By Stephen Young
By Stephen Young
By Stephen Young
By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
The perishables part of this equation had its gestation in the late '80s when H-E-B forged a relationship with Harry Blazer, founder of Harry's Farmers Markets in Atlanta. Harry's Markets stock a dizzying array of some 1,200 varieties of fruits and vegetables. "These were very powerful markets," Campbell says. "Harry, we thought, was the consummate perishables retailer in the world." From Harry's, H-E-B adopted a number of innovations, including a minimalist, industrial rack design that receded into the background, allowing the produce to overwhelm and cloak the fixtures, and a "serpentine" floor plan that snaked traffic flow through the store instead of breaking it up with a grid of aisles.
The head of the serpent is a cramped maze with low ceilings and cool, damp air blasted throughout, creating the ideal climate for produce, meat and seafood. "It's like shopping in a big industrial cooler," Campbell says.
The pathway then opens into high ceilings and airy spaces where wine, bulk foods and dairy products reside. The channel constricts again once the world of cheese, olives, bread and deli meats is trespassed.
This deliberate compression-and-release accosts shoppers with an in-your-face, sensual food presentation, no doubt generating impulse sales. Campbell says this sort of forced flow also offers a tremendous boost in retail-display square footage.
In 1991, H-E-B implemented the retailing concepts drawn from Blazer in a San Antonio experiment called Market Place, a precursor to Central Market. Like Central Market, Market Place had a muscular perishables component. But unlike its future progeny, Market Place was stocked with traditional grocery-store fodder plus a pharmacy and a photo-finishing depot. To the surprise of H-E-B brass, Market Place was a runaway success.
Then in 1992, Charles Butt bagged a piece of prime state-owned real estate at Lamar and 38 1/2 streets in Austin. His initial ambition was to plant an H-E-B supermarket on the plot, but he quickly thought better of it. Instead, he called for a new concept that would dazzle instead of just serve. Campbell was tapped to create the box that would contain the sizzle. For inspiration, he scoured some of the globe's best-known grub boutiques, including Dean & DeLuca in New York, Harrod's in London and KaDeWe in Berlin. "Let's turn the world upside down and find every incredible thing we can find and bring it in and let the customer experience it," he says of his mission.
But perhaps more surprising than what Central Market would stock was what it would forgo. Campbell decided to chuck traditional store shelf staples such as Tide, Budweiser, Ruffles, Rice-a-Roni and Ken-L Ration and zero in on unique food items.
"It was a gut-wrenching gamble," Campbell admits. Indeed. Harry's Farmers Market Inc. sold its three superstores and most of its assets last fall to Austin-based Whole Foods Market Inc. for $35 million--a mere fraction of its 2001 revenues--after struggling with mounting debt and losses.
Yet for Campbell, the gamble paid off. Central Market was a hit almost from the moment the doors opened in 1994, quickly becoming Austin's top tourist draw, after the state capitol. The company followed with a Central Market in San Antonio and another in Austin.
Then last year, H-E-B embarked on a breathless Central Market expansion, opening a store each in Houston (May 2001), Fort Worth (October 2001), Plano (February 2002) and Dallas (July 2002), with the latter marking H-E-B's 300th store. This was quick work for the San Antonio-based grocer, born as the Mrs. C.C. Butt Staple and Fancy Groceries in Kerrville in 1905 with a $60 investment. Today, H-E-B is the nation's 12th-largest food retailer and the 13th-largest private company in America, according to Forbes magazine. Stephen Butt, 47, great-grandson of founder Florence Butt and the executive heading up H-E-B's Dallas-Fort Worth front, says the company will rack up $10 billion in sales this year. Campbell projects the seven Central Markets will represent $375 million of that total.
This rapid incursion, with three store openings in just seven months, marks H-E-B's long-awaited plunge into the Dallas area, a gaping cleft in its Texas market presence. H-E-B opened stores in Mexico four years before Dallas-Fort Worth. What took them so long here? Campbell says the company was spooked. With virtually the highest per capita supermarket square footage of any Texas market, the area was just too daunting a landscape to tackle without something special to arouse shoppers.
"People in Dallas, we believe, were looking for something new on the retail landscape," Butt says. "We felt like to introduce H-E-B to the city of Dallas--into the metroplex in total--we really wanted to bring a store that is new and different...a better version of what was already here."
Butt characterizes Central Market as the company's entry vehicle into Dallas. Yet somehow it comes across more as a Trojan horse, a device to secure a foothold by building fierce loyalty before the name brand is deployed. Butt talks about the room he sees in the area for more Central Markets and coyly adds that there may be reasons to install conventional H-E-B supermarkets on Dallas-Fort Worth turf, where the field is largely divided among Tom Thumb, Albertson's, Kroger and Wal-Mart.
It will be awhile, though, before more Central Markets dot the landscape. Campbell hints they may have outrun their headlights in their rapid-fire plunge, leaving them with no real estate parcels in the offing and slim pickings on their human resources bench to populate new stores. "Not just anybody on the street can come in and run one of these things," he says. "They're so dadgum complicated."