How H-E-B became Texas' most beloved brand (2024)
texashighways.com
texashighways.com
But this story[0] is the one that I think sums up the love people have for HEB pretty well. During the 2021 "Great Texas Freeze" [1] (where 4+million homes went without power for days, 10+million without safe drinking water and 200+ died); basically during a rush to stock up on food, the power went out at an HEB and they couldnt check anyone out, but instead of telling everyone to leave their carts and exit to go home without food, they let them all to walk out with whatever they had in their carts.
It's unfortunate that more big businesses don't even try to be a net positive the way HEB does. (some seem to be actively hostile to the idea)
[0] https://www.cnn.com/2021/03/09/us/texas-storm-recovery-heb-g...
> When it was their turn at the register, the Hennessys started loading their groceries on the conveyor belt but were told to put the groceries back in the cart. The woman at the register asked if they had alcohol. They didn’t. Then she waved them toward the exits.
> “Go home and be safe,” she said.
The history of HEB is something I want to learn about. I know from reading Robert Caros LBJ volumes that Howard Butt was funneling a lot of money to LBJ staring in the 30s or 40s. Not to judge that, I’m just curious how they dominated Texas.
https://www.texasmonthly.com/food/heb-prepared-coronavirus-p...
> The grocer started communicating with Chinese counterparts in January and was running tabletop simulations a few weeks later. (But nothing prepared it for the rush on toilet paper.)
HEB believes that if you treat your employees right, that they will in turn treat their customers well.
As someone that has spent years living away from HEB they are just a great store to have access to. Better prices, store brands that are often better than national, and they usually have a good produce selection. When we moved to the San Antonio area a decade ago, having access to HEB again was one of the most exciting parts of the move.
Wal-Mart is the opposite. I go in to buy groceries and am always astonished to have my trip be like for $27 or something. I usually shop from the outside of the grocery (raw produce) and they are just dirt cheap.
HEB operates a series of upscale Central Market stores that are even more lopsided in price and even more interesting in selection.
Subtle, but it allows them to make some fun marketing claims!
Costco groceries are expensive because you're forced to buy in bulk. You can leave HEB with 1 tube of toothpaste or a single potato. You can't leave Costco with fewer than 5 tubes of toothpaste or several pounds of potatoes. I love Costco and imo they win in a few areas like the butcher, but HEB crushes them in the variety of desirable groceries hands down.
Literally if you are willing to work they will hire you. Alot of my family and friends have started their careers here and they love it.
Unsurprisingly the way they treat employees also means that the talent pool in corporate is excellent. Employees are very invested in the company's future.
I could go on but yes they are good.
instead of them being on every corner.
They are saying almost no one in Texas can walk to a grocery store. Hence, it is a flex if you can. And Europeans don't understand that it is that unusual.
Why did this M&A seemingly not happen in Texas, New York, Florida, Pennsylvania, and Ohio?
Safeway and Albertsons had already bought up many grocery stores prior to that merger. When I was a kid, we knew which grocer had the best butcher and which had the best baker, and neither were chain stores.
1: Granted Haggen isn't entirely innocent here; they saw a potential growth opportunity and over-leveraged.
When I’ve been to HEB I see plenty of cashier lanes open, each with a cashier and bagger, people stocking aisles, a team behind the butcher and bakery counters, etc.
By comparison, Kroger seems to try and have a skeleton crew at all times. Usually a single cashier, a self checkout supervisor, and a couple of people frantically stocking.
The Kroger employees look over worked and clearly unhappy to be there.
The HEB employees seem generally happy and are usually in groups chatting with coworkers and customers while they work.
Shopping at Kroger feels almost dystopian relative to HEB.
This is probably just a 'Kroger vs nice supermarket' thing.
Same thing for Bucee’s compared to normal gas stations.
Bucee’s popularity exploded by asking “what if we paid someone to clean the bathrooms at a gas station” and following the logical chain of thought from there.
People like spending money at businesses that aren’t depressing or gross to be in.
You're also only going to find those in the same kinds of places you'd find a Trader Joe's or Costco - only in the nicest parts of town unless it's very densely populated or a small but rich enclave.
It's literally just doing the core service better than average and allowing it to yield results. "hmmm lets try not scamming people so we can save pennies on some expired bell peppers in a loss leader area to begin with... Perhaps they'll also pick up some prescriptions while they are here! Heck, I bet if we make some effort to keep our employees relatively happy, customers might also have a better experience in our stores!"
