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Wal-Mart Has Familiar Company In Mexico

06/10/04

By George Anderson

It's been widely repeated in these and other circles that the one company Wal-Mart fears as a competitor is Costco. Could it be the world's largest retailer may be adding H.E. Butt Grocery Co. to that short list?

H-E-B more than held its own when Wal-Mart's Supercenters came into Texas. Now the two competitors are facing off once again, but this time in Mexico.

Charles Butt, chief executive of the family-owned company, told Bloomberg H-E-B wants to double the number of stores it has operating in the northern part of Mexico to 20.

"A lot of the tastes are the same on both sides of the river,'' he said. "Having been in the region an extended period of time and having a feel for the customer enables us to be competitive.''

Walmex spokesman Raul Arguelles said, "We're fully committed to continue growing in the northern part of Mexico because it's one of the most affluent areas of the country. Now that the American economy is moving and the Mexican economy is also growing again, the numbers clearly show the north is pulling the country ahead.''

Moderator's Comment: What has H.E. Butt done to successfully complete with Wal-Mart?

It should be noted that H.E. Butt not only competes well in the same market as Wal-Mart, they do so in a market that has more Supercenters than any other in the country.

Walter Loeb, president of consulting firm Loeb Associates told Bloomberg, H-E-B has "developed a formula to fight the Goliath." The formula, according to Mr. Loeb, includes cutting costs, lowering prices and adding more varieties of fresh foods. - George Anderson - Moderator

Comments


HEB's success "north of the border" speaks to a retailer who has built a solid reputation with their shopper base and has continued to invest and experiment in store offerings and store design/format to make themselves new and improved. As a result, as measured through the ACNielsen Homescan consumer panel, HEB drives greater annual shopping frequency than any other U.S. retailer. No reason why their business model can't do well in Mexico.
Todd Hale, Senior Vice President - Consumer Insights, Nielsen - Braintrust Panelist

The most telling part of the article was that Charles Butt's nephew, Howard, took Spanish lessons for several years before leading the company's efforts in Mexico. It all starts and ends with knowing the marketplace, and how can a retailer really know a market without speaking the language of the consumer? HEB not only hires great local managerial talent and develops their skills by sending them for training in the US, they enable the cross fertilization of grocery marketing ideas by sending skilled managers from the US to Mexico. This attitude permeates HEB from top to bottom, and that is what it takes to compete effectively with Wal-Mart.
Ron Margulis, Managing Director, RAM Communications - Braintrust Panelist

Speaking only for my team, we see HEB continuing to reinforce its superb reputation for molding itself to the communities it serves, especially Hispanic neighborhoods. They're true merchants, focusing as much or more attention on the sell-side of the supermarket business model as they spend on the control-side or buy-side. That emphasis tends to show up as a better connection with customers, since such significant revenues flow from their purses and wallets.
M. Jericho Banks, Ph.D., President, CEO, Forensic Marketing LLC - Braintrust Panelist

Agreed on all points above. Would just add that HEB's lightning-quick and spot-on serving of market needs is greatly aided by its top-notch private label program. If they can't find just the right product for a particular market, they'll make it and have it on shelf before you can say "Supercenter!"
Warren Thayer, Editor & Managing Partner, Frozen & Dairy Buyer - Braintrust Panelist

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