HEB Grocery Company LP (“HEB”) aims to be the leading provider of everyday and high-end organic groceries in Texas and Northern Mexico, seeking to offer good quality products at reasonable prices and wit excellent customer care.
HEB was founded in November 1905 by Florence Butt, who opened a grocery store on the ground floor of her family home in Kerrville, Texas.The store was named CC Butt Grocery Store.
In 1919, after a number of years of modest operations, Florence Butt’s youngest son Howard Edward Butt (“Howard”) took control of the store on his return from the First World War.
Howard had greater ambitions for the store and began seeking opportunities for expansion; his first four attempts at extending the store’s reach, however, failed.
Howard ultimately established a successful second store in Del Rio, Texas in 1927, after which he purchased a further three stores in the Lower Rio Grande Valley.The stores were organised under the HEB brand, which takes its name from Howard’s initials.
Howard passed control of HEB to his son Charles in the 1970s, who continued to expand the company’s presence across Texas and Northern Mexico, growing the company’s annual sales from USD 250 million in 1971 to USD13 billion in 2006.
The company has continued to expand in recent years, notably acquiring Favor Delivery, which now handles the company’s grocery delivery service.
Business model of HEB
HEB provides a range of grocery products and everyday merchandise to a general consumer base.The company is notably a regionally focused company, serving customers in Texas and Northern Mexico.The company’s brand is in particular tied to regional pride of consumers in Texas.
HEB serves a range of consumer demographics, spanning a number of age ranges, income brackets, and social groups.The majority of the company’s customers, however, fall under the age of 44 and have a household income of USD 60,000 or below.
The company’s stores are a popular choice of Hispanic consumers; this is likely due principally to the company’s regional focus.
In addition to its flagship HEB stores, the company also operates an organic grocery chain under the Central Market brand, which offers more high-end products, including international food products, and is targeted at more affluent consumers, as well as stores under the Mi Tienda brand that is targeted Hispanic consumers.
HEB provides value to its customers in the following ways:
Regional Reputation – HEB has a long history of providing reliable and efficient grocery services to customers in Texas and Northern Mexico, the company has remained focused on operations in its home state since its incorporation and has become tied closely to the regional pride of Texan consumers;
Variety of Products – HEB offers its customers a broad range of grocery products and everyday household items, ensuring that its customers are able to find all of their grocery essentials and staple household essentials in one place;
Multiple Brands – HEB operates several brands in addition to its flagship HEB brand – including the Central Market, HEB Plus, Mi Tienda, and Joe V’s Smart Shop – ensuring that it is able to serve the needs of a broad range of customers;
High Quality Customer Service – HEB offers its customers a high level of customer service across its network of stores and brands, seeking to ensure that its customers are satisfied with their shopping experience.
HEB serves its customers on s partly self-service basis through its network of stores across Texas and Northern Mexico, at which customers are offered direct assistance from the company’s sales and support personnel.
The company’s principal sales channel is its more than 350 HEB-branded stores.The company also operates network of stores under the Central Market, HEB Plus, Mi Tienda, and Joe V’s Smart Shop brands.
HEB operates a website at www.heb.com through which it provides information on its products and the location of its stores.
The company’s website also includes an online store, through which customers are able to browse products and make purchases.
Customers are then able to schedule home delivery of these products or arrange a curbside pickup time.
HEB serves its customers directly, employing an extensive sales and support team that operate out of the company’s various retail locations.
These employees are on hand across the company’s stores to provide in-person support, answer questions and queries, handle complaints and returns, and offer advice.
HEB also offers support and assistance through its website, in the form of FAQs and information and contact details.
HEB seeks to secure recurring business from its customers.
In addition to offering excellent customer service, the company seeks to attract customers back to its stores through its membership and rewards scheme, which enables customers to access discounts, benefits, and other rewards in return for shopping at HEB stores.
The company also offers a number of discount coupons to customers through its website.
HEB is additionally able to interact with its customers through its various social media accounts, including with Facebook, Twitter, Instagram, and Pinterest.
HEB uses these accounts to communicate with customers, handle complaints, publish company updates, and provide information.
HEB is a grocery chain operator.It is engaged in the operation of grocery and supermarket stores across its home state of Texas and in Northern Mexico, including the procurement, distribution, and sale of grocery products and general merchandise items.