IMO/rant, few businesses/people seem to grasp this and all think there is some magic "business hack" they can do while avoiding doing the core business thing well. And I don't think it's that they don't know it, it's the divorce between the reality they themselves likely desire to live in and experience, and the reality they build/provide day to day in their work. But, that plagues everything these days tbh. Nobody just wants to do the fundamentals well, everyone is looking for "this one simple hack" that alleviates having to just do the work. The calculator might save you some money, but it'll never, by itself, extract the gold from the mine.
Albertson’s adds insult to injury by overcharging for everything. Tomato? $4.99/lb please.
TJs and Costco also have similar fan bases, but they restrict their stores to the richer side of town.
Kroger and Albertsons, however, have operations in many stagnant or declining areas, saddled with union contracts from a long time ago when those places were not stagnant. Household sizes and hence the utility of full service grocers have fallen precipitously for many of their stores.
There is certainly a component of HEB’s leaders choosing to not squeeze a short term profit now, but they wouldn’t be able to do it if Walmart and Kroger could eat their lunch because their customer base was declining in numbers and purchasing power.
Hell, even Kroger and Albertsons’ customer base is declining in purchasing power which is why not Aldi and Lidl are wrecking them wherever Walmart hasn’t.
I had to argue with a Meat Department Manager at a Publix in Central Florida who told me that "Top Round Roast" did not exist. I told him I could walk 50 feet to the Deli and get some slices of the Boar's Head Top Round Roast Beef if he'd like to try this non-existent cut. He did not have an answer and I had to show him images of the cut I wanted and he said they don't sell that cut.
This was great given it was a 20-mile round trip to that store for me...
Having spent most of my life in the south, I thought Publix was a great grocery store. But then I spent some time traveling the US and discovered stores like H-E-B, Hy-Vee, Wegmans, and Harmons and realized that Publix was just clean version of a low-end grocery store.
Unfortunately , it seems to work for Kroger.
As customers we hate it, but Kroger sells something like 20% of all groceries in the US, and HEB is a s small by comparison regional grocer
I'll never forget that they were one of the first on site after the recent flooding in South Texas to feed first responders and employees paid to volunteer in the search party, they provided food at no cost when their stores lost power to thousands of households during Snowpocalypse and worked tirelessly to restock and restore power via generator to ensure folks could get what they needed even as the city went dark, and during Katrina they set up mobile kitchens and kept them stocked to feed emergency workers and storm refugees throughout the Houston metro area, as well as many many many other examples of them stepping up when our own state government has failed us.
As someone who's lived in Texas off an on for more than two decades and lives here now, I would trust HEB ten times before I'd trust anyone in the state government here.
Seriously though, I prefer many things there: recycled toilet paper/paper towels, pet food (their quality line, not the cheap stuff), and even their to-go sushi are all among my favorites in those categories. For beer drinkers, they actually have an impressive craft selection.
Sweden: The dominant one is called ICA. Shared brand and supply chain. Stores are locally owned, typically 1, maybe 2 stores per owner. Store owners own a share of the centralized aspects. Customers generally prefer it, except for those on the (quite) left. It often becomes a political charged debate topic on a national level.
People do seem to at least eventually understand that local ownership is good since it translates into caring.
The charges from the left: a) Possibly valid: They have gotten too good/dominant, b) Just stupid: "They are ripping people off with their 2% profit margins".
They still have an "Asian" market too but it's far too expensive for what it is, mostly sushi with various kind of goop drizzled on top.
So while I still admire HEB and choose it over anything else, it's on its way down in terms of quality and value.
Haven't been to Central Market (their high end brand) in a while, but it's night and day compared to HEB.
HEB and their upscale Central Market are the only grocery stores that we visit. We do drop by World Market occasionally for oddball things but if we don't grow it and HEB/CM doesn't sell it we probably aren't eating it.
I think one of the best things about the new HEBs is the attached BBQ store. Dependably good BBQ options with a Central Texas BBQ flavor that beat all of the fast food options locally. We have a wide selection of fast foods since this region is in a massive growth stage absorbing all the FtW refugees. HEB BBQ and the other fresh meals available inside that take little or no prep are dependable, flavorful, options for quick meals and picnics.
Locally we have Walmart, Target, Albertsons, Brookshires, Winn Dixie(?), Aldi, and maybe a couple other smaller ones including some Dollar (G/T) stores for groceries. Walmart is the only one that offers similar options but the quality of their fresh stuff can't measure up. Albertsons was the go-to for years if we had to swing into town for groceries and didn't feel like adding the extra commute to FtW Central Market. We stopped going there after we took a rafting trip down the Salmon in Idaho and rounded a curve in the river and found a large vacation home built right up on the bank complete with a concrete boat ramp. The river guide told us the house was a vacation home owned by the Albertsons grocery store family and that it was vacant most of the year. The concrete ramp is not allowed on any stretch of the river since it is in a Wild and Scenic area but it was built anyway because the sanction for building the ramp was a simple annual fine, easily affordable for billionaire grocers. We had rafted that river several times over the years and the encroachment of second homes and vacation homes on all the high spots up there really degrades the wilderness feel.
