|HEB has a lock on Hispanic shoppers.
H.E.B. battled directly on price, doubled the size of one store, added fuel services at another and stepped up advertising. Today, four grocery stores serve Victoria: two H.E.B.s, a sprawling Wal-Mart and one local shop.
Not just Goya
“They have a lock on the Hispanic shopper [at H.E.B.],” said David Rogers, president of DSR Marketing Systems, a retail research firm based in Deerfield, Ill., that tracks Wal-Mart’s expansion. “They carry their [Hispanics'] perishables and brands and it goes way beyond Goya. Most chains think if they have a collection of Goya products, they’ve targeted the Hispanic market.”
H.E.B. deliberately taps into both the Hispanic heritage of family and celebrations and Texas patriotism.
“They don’t miss a beat reminding everyone they are a Texas company, they care for Texas and they care for the Texas shopper,” Mr. Rogers added. “One of the other big issues is sheer fighting spirit and H.E.B has that in spades. They are determined to win.”
But Wal-Mart is still No. 1
Even so, Wal-Mart has overtaken H.E.B. as the No. 1 grocer in Texas, with 321 stores. H.E.B., an $11 billion retailer, is second with 300 Texas stores and 21 in Mexico, where Wal-Mart is the No. 1 retailer. A new study by NOP World found that Wal-Mart was the most popular choice among U.S. Hispanics asked to name their favorite store. In a February telephone poll of 500 Hispanic adults, 36% called Wal-Mart their favorite store, way ahead of Target, JCPenney and Sears & Roebuck Co., all tied for second place at 4%.
In the ferociously competitive Texas market, regional players like H.E.B. and smaller players like Houston-based 50-store chain Fiesta have survived in part because they appeal better than traditional grocers to the state’s large Hispanic population.
H.E.B.’s tagline is “Low prices and a passion for quality.” Howard Blevins, account manager at H.E.B.’s ad agency Richards Group, Dallas, said the positioning challenges Wal-Mart directly on price, yet avoids a tradeoff in the minds of Hispanic consumers who value quality.
“We feel we are better positioned against Wal-Mart to compete for the Hispanic market than anyone else because of our produce offerings,” Mr. Blevins said. “The key thing is to make sure the stores are relevant and have the food offerings that are important to Hispanics.”
Three store formats
H.E.B. operates three different store formats: traditional, Hispanic-oriented H.E.B. Fresh and Central Market, aimed at “foodies.” At an H.E.B. Fresh, at least half the food is fresh -- produce, baked goods, meat and seafood -- and there are dozens of peppers, olive bars and tortillas baked in ovens on the store floor. And H.E.B.’s 21 stores in northern Mexico serve as a kind of test market.
“When a promotion works in Monterrey, you definitely try it in Texas,” Mr. Blevins said.
Not only does the retailer’s experience in Mexico lead to consumer insights into the Hispanic customer, but also as the largest immigrant group in Texas, brand familiarity clearly translates across the border.
Cory Basso, H.E.B.’s group vice president of marketing and advertising, said the retailer’s appeal to Hispanic shoppers reflects careful attention to product choices.
“We try to assort the stores based on the market and target,” said Mr. Basso, who joined H.E.B. more than two years ago after working at WPP Group's Young & Rubicam and Publicis Groupe's Publicis in New York. “An H.E.B. will feel different depending on where you are. It’s a very consumer-directed approach.”
Fresh Hispanic marketing
H.E.B.’s Hispanic advertising was less savvy than the stores’ product mix. Mr. Basso ended the retailer’s practice of dubbing general market campaigns into Spanish and recently hired the first manager of Hispanic advertising. “You can’t take a general market idea, put in different actors and a different voice-over and call that a campaign,” he said.
Hispanic spots created on a project basis last year by Rives Carlberg, Houston, were all about sharing, barbecueing and a fiesta atmosphere, Mr. Basso said. There was even a catchy song about H.E.B.’s product quality and unbeatable prices. General market spots focused on famous baseball players like Roger Clemens who live in Texas.
Late last year, H.E.B. consolidated all creative and media planning and buying at Richards Group. Rives Carlberg retained media buying in Houston. A new series of humorous commercials, created by Richards Group, includes a Spanish-language spot that broke last week promoting the chain’s private-label H.E.B. Baby line of diapers and wipes. In a hypothetical training session for H.E.B. employees observing babies using the product, an overzealous employee speaks up and asks how these babies can really be trusted, since babies can be kind of shifty.
The point: “We test the products, we don’t just ask people in focus groups, we make sure products actually work right,” Mr. Blevins said.