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To say it’s been a difficult year where H.E. Butt Grocery Co. does business is putting it mildly.
“The Mexican economy is in a shambles,” noted Burt P. Flickinger III, managing director of Strategic Resource Group, New York, “and Texas is suffering on the energy side, ranching is suffering because of high costs for feed, and agriculture is struggling because of drought. What used to be one of the best-balanced economies in the U.S. is really having a hard time.”
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In addition, Flickinger noted, the San Antonio-based chain faces strong competition on both sides of the border from Wal-Mart supercenters, which in a rough economy are flouting price advantages.
But don’t count out H-E-B, which behind Charles C. Butt, chairman and chief executive officer, has a long history of weathering tough times and emerging ever stronger.
Acknowledging its customers’ call for relief from the economy, H-E-B this year launched a new advertising campaign emphasizing value inherent in the retailer’s combination of everyday pricing and local product sourcing. Its television ads include testimony from shoppers, suppliers and employees as well as messages from division presidents. “We’re from Texas,” Scott McClelland, president of H-E-B’s Houston division, says in one ad, “and we’re here for Texas.”
The chain supports its “No Store Does More” campaign with lower prices through aggressive promotions and an expanded private-labels offer.
“H-E-B has the best management team of any retailer in the Sunbelt and has bounced back well from nine recessions that the company has weathered under Charles Butt. They will bounce back bigger and better from the 10th one,” Flickinger said, predicting that the company would help support sharper pricing in part by addressing its own costs for real estate. “They will also work very aggressively on more powerful promotional programs and will work even more aggressively on private brands and consumer communication for Spanish-speaking shoppers.”
“If you know about H.E. Butt then you know a lot about Charles,” added Neil Stern, senior partner at McMillan Doolittle, Chicago. “All of those attributes you’d attribute to H-E-B — fierce competitor, innovative, unwilling to give an inch, and always thinking for the long term: That’s what Charles is all about.”
— Jon Springer