I'm not going too far down that trail today since that is too far OT.
If you're in Texas, HEB is the grocery store. The others suck balls.
Not a Texan, just visited occasionally.
This sentence more than anything has just made me want to become a Texan. I did not know this was a thing, but that sounds amazing.
For the price though, the heb bbq is extremely competitive. But if someone is coming to town looking for great bbq (even without any Franklin line), there are a bunch of places id recommend first.
The catch is that, like the crawfish, their BBQ is pretty mid. So if you want great BBQ, you gotta drive a mile or two to a real BBQ place. But if you want some brisket before you do your grocery shopping, it hits the spot.
In my own mind, second chances are context dependent. They clearly knew about the problem and the potential health consequences for customers, and they chose to continue operations. Some people became sick and others died. There are no second chances in that situation. All of the people at Blue Bell in the chain who decided to keep running should be in prison and their assets confiscated.
I'm glad that we were not big ice cream eaters while this was a problem because Blue Bell was one of our trusted brands.
HEB carries Blue Bell but I don't have to buy it since they also carry quite a few other brands.
The Albertsons founding family and heirs has had nothing to do with Albertsons grocery stores for at least 20 years.
If I were you, and if the information above was true, my beef would be with the government and the voters.
The attraction of the river was the silence and the grand views, paddling the rapids at different flow levels and learning to read the water, watching wildlife come up to the river, admiring the geologic story told by the rocks exposed on the canyon walls, the dark night skies. Once you add a structure, with the supporting access roads, powerlines, etc into the mix you have destroyed something that was worth saving for future generations. I don't expect everyone to understand that since too many people spend their lives caught up in the bullshit pursuit of money or recognition.
I don't give a shit whether that family still owns or runs the grocery business or did when they built that place. The fact that they built there, right on the river and built a ramp to launch their jet-boat on what had been one of the quietest stretches of the river makes them my enemy and worthy of my contempt. The fact that they decided to build the ramp and just pay the annual fines is an artifact of a broken system where penalties and sanctions do not match the gravity of the infraction. Wealthy people do whatever they want, trashing things everywhere they go. It could be true that this will never change. I'm hoping that it will though and working to help it along.
My point was that you are just inconveniencing yourself by avoiding a particular business because you erroneously believe avoiding it will impact a certain party.
Two constants in Texas: HEB and Waffle House.
I'm currently in Dallas, and annoyingly there is no HEB within a reasonable distance, though they have finally started opening stores in the DFW metro area. Just none in central Dallas, yet. They do just about everything right. Their lower bound on quality for stuff like produce is higher than most stores, their store brands are usually higher quality than the big brands (real sugar instead of high fructose corn syrup, fewer unpronounceable ingredients, etc., and often simply taste better). Their employees seem more invested in it being a good shopping experience, and I hope that means they're treated well.
Anyway, it's earned loyalty. It's not just a "well, it's been here for a long time and it's what I'm used to".
HEB is a fantastically ran store, but the quality of many of the goods tends to suffer relative to competition. Things like chicken broth that isn't fake can only be found at the gigantic, brand-new HEB 30 miles away (or at any Kroger). The local HEB built a decade ago seems to be somewhat forgotten by corporate.
(/s)
> ... in this company’s nearly 120-year history, it’s remained family-owned and operated.
It has been more than a century since the American legal system told publicly-owned companies "Don't Be Good"
It would be crazy not to do share buybacks for a growing business.
The American legal system did no such thing in the Dodge ruling: as stated in the Wikipedia article itself, the 'pay shareholders' idea was in the obiter dictum (non-binding remark) portion.
And as recently as Burwell v Hobby Lobby, the Supreme Court said:
> While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so. For-profit corporations, with ownership approval, support a wide variety of charitable causes, and it is not at all uncommon for such corporations to further humanitarian and other altruistic objectives.
* http://caselaw.findlaw.com/us-supreme-court/13-354.html
* https://en.wikipedia.org/wiki/Burwell_v._Hobby_Lobby_Stores,....
The difference between that decision and "Don't be Good" is that if you have zero greedy shareholders, or are ready for a protracted and uncertain legal battle against them, then you might get away with being good. Otherwise - make sure any seeming good you do is some combination of de minimis and trivial to defend as a tactic to maximize shareholder profits.
