Description
Presentation on HEB : A retail case study
HEB Own Brands
Group 3 Retail Brand Management
History
? Founded in 1905 when Florence Butt invested $60 and opened the C.C. Butt ? ? ? ? ? ?
?
Grocery Store In 1919, Howard Edward Butt expanded the Butt Grocery Company with a new Butt, became president of the H.E. Butt Grocery Company in 1971. Charles Butt is chairman and CEO of H-E-B, having grown the business from sales of $250 million in 1971 to $13 billion in 2006. In 1996 H-E-B announced that it will open stores in Mexico. In 2003, the company was #10 on Forbes' list of largest privately held companies; H-E-B is also the largest privately held company in Texas. H-E-B is also environmentally driven, focusing on recycling and conservation, and in 1999 began converting its Houston distribution fleet to run on liquefied natural gas. In October 2007, HEB recognized domestic partners in its healthcare plan for the first time. The plan allows domestic partners of employees to receive all of the same benefits of a married couple except for federal benefits such as healthcare reimbursement accounts
H. E. Butt Grocery Company
? The H. E. Butt Grocery Company, headquartered in
San Antonio, Texas, was the 11th largest grocery chain in the United States. ? In 2001, as sales approached $9 billion and the chain surpassed 275 stores ? Company research indicated that 90% of the households within its core market area visited an H-EB store at least monthly ? Store Locations: Austin, East Texas, Houston, North Texas, San Antonio, South Texas, West Texas, Louisiana and Mexico
Store Structures
?
H-E-B Supermarkets: The average H-E-B store was 55,000 square feet with approximately 50,000 SKUs. Typically, smaller market stores had 10-15 check-out lanes and employed about 200 people. H-E-B’s larger stores typically provided more than 400 parking spaces, operated a minimum of 20 che ck-out lanes and employed in excess of 350 people. Development costs for new stores were $8 million$15 million (including land, building, equipment and inventory) and were projected to achieve sales volumes of $600 to $750 per annum per square foot of selling space H-E-B Pantry Foods: H-E-B also operated 86 Pantry Stores with a low cost, low price format. The smaller Pantry Stores were 25,000-30,000 square feet and averaged $14 million in sales per year. However, in the late 1990s, the small formats were limiting H-E-B’s ability to offer the full assortment sought by customers. H-E-B planned to transition many Pantry stores to full-sized H-E-B supermarket H-E-B Central Market: H-E-B operated two Central Market stores in Austin and one in San Antonio. Central Market stores were 60,000 square foot stores with a focus on premium products. The store created lavish displays of premium quality merchandise. Central Markets stores also featured extensive “readyto-eat” and “ready-to-heat” products. Targeting food enthusiasts, the stores had a very large wine and beer selection, self-service pasta and olive bars, international cheeses and full aisles of vinegar, oils, and Salsa
?
?
Own Brands
? HEB divided the existing labels into three brands
that would be more clearly positioned versus the national brands ? HEB Brand offered products that equalled or exceeded national brand quality ? The next tier of products was Hill Country Fare(me too). The quality of Hill Country Fare products was intended to be “good” but not “cheap” ? Generics, were products of reasonable quality with some acceptable quality variation. These would be the lowest-price products available in the market.
Own Brands
Own Brands
? H-E-B had three major objectives for its Own Brand
product lines: improved profitability, sales growth, and deeper customer relationships.
? Own Brand products typically provided better margin
than national brand alternatives
? 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
Advantages of Own Brands
• Own brands will attract more customers and more sales within the store. • Producer will have guaranteed sales • Products are cheaper
Disadvantages of Own Some customers believe „own brands? are of Brands
lower value than established brand names (although this is not necessarily true).
Own Brand: Mixed Bag
?
Ice Cream Fully Cooked Meats Pasta Sauce Flour Canned Vegetables
?
?
?
?
?
Frozen Vegetables
Water
?
