HEB Homes are on the way to growth with new decorative partitions

Inside the sprawling HEB plus! Store at US 281 and Evans Road, customers browse through colorful pillows, rugs, vases, frames, chairs, ottomans, doormats and bundles of dried lavender.

Mirrors, wall hangings near table linens, lamps, and plant stands are displayed under a sign that says, “Welcome to your happy place.”

The new division, called Home by HEB, is one of the San Antonio-based grocer’s latest moves to grow its business. While adding store locations—which it does as it pushes it into the Dallas-Fort Worth area—is a major avenue for growth, in mature markets like San Antonio, growth can require something new.

“Incorporating higher-margin categories such as home into the mix allows HEB to increase profits without moving too far” from its geographic footprint, said Carol Spieckerman, president of retail consultancy Spieckerman Retail based in Bentonville, Ark. The goal is to use groceries as a lure to drive traffic that translates into sales in more profitable categories. Grocery sellers like HEB can reverse this game by layering non-grocery categories.”

The strategy is not new. Supermarket chains such as Ohio-based Hy-Vee, Ohio-based Kroger and other new formats have experimented with adding home goods, clothing, and even fitness equipment. They know that expanding into such non-food categories provides a way to increase traffic, sales and profits.

HEB is pushing this year into the household goods segment. After launching the Home by HEB concept in April at a Walnut Avenue store in New Braunfels, the company has since expanded it to four other stores, in San Antonio, Brownsville, Burleson and Corpus Christi.

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

Two years of planning

Home by HEB has been in operation for nearly two years, said Sabina Israelian Garcia, the company’s group vice president for general merchandise and drug and cosmetic store.

“We are always looking for new categories and always making sure we put the best in front of our customers,” she said.

At its San Antonio store, the roughly 2,500-square-foot section within the 130,000-square-foot store includes more than 500 items and is among the largest sections of the home by HEB.

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

Israel Garcia said the company has been known to adapt its stores to their surroundings, and the home section would be no different.

Far from local connections, HEB has long tapped a wellspring of Texas pride, and its foray into home décor reflects that—wall art adorned with the state flag, longhorn throw pillows emblazoned with “Howdy,” and a “God bless you Texas” display.

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

Why does this make sense

Retail experts in the San Antonio area, where the company last opened a new store in 2020, said HE-B’s expansion into non-food categories is essential to driving sales and profits. The company and other grocers face more competition in an industry with minuscule margins and must go beyond traditional grocers to grow.

“Margins on non-food items, including household items, are much better and could boost HE-B’s earnings,” said Neil Saunders, managing director of retail at London-based data analytics and consultancy firm GlobalData.

“If the supply is good, adding household products can help increase sales as shoppers will explore the range while they are doing their groceries (shopping) and are more likely to buy things on impulse,” Saunders said.

Amid rising gasoline prices, it’s also important for customers to get more one-store shopping — “providing yet another rationale for category expansion,” said Spikerman, a consultant in Arkansas.

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

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

While HEB has built a loyal following in part by emphasizing its relationships in Texas through its product lineups, competitors like Walmart and Target aren’t quite on the same page, said John Hauptmann, senior director of e-commerce at Inmar Intelligence, a retail analytics specialist. Efficiency at that. Company in Winston-Salem, North Carolina

“They built their entire business on appealing to local tastes and local needs,” Hauptmann said.

But new product lines come with new challenges. Hauptmann added that managing home appliances and decor involves a different business model than managing groceries.

The speed with which an item is placed on the shelf and purchased is much longer for non-food items, and higher gross margins are necessary to offset the higher costs of bringing and processing these items, he said.

“By bringing in the right people to do it and allocating resources and space in the store, it is possible to do it very well,” said Hauptmann. “But this is not easy.”

HE-B’s Other Efforts

HEB has experimented with other departments within its stores.

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

The company added the division in 2019, and it includes cosmetics, hair and skin care products, along with test stations and an interactive screen where customers can take photos.

The HE-B store is located at 651 S. Walnut Ave. In New Braunfels on the company’s first two-story restaurant, True Texas BBQ, which provides another stream of customers who might come to eat and stay for groceries.

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

The company is seeking other ways to boost its bottom line.

HEB opens more health clinics that provide primary care, nutrition, pharmacy and physical therapy services.

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

Spekerman said the clinic’s opening reflects “retailers’ push toward solutions and services, particularly in the health and wellness arena.”

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

The company is also investing in pick-up and delivery services by building more facilities and allocating more space within its stores to store and prepare orders.

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

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

HEB opened an e-commerce fulfillment center in Leander in mid-July, its fifth since 2018. The company plans to add more of these facilities across Texas, including in Plano, where it enters the Dallas-Fort Worth market through its name-branded stores. the first.

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

HEB also continues to expand into its existing markets, including the San Antonio area. There are new stores in Cibolo and near Fair Oaks Ranch.

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