H-E-B OWN BRANDS

H-E-B V/S. INDUSTRY

 Industry operating on wafer thin margins of

approx. 3 – 6 pct of sales
 H-E-B being an innovative leader clocked
sales/store higher then national average
 H-E-B could achieve this due to:-
Strong commitment to EDLP strategy
Better operational efficiency
Adherence to consumer value
WALMART’S ENTRY

 Amalgamated its discount mass merchandise

store format with grocery store to create
SUPERCENTER in ’92
 Supercenter stores mushroomed to 888 by ’00
 Acted as a source of inspiration for Target and
Kmart
 Created Neighborhood market format to focus
on health and beauty items, pharmacy and
bakery products
 EDLP at Walmart is credited to higher
purchasing power and supply chain leadership
 H.E.BUTT GROCERY COMPANY

Education and
CSR Activity hunger relief

H-E-
New
B prods.
Outstand Empower +
store Executives. Suppl
ing manager gained inputs
customer with store globally y
service philosophy chain
strate
gies
H-E-B PILLARS:THE BOLD PROMISE

THE BOLD PROMISE

RETENTION OF GREAT
PEOPLE COMMUNITIES
SALES GROWTH Earn community trust
CUSTOMERS
Providing benefits Turn ideas into action and respect trough
action
Best service Recognising contribution
Maximize each store’s
potential During crisis take action
Fresh,safe prods. Creating flexible work
environment
Work towards achieving Share time and
Low price with best Ensuring safe working lower costs resources with
value environment neighbours
H-E-B STORE FORMATS

• Formed 77pct of sales

Supermarkets • Provided assortment based on local market needs
• Creation of MEAL DEAL to boost topline

• Formed 16 pct of sales

• They operate on a low cost, low price format
Pantry stores • With increasing demand, these stores will be translated to H-E-B
supermarkets

• Total 4 in number and formed 2 pct of the sales

Central • Featured ready-to-eat products
• Attracts people within a larger radius
markets • Carried huge collection of wine, beer,cheeses, oils etc…
H-E-B’s OWN BRANDS

 Focused on improved profitability,sales

growth and customer relationship
 Own Brand products offered better margins
than national brands
 Captive manufacturing saved costs
considerably
 Brand advertising and promotional expenses
helped co. to clock higher awareness and
ultimately boosting their topline
H-E-B’s PROCUREMENT PLAY

Procurement revenue Alternate source of

Cost control achieved from vendors of income in lieu of lower
by tight back-end national brands for operating margins due
sourcing securing adspace and to competitive
displays in stores pressure
CHALLENGES FACED BY H-E-B

Balancing Own
Brands and National
brands

Handles ordering,
stocking on shelves
Maintaining EDLP is
and taking back of
difficult at all times
unsaleable products
hurts bottomline

CHALLENGES
FACED
Recommendation for Glacia
Glacia – Road Ahead…

Glacia - Road Ahead

Aim for a Premium Domestic Spring Purified Water

Image Water Market

Heavy time and Heavy time and

Heavy Price expense in product expense in product
Increment development and development and
Package redesign Package redesign

Move Product closer

to Evian
Glacia – Competition at a
glance
Gross Margin
Brand Cost/Unit Price/Unit % Profit/Unit

Ozarka $1.46 $1.86 21.5% $0.40

Glacia $1.23 $1.79 31.3% $0.56

Evian $4.23 $5.49 23.0% $1.26

Aquafina $1.90 $2.39 20.5% $0.49

Glacia – Story of
Contradiction

Positioning Position
• Positioned as Evian’s • Priced next to Ozarka ( a
Competitor ( a Premium Standard Product)
Product)
• Advertised as a Foreign • Placed next to Ozarka –
Spring Water Domestic Spring Water
• Promoted as Canadian • Placed next to Ozarka –
Spring Water Texas Spring Water
 Glacia – Customer View
• Wrong Product Placement
Wrong • 64% believed it was from Texas
Association

• Unaided Recall – 19%

Low • Aided Recall – 74% ( still very low)
Awareness

• Canada was much less appealing to broader base of

water drinker
Small Target
Group • Pricing placed the product as par with standard product
Glacia – Proposed Solution

Reposition Glacia
as Domestic
Reposition Glacia as Domestic Spring water

Spring water
 Glacia – Domestic Spring Water
Advantages
Bottomlime • Reduce Logistic Pressure
Impact
Topline Impact • Greater Segment of Customer
• 44% customer prefer domestic spring water

Operational • Since the sourcing is located in proximity,

Efficiency operational efficiency can be achieved

Easy to • 64% Americans think it is a domestic brand

Reposition
HEB OWN BRAND RESPONSE TO
COMPETITIVE PRICING
Objective of Own Brand Product
Line –

Premium Image

Deeper
Improved
Sales Growth Customer
Profitability
Relationship
H-E-B Own Brand Lost its
premium Image

Consumer perceived Own Brand Product as generally lower quality than

national brand

Consumer saw no difference between H-E-B and Hill-Country Fare

Brands

Product Research Revealed H-E-B did not meet national brand

performance

H-E-B Own Brand was always suppose to me High Margin Product but
due to competitive pressure they lost this. Eg Ice-Cream and Flour
Quest to Regain Lost Ground

• Work to improve the Quality of H-E-B Own Brand

Quality
Products

• Difficult to carry Hedonic and Utilitarian Association at

the same time, so abandon EDLP for H-E-B Own Brand
Abandon
EDLP • EDLP can continue for Hill Country Fare

• Realign price to emphasize on Own –Brand Premium

Image
Reposition it
as Premium • Use Hill Country Fare to counter competitors price cut


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