Glacia Water-Question 1
? Bottled water was an important category to H-E-B
? Category sales were growing 20% annually
? Water was segmented both by source (imported
spring, domestic spring, and purified) as well as by size (single serve, multi-pack, and gallons) ? Glacia was launched in 2000 after three years of research and product development ? Glacia was positioned as Evian quality water. ? The product was bottled at the source at a spring in Feversham, Canada.
Glacia Water
Glacia Water
Consumer Test Results
? Without Pacakaging only 19% of Glacia consumers were aware
?
?
? ? ? ?
the product was bottled in Canada.64% believed it was from Texas With Packaging,74% agreed.Packaging had red mapel leaf and product of Canada written on it. The Evian users indicated preference for Canada over France, Evian?s source It appeared that heavy emphasis on Canada would make Glacia the water of choice for Evian users. Canada was much less appealing to a broader base of water drinkers. Only one in five bottled water drinkers perceived any advantage from imported water. Ozarka users indicated that their preference for Texas water was 44% higher than for Canadian water.
Glacia Water-Course of Action ?
Alternative 1
Target Glacia against Evian more directly ? Move Product Closer to Evian ? Price it higher than Ozarka ? Canada Message more Clear
Alternative 2
Reposition Glacia as domestic Spring Water ? Placement and Price Intact ? Product Development and Package Redesign ? Advertising ? HEB or Hill Country Fare ?
Glacia Water-Course Of Action ?
As a group we think Alternative 2 is better to go with
Why ?
? Only one in five bottled water drinkers perceived any advantage
from imported water(20%)-Canada sourcing not a highly desired attribute ? Ozarka users indicated that their preference for Texas water was 44% higher than for Canadian water-Domestic Texas Spring more preferred ? A 1999 customer study indicated that customers perceived H-E-B?s Own Brand products as generally lower quality than national brands-Don?t attack the premium brand Evian ? Consumers also saw no distinction between the H-E-B and Hill Country Fare brands-No Point having two separate brands of bottled water
doc_404844885.pptx
Presentation on HEB : A retail case study
HEB Own Brands
Group 3 Retail Brand Management
History
? Founded in 1905 when Florence Butt invested $60 and opened the C.C. Butt ? ? ? ? ? ?
?
Grocery Store In 1919, Howard Edward Butt expanded the Butt Grocery Company with a new Butt, became president of the H.E. Butt Grocery Company in 1971. Charles Butt is chairman and CEO of H-E-B, having grown the business from sales of $250 million in 1971 to $13 billion in 2006. In 1996 H-E-B announced that it will open stores in Mexico. In 2003, the company was #10 on Forbes' list of largest privately held companies; H-E-B is also the largest privately held company in Texas. H-E-B is also environmentally driven, focusing on recycling and conservation, and in 1999 began converting its Houston distribution fleet to run on liquefied natural gas. In October 2007, HEB recognized domestic partners in its healthcare plan for the first time. The plan allows domestic partners of employees to receive all of the same benefits of a married couple except for federal benefits such as healthcare reimbursement accounts
H. E. Butt Grocery Company
? The H. E. Butt Grocery Company, headquartered in
San Antonio, Texas, was the 11th largest grocery chain in the United States. ? In 2001, as sales approached $9 billion and the chain surpassed 275 stores ? Company research indicated that 90% of the households within its core market area visited an H-EB store at least monthly ? Store Locations: Austin, East Texas, Houston, North Texas, San Antonio, South Texas, West Texas, Louisiana and Mexico
Store Structures
?