(Hobby Lobby is a decision about about closely-held and privately-held corporations, when they are claiming strong religious reasons for policies which a majority of the Supreme Count Justices have very obvious ideological reasons to favor. And also have both the motive and resources to spends years fighting through the Federal Court System. The relevance to 99.99% of the decisions made by corporations is very close to nill.)
* https://en.wikipedia.org/wiki/Friedman_doctrine
So there's several decades between the two where it wasn't really a thing. The late Lynn Stout (amongst others) has written extensively on this:
> The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public (Berrett Keohler Publications, 2012) challenges the ideology of shareholder value. Part I, “Debunking the Shareholder Value Myth,” traces the intellectual origins of shareholder-primacy thinking. It shows how the ideology of shareholder value maximization lacks any solid foundation in corporate law, corporate economics, or the empirical evidence. Contrary to what many believe, U.S. corporate law does not impose any enforceable legal duty on corporate directors or executives of public corporations to maximize profits or share price. The economic case for shareholder-value maximization similarly rests on incorrect factual claims about the structure of corporations, including the mistaken claims that shareholders “own” corporations, that they have the only residual claim on the firm’s profits, and that they are principals who hire and control directors to act as their agents. Finally, there is a notable lack of persuasive empirical evidence demonstrating that individual corporations run according to the principles of shareholder value maximization perform better over time than those that are not. Worse, when we look at macroeconomic data—overall investment returns, numbers of firms choosing to go or remain public, relative economic performance of “shareholder-friendly” jurisdictions—it suggests shareholder value dogma may be economically counterproductive. Part I concludes shareholder-value ideology is based on wishful thinking, not reality. As a theory of corporate purpose, it is poised for intellectual collapse.
* https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v...
Managerialism, which was the predominant theory before Friedman kind of took over, seemed to do relatively well:
> The system was hardly perfect.11 But the proof of the pudding is thetasting. Judged by that standard, managerial capitalism seemed to generate good results. American corporations dominated the global economy, producing innovative products for their consumers, secure jobs for their employees, and corporate tax revenues for their government. And-especially notable-they produced outstanding investment results for public shareholders. Between 1933 and 1976 (a period that includes the infamous bear market of 1973-1974),12 shareholders who invested in the S&P 500 enjoyed inflation-adjusted compound average annual returns of 7.5%. 13This compares very favorably indeed with the sorts of returns shareholders have received more recently.14
* https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?arti...
There have been multiple ideas about the purpose and responsibility of corporations and their management over the decades, all under the same legal regime.
Further, even talking about "shareholders" brings up issues: what is meant by "shareholder"? The pension fund that wants steady dividend payments for 3 decades? The hedge fund that wants a meteoric rise in share prices in 3 years? The day trader that's trying to cash in on a meme in 3 days? There is no (single) Platonic "shareholder" that a company's directors can aim to be best at: there are a variety of people holding stock for different reasons. See concept of "shareholder heterogeneity".
Was John Sculley doing the right thing by going for maximum profits and shares prices when he was CEO of Apple (and kicked Steve Jobs out)? How that'd work out for AAPL in the 1990s? How has focusing on financials gone for Boeing (since they bought out McDonnel–Douglas)? How did all the stuff that Jack Welch did at GE work out?
Regardless any sort of legal principle, the fact is capitalism rewards exploitation. The more a company exploits, the more profit it can bring in. Whether that be worker or customer.
While it's not stated that way in business management courses, that's exactly how it's taught in a round about way. The entire business class is chasing after efficiency, how to do more with less. And their idols are the likes of Walmart who will shut down a store if anyone says "union" and who aggressively negotiates for tax breaks in every location where their stores go up.
But further, venture capitalists have learned that one of the most effective ways to extract capital is to purchase well respected brands and destroy their quality while sucking off every last bit of value before customers wise up to the impending death of a beloved brand (see Sears, KMart, and basically all of fast food at this point. Also, be prepared to see this in your vet, dentist, and retirement homes).
People make millions doing these awful things which is why they keep happening. It's simply a lot harder and less profitable to make a "good" company which makes good products and respects their customers. And if H-E-B ever sells to a 3rd party, exactly the same thing will happen to them in a heartbeat.
In the short run, that doesn't seem worth arguing with.
It isn't clear whether or not it is really true in the long run. If shareholders (and courts) demanded the long view, it's equally unclear if the exploitation approach could really have taken hold.
It's worked great for walmart for several decades now.
And the venture capitalists continue to use the plunder from prior pillaging to continue the exploit train.
And further when a company achieves monopoly or near monopoly status, it becomes nearly impossible for a competitor to knock them off their perch.
The unfortunate thing is for the people engaged in exploitation this is a great long term strategy. A CEO that does this can almost always land another job as a CEO for another company to rinse and repeat the process. See Mark Hurd.