to entertaining.

Whole Foods, also based in Texas, raised the bar as well with the recent opening of its landmark store in Austin. New general merchandise categories include apparel, soft home and baby, offering items such as sheets and casual clothing made from organically grown cotton.