H-E-B Supermarkets: The average H-E-B store was 55,000 square feet with approximately 50,000 SKUs. Typically, smaller market stores had 10-15 check-out lanes and employed about 200 people. H-E-B’s larger stores typically provided more than 400 parking spaces, operated a minimum of 20 che ck-out lanes and employed in excess of 350 people. Development costs for new stores were $8 million$15 million (including land, building, equipment and inventory) and were projected to achieve sales volumes of $600 to $750 per annum per square foot of selling space H-E-B Pantry Foods: H-E-B also operated 86 Pantry Stores with a low cost, low price format. The smaller Pantry Stores were 25,000-30,000 square feet and averaged $14 million in sales per year. However, in the late 1990s, the small formats were limiting H-E-B’s ability to offer the full assortment sought by customers. H-E-B planned to transition many Pantry stores to full-sized H-E-B supermarket H-E-B Central Market: H-E-B operated two Central Market stores in Austin and one in San Antonio. Central Market stores were 60,000 square foot stores with a focus on premium products. The store created lavish displays of premium quality merchandise. Central Markets stores also featured extensive “readyto-eat” and “ready-to-heat” products. Targeting food enthusiasts, the stores had a very large wine and beer selection, self-service pasta and olive bars, international cheeses and full aisles of vinegar, oils, and Salsa
?
?
Own Brands
? HEB divided the existing labels into three brands
that would be more clearly positioned versus the national brands ? HEB Brand offered products that equalled or exceeded national brand quality ? The next tier of products was Hill Country Fare(me too). The quality of Hill Country Fare products was intended to be “good” but not “cheap” ? Generics, were products of reasonable quality with some acceptable quality variation. These would be the lowest-price products available in the market.
Own Brands
Own Brands
? H-E-B had three major objectives for its Own Brand
product lines: improved profitability, sales growth, and deeper customer relationships.
? Own Brand products typically provided better margin
than national brand alternatives
? 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
Advantages of Own Brands
• Own brands will attract more customers and more sales within the store. • Producer will have guaranteed sales • Products are cheaper
Disadvantages of Own Some customers believe „own brands? are of Brands
lower value than established brand names (although this is not necessarily true).
Own Brand: Mixed Bag
?
Ice Cream Fully Cooked Meats Pasta Sauce Flour Canned Vegetables
?
?
?
?
?
Frozen Vegetables
Water
?
Glacia Water-Question 1
? Bottled water was an important category to H-E-B
? Category sales were growing 20% annually
? Water was segmented both by source (imported
spring, domestic spring, and purified) as well as by size (single serve, multi-pack, and gallons) ? Glacia was launched in 2000 after three years of research and product development ? Glacia was positioned as Evian quality water. ? The product was bottled at the source at a spring in Feversham, Canada.
Glacia Water
Glacia Water
Consumer Test Results
? Without Pacakaging only 19% of Glacia consumers were aware
?
?
? ? ? ?
the product was bottled in Canada.64% believed it was from Texas With Packaging,74% agreed.Packaging had red mapel leaf and product of Canada written on it. The Evian users indicated preference for Canada over France, Evian?s source It appeared that heavy emphasis on Canada would make Glacia the water of choice for Evian users. Canada was much less appealing to a broader base of water drinkers. Only one in five bottled water drinkers perceived any advantage from imported water. Ozarka users indicated that their preference for Texas water was 44% higher than for Canadian water.
Glacia Water-Course of Action ?
Alternative 1
Target Glacia against Evian more directly ? Move Product Closer to Evian ? Price it higher than Ozarka ? Canada Message more Clear
Alternative 2
Reposition Glacia as domestic Spring Water ? Placement and Price Intact ? Product Development and Package Redesign ? Advertising ? HEB or Hill Country Fare ?
Glacia Water-Course Of Action ?
As a group we think Alternative 2 is better to go with
Why ?
? Only one in five bottled water drinkers perceived any advantage
from imported water(20%)-Canada sourcing not a highly desired attribute ? Ozarka users indicated that their preference for Texas water was 44% higher than for Canadian water-Domestic Texas Spring more preferred ? A 1999 customer study indicated that customers perceived H-E-B?s Own Brand products as generally lower quality than national brands-Don?t attack the premium brand Evian ? Consumers also saw no distinction between the H-E-B and Hill Country Fare brands-No Point having two separate brands of bottled water
doc_404844885.pptx