Heb Analysis

HEB

S

steadfast commitment to consumer value

wide selection,

outstanding baked goods, produce, flowers, meats and seafood.

Customer-focused service and our growing Own Brand assortment

company leaders traveled worldwide seeking new ideas and best practices

H-E-B had high hurdle rates for its investment decisions,

commitment to internal manufacturing

automated replenishment in some categories, which provided better in-stock conditions and freed up shelf space for additional variety

self-checkout technology, which increased throughput at the front end

Convenience services like drive-through pharmacies and on-premise gas stations were commonplace.

The Meal Deal offered a central item surrounded by complementary products that together made an easy meal: H-E-B generally used one of its leading Own Brand products as the focal item and obtained complementary product at reduced cost from the national brands.

W

particularly sensitive about its price reputation

a business made up largely of commodities undifferentiated to the customer

At H-E-B, most categories had Own Brand products, but the share of sales these products achieved varied widely.

The total gross margin of $450 million earned by Own Brand represented a disproportionately high percentage of H-E-B’s total profitability.

O

low household incomes

create innovative products under the H-E-B brand that were tailored to the tastes of South Texans

five national brands along with seven specialty brands

carried H-E-B Brand products to compete against premium players like Classico and Five Brothers

Own Brand products did not require the same level of investment since H-E-B’s overall marketing activities created awareness and demand for Own Brand products. H-E-B’s captive manufacturing of highly profitable products. successful Own Brand products influenced some branded manufacturers to provide additional funding and reductions in cost to remain competitive on the shelf.

T

premium [private label] programs risk diluting the customer’s impression of your [own] brands

Pricing

particularly sensitive about its price reputation

In light of this reality and Wal-Mart’s stand on prices, H-E-B paid special attention to maintaining its EDLP reputation.

price very closely with Wal-Mart

STRATEGY

characterized the company’s strategy as “refusing to choose between low cost and differentiation.” jealously protected its EDLP reputation: Tracking competitors’ price and evaluate customer perceptions of prices; not sacrifice service, variety, and freshness

Cost containment initiatives included H-E-B’s commitment to internal manufacturing.

The Meal Deal offered a central item surrounded by complementary products that together made an easy meal.

Central Market: focus on premium products; a destination shopping experience targeted to draw shoppers within a 50-mile radius; effective in transforming H-E-B’s reputation in key trade areas

Three OWN brands: provide customers with a “point of difference.” Hill Country Fare served to compete against other store brands and approach national brand quality. The third tier, generics, were products of reasonable quality with some acceptable quality variation.