The company offers a wide variety of products across the following product categories: fruits, vegetables, dairy products, frozen foods, baked goods, health and beauty, home and kitchen, baby and toy, pet, outdoor and sports, entertainment and electronic, office and school, clothing products, and flowers.
It also operates an online grocery service, through which customers can browse and purchase items and arrange home delivery or curb pickup services.
HEB works closely with a network of partner companies and organisations that support the company’s core operations.
These partners can be organised broadly into the following categories:
Vendor and Supplier Partners, comprising suppliers of grocery products and general merchandise items that are sold across the company’s stores, as well as providers of other services that support the company’s operations more generally;
Storage and Distribution Partners, comprising various logistics and distribution companies that assist in the storage of the company’s products and the distribution of these products across the company’s network of stores;
Branding and Marketing Partners, comprising a range of brands and commercial enterprises that work with the company on various branding and marketing projects, both in-store and elsewhere;
Community Partners, comprising a range of charitable organisations and non-profits with which the company collaborates on various community projects across Texas and Northern Mexico; and
Strategic and Alliance Partners, comprising a range of companies and organisations with which the company collaborates on other development and commercial projects.
In recent years, HEB has partnered with Instakart and the Animal Defense League of Texas, among other companies and organisations.
HEB’s most key resources are its inventory of products, its supply chain and logistics infrastructure, its network of stores, and its personnel, without which the company could not effectively operate.
The company’s success is also dependant on its brands – including Central Market, HEB Plus, Mi Tienda, and Joe V’s Smart Shop, its IT and communications infrastructure, its partnerships, and its website.
HEB incurs costs primarily in relation to its acquisition of products and merchandise, the storage and distribution of these products, the operation of its network of stores – including rental and utility costs, and the payment of salaries and benefits to its personnel.
The company also incurs costs in relation to the development and maintenance of its website and online store, the management of its partnerships, and the procurement of external services.
HEB generates revenue through the operation of grocery and supermarket stores under the HEB, Central Market, HEB Plus, Mi Tienda, and Joe V’s Smart Shop brands.
The bulk of the company’s revenue is derived from in-store sales of grocery products and household goods to the general consumer public.
The company also derives a smaller portion of its revenue through sales made via its online store and delivery service.HEB reportedly generated annual revenue of HEB 25 billion in 2017.
Charles C. Butt,
Chairman and Chief Executive Officer
info: Charles C. Butt (“Butt”) was appointed Chairman, Chief Executive Officer, and President of HEB in 1971, taking over control of the company from his father Howard. Butt retains the dual roles of Chairman and Chief Executive Officer but has relinquished the position of President. Butt remains HEB’s principal decision maker, he is responsible for leading the company’s overall strategic direction. Butt has spent the entirety of his career at HEB, including a number of directorships within the company and its subsidiaries. He does not appear to have any substantive professional or executive experience outside of HEB.
President and Chief Operating Officer
info: Craig Boyan (“Boyan”) serves as HEB’s President and Chief Operating Officer. He has also been President of HEB company HE Butt Grocery Company since January 2010. As President, Boyan plays a key role in dictating HEB’s strategic direction, notably working closely with other members of HEB’s Board of Directors to develop effective strategies and policies. Boyan first joined HEB in 2005, initially serving as Chief Strategic Officer of HE Butt Grocery Company. Prior to assuming his current positions, he served as Chief Operating Officer of HE Butt Grocery Company from November 2008. Boyan previously served as a Consultant to HEB as Partner of the Monitor Group. Boyan worked at Boston-based international consulting firm Monitor Group LP for 15 years before joining HEB, notably founding and leading the firm’s New York office.
Chief Operating Officer
info: Martin Otto (“Otto”) serves as Chief Merchant & Chief Financial Officer of HEB. He is responsible for overseeing the company’s financial management operations, including its accounting, reporting, tax, and internal audit practices. Otto also serves as Chief Operating Officer of HEB company HE Butt Grocery Company. Otto has additionally served as a member of the Board of Directors at the National Association of Chain Drug Stores Inc since April 2013. Otto has held a number of senior leadership positions at HEB, including spells as Interim Chief Financial Officer and Executive Vice President of Grocery Merchandising and Procurement, and Executive Vice President of Grocery and Fresh Merchandising/Procurement. Otto previously worked in real estate investment banking and public accounting. He is a graduate of the University of Virginia and Harvard Business School.