H.E. Butt Grocery
H.E. Butt grocery is a private supermarket operating in the United States of America. It is based in San Antonio, Texas. Currently the company has over 350 stores spread throughout Texas. Besides, it also has its operations in the northeastern part of Mexico. Other than the provision of household equipment and groceries, the company is also listed in the U.S. Central Market. During the 2017 financial year, H.E.B. had revenue amounting to 25 billion U.S. dollars. In the same year, Forbes ranked the company 12th among the largest private companies in America. It had scooped the retailer of the year award in 2010. The company is charitable and gives out 5% of its gross income to charity work. The following paper seeks to present a detailed analysis of H.E. B Grocery in light of four key components of business operations namely the history of the company, products, and services offered by the company, the marketing strategies that the company employs in positioning its products in the market and the financial profile of the company.
History of H.E.B. Grocery
This company was founded by Florence Butt in 1905 as a grocery store. She started the business in the ground floor of her family apartment in Kerrville. Fourteen years after its inauguration, the management of the company shifted to H. Edward Butt: the youngest son to the founder of the company. Edward tried to expand the company in four different locations within Texas with little success. However, in 1927, there was a breakthrough following a successful launch of a second branch of the store in Del Rio. After a short stint, he purchased three ore grocery stores in the same region. Edward then changed the named the company after his name with the initials of his first two names Herbert Edward Butt as H.E. Butt.
In 1971 Charles, who was the youngest son to Edward, was appointed the president of the company. He steered the company as its president between 1971 and 2006 (Kaplan, n/d). During his tenure, Charles managed to grow the revenue of the company from 250 million dollars to 13 billion dollars when he retired from the position of the company’s president. Charles was then promoted to the position of the company’s chair and C.E.O. Craig Boyan succeeded Charles as the company’s president and doubling up as chief operating officer in 2010. In 2018 the former chief financial officer Mr. Martin Otto was appointed the C.O.O. of the company. Forbes ranked the company 12th in the list of privately owned American companies. H.E-B was the largest private company in Texas for years till 2013 when Dell was privatized. In 2018 H.E-B acquired Fayor Delivery as its subsidiary company for an undisclosed amount.
Company products or services
H.E-B Grocery is the leading supermarket in southern and central Texas. The company sells groceries and first foods. Its products are distributed in over 350 supermarkets in Texas. The company is known for its personally processed bread that is sold in its outlets across Texas. Besides, it also processes dairy products such as yogurt, cheese, and pasteurized milk. It also processes canned meat and Mexican tortillas. The company offers both physical purchasing services and online services. Furthermore, it offers delivery of products to its customers’ premises at no additional costs. The company also operates close to 90 stores under different names. Some of the prominent shops operated by H.E. Butt include but not limited to the deep-discount Joe V’s Smart Shop, the Hispanic-focused Mi Tienda, and a single, upscale, foodie- oriented Central Market (Iszler n/d).
Marketing Strategies
H.E. Butt applies a combination of different strategies in ensuring that its products are well-positioned in the markets where it operates. One of its leading strategies is the expansion strategy, where it replaces the old small scale businesses with newer and larger ships that are attractive to customers. Additionally, the business has strategic location of its shops and outlets that makes it easier for its customers to access the shops with a lot of ease and convenience. Another strategy employed by giant Grocery is customer satisfaction through the provision of superior quality products. Its gifts to children as well as gift hampers and coupons make the experience memorable thereby enabling the business to retain its customers much easier. It focuses on the provision of top-notch services to its customers by setting higher standards, thereby making customers prefer shopping from H.E.B. repeatedly. Additionally, it focuses on establishing long term relationship with both its suppliers and customers. The long term working relationships with suppliers helps the company to enjoy quantity discount on raw materials and also assures the company of stability in prices of the raw materials it uses throughout the year thereby helping it to minimise production costs significantly. It also focuses on building and maintaining good working relationships with the community, which has promoted its P.R. and rating by the community. Participation in community charity through its C.S.R. programs also helps to market the company and its products (Dawson, 124).
The company also offers fair prices on its products as compared to its competitors. The air pricing strategy allows the business to have an advantage of penetrating the market and making an appeal to the below the pyramid customers who are the majority. In this regard, fair pricing allows the company to have a larger market share than its rivals in the market since most customers are price sensitive and will prefer to buy products they need at discounted prices. Market research conducted in Texas indicated that H.E.B. sells most of its items at lower prices as compared to rivals like Wal-Mart in 20 baskets, thereby making it have higher traffic as compared to the rival firm. Product proliferation and differentiation is another strategy that the giant Grocery uses. It has several baskets of products thereby making it easier for the company to diversify in different market segments depending on the prevailing market conditions. Additionally, product differentiation also allows the company to survive even when the market trends are not favourable since some lines of products will always cushion the other lines that undergo losses. The company also employs mergers and acquisitions which allow it to easily penetrate the market by maintaining the already approved business units. Additionally, through mergers and acquisitions the company stands to benefit from the goodwill created by the subsidiary company. Through the acquisition of an application that facilitates online shopping the company is currently able to reach out to more than 8 million residents in Texas faster thereby making shopping more enjoyable and easier. The mobile application facilitates faster delivery of orders to the customers at their convenience, thereby making the company number one preferred company in Grocery related services because it is prompt and efficient. The application allows customers to peruse for the products they want to buy from their mobile phones and place orders through their phones without wasting time to move to the physical stores (Roethler n/d). Lastly, stable administration and leadership from the owners have been the cornerstone of the success of the company in terms of financial management and related fiduciary and accounting issues.
Company Financial Profile
- E. B has continued to post good financial indicators since its inception. By around the 1990s, the company commanded about 39 percent of the market share. Through sound financial management and articulate administration, it expanded its market share growth to over 55% by 2010. It started off in a positive light, and by 1971 the company was making an annual revenue of 250 million shillings. This rose steadily, and by 2010 it made a profit margin of 13 billion dollars. Its revenue growth between 2007 and 2008 was 2% showing a positive deviation from the previous financial year (Kaplan, n/d). By 2010 the total sales from the six outlets were totaling to 42.3 billion dollars. The increase in profit margin to the company is attributed to the diverse product portfolio and proper financial management. It remains one of the most financially stable private companies in the U.S.A. It appears in the top 75 financially viable American companies. In Texas, it is the second most viable private company after Dell.
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Fredrick, Jim. Blowing away Texas with wellness focus, energy. Drugs to renew annual report
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Kaplan, David. “H-E-B is going the extra mile on the new Montrose store.” Houston Chronicle. Retrieved November 14, 2010.
Roethler, Eva “H-E-B Donations Reach $1 Million and Deploys Response Teams for Harvey Relief Efforts”. And Now U Know. August 30, 2017)
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