H-E-B: a Texas-size force in pharmacy

Drug Store News, Oct 9, 1995

The H.E. Butt Grocery Company is known by manufacturers and competitors as an innovative retailer that isn't afraid of change. This attitude toward retailing, combined with an emphasis on customer service and efficient operations, has distinguished H-E-B as an outstanding supermarket and pharmacy operator.

Today, H-E-B is recognized as one of the first supermarket operators to embrace and implement the concept of category management. H-E-B also recognized early on the advantages of investing in technology to bring cost-saving efficiency to distribution and inventory management. Its ability to hold down costs has made H-E-B the low-price leader in the markets it serves and the destination of choice for Texans who helped the chain achieve $4.6 billion in sales last year.

Its concentration of stores in Texas has also made it a popular destination for pharmacy customers as its market coverage helps ensure participation with third-party plans. With 223 stores and 112 pharmacies, H-E-B ranks among the top six supermarket operators in pharmacy sales, according to the Drug Store News Annual Report. Only chains such as Kroger, Albertson's, Safeway, American Stores and Pathmark, with considerably more pharmacies, do more volume than H-E-B.

H-E-B thrives in the competitive Texas marketplace by constantly looking for ways to stay ahead of the curve. It is a philosophy that has served the chain well since it was founded in 1905.

That was the year Charles C. and Florence Butt along with their three sons moved from Memphis, Tenn., to Kerrville, Texas. A $60 investment allowed the family to open a grocery store on the bottom floor of their two-story house.

Their son Howard took an interest in the business and began experimenting with such things as the installation of the first in-store meat market in 1919, followed by the development of a cash and carry format.

In 1924, H-E-B expanded by opening its second store. Clever promotions such as throwing nickels from the store's roof and free merchandise giveaways with every $5 purchase made people take notice.

Years later in 1949, H-E-B achieved another first when it opened the largest grocery store of its kind, a 22,500-square-foot unit, which was the first to have drug and cosmetics departments and a lunch counter.

The dawn of the '70s marked a new era for H-E-B. Charles C. Butt, the son of Howard Butt Sr., became resident. A graduate of the Wharton School of Finance and Commerce, Charles decided that to keep pace with the demands of a changing marketplace and competition the chain needed to restructure its management and top-level, experienced grocery executives were recruited. By the end of the '70s, H-E-B saw its future in large format, one-stop shopping stores and developed its 56,000-square foot superstore format.

In the '80s, H-E-B continued its expansion throughout Texas.

In 1991, one-stop-shopping was taken to a new level when H-E-B opened its 93,000-square-foot Marketplace store.

H-E-B has come a long way from the ground floor of a two-story house 90 years ago, but the guiding principles that have produced consistently high levels of customer satisfaction continue to guide the company.