H-E-B In It for Profits, Not Fun

Discussion
Dec 09, 2002
George Anderson

By George Anderson


Ask US supermarket industry experts to name the most admired store operators in the country and most (if not all) will include H.E. Butt Grocery Co. on their list.


The San Antonio, Texas-based chain has established itself as one of the most customer responsive and operations savvy retailers in any trade channel.


The San Antonio Business Journal reports that real estate holdings are key to the company’s success. “H-E-B owns and manages a total of 3 million square feet of space leased to other retailers in 101 shopping centers in Texas.”


Todd Piland, senior vice president of human resources and real estate, credits the retailer’s property acquisition and management as a competitive advantage. “H-E-B’s able to offer low prices because H-E-B has lower costs and one of the things we’re always pushing is to drive the costs down so we can offer lower retails to the customer. One of the things the real estate development part of the business does, it allows us to offer lower rents to our grocery stores. We can buy land cheaper by the acre than by the foot.”


Operating its own stores less expensively isn’t what H-E-B’s real estate business is all about says Mr. Piland. “These are stand-alone investments. We’re not in it for fun. This is a for-profit business.”


Moderator’s Comment: Two Questions–



  1. What are the advantages/disadvantages of a retailer
    that is also involved in real estate development and management?

  2. Why is H-E-B successful where others are less so?


Its real estate business has certainly helped keep H-E-B’s
costs down. That said, the “secret” behind the retailer’s success is its total
customer focus. H-E-B’s sales per square foot are what most others aspire to.
[George
Anderson – Moderator
]

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