compete effectively by offering specialty products, developing focused distribution channels, catering to the local market, and providing superior customer experiences.
Slide 16-3 Retailing; Slide 16-9 Changes in the Retail Environment
Slide 16-10 Retailers’ Marketing Decisions Retailing is defined as all of the activities in selling a good or service directly to the final consumer for personal, nonbusiness usage. (Kotler, 2012.). H.E.B. Grocery has been segmented as a regional grocer in the southern region of the United States. In 1905, Florence Butts invested $60 dollars in a grocery store developed on a charge and delivery model. The first store was known C.C. Butts Grocery Store. This was the first staple grocery store in the local market. In 1908, the company began building a revolutionary bakery delivery system where customers could place orders and would have their bread delivered from the San Antonio based bakery. In 1921, H.E. Butts started the first Butts Cash and Carry grocery store, where customers could come and peruse the selection themselves and pay upon leaving the store (H.E.B. History, 2014.). This allowed for cost savings to the customers and reduced the expenses of the grocery store. From this short timeline, we are able to see how innovative the Butts family was in the grocery store business. Research done by Accenture(2011) explains “Companies that continuously innovate their product and service offerings, and adapt their channels faster than their competitors in order to stay relevant to customers will be well positioned to achieve high performance in the grocery industry.” As a regional grocer H.E.B. Grocery has done just that. They have focused heavily on their regional markets developing lifestyle focused grocery stores that enable them to deliver high quality service and groceries to their target market. H.E.B. Grocery has adapted as the landscape of the United States retail grocery environment has transformed over the 105+ years of its companies existence. H.E.B. has continually focused on its target market and developed its marketing decisions around those that it serves. Most recently, H.E.B. Grocery started to develop a lifestyle retail approach. Lifestyle retailing is retailing geared to people with a common lifestyle. Jennifer Kruger (2007.) proclaims “It 's a matter of providing offerings and a place conforming to the self-image of the people in this segment of the marketplace, whether it 's their current self-image or an aspirational self-image.” H.E.B. Grocery’s twist on this is identified as “Different Faces for Different Places” (Kaplan, 2007.). H.E.B. Grocery has developed six major layouts for this campaign. A Central Market that offers gourmet and specialty foods. Central Market has taken off as one of the most effective approaches for H.E.B. The Central Market (2014.) website proclaims “We only create foods with the freshest and purest ingredients, making them sure to please. We practice what we preach, and the result is a food lover’s dream—one that should be experienced firsthand to be truly appreciated.” The second face is the traditional food and drug store approach. Another layout known as H.E.B. Plus that is considered the H.E.B. Supercenter. The Pantry is a budget-oriented grocer concept that brings low prices to those on budget constraints. Mi Tienda (My Store) was a Hispanic food centric concept developed for the southern and Mexico markets. Most recently in 2010, H.E.B. has begun testing a Joe V’s Smart Shop, a new no-frills warehouse-style grocery concept, it is twice the size of an H.E.B. Pantry. Larger companies such as Kroger have begun to develop themselves into divisible segments that focus at a regional level. These segments have allowed for a given child company to improve their stores for the local market. I spoke with Tyler Abel, the district loss prevention manager of Dillons Grocery for Lawrence and Leavenworth, about the recent redesigns taking place in the local stores. He explained “The redesigns help spark interest, but it’s up to the management to keep customers coming back. The products offered have to meet the local market’s needs.”
15-3 What is a Marketing Channel?
Slide 16-19 Market Logistics Planning A marketing channel system is a particular set of interdependent organizations involved in the process of making a product or service available for use or consumption (Kotler, 2012.). It is the path a product takes from its production to the consumer’s hands. Deciding on the company’s value proposition to its customers makes distribution a very important part of logistics planning (Kotler, 2012). Deciding on the best channel design and strategy can make a huge impact on the company’s success. Early in H.E.B.’s life a delivery of groceries to its customers helped in the success. It then realized that opening a store up to its customers would further that success and allow for cheaper pricing. The logistics of getting the product to or in front of the customer can often times be just as big as marketing the product. Product distribution is a part of the marketing mix that retailers use in the process of getting the products available for use and consumption. Items need to be fresh and of good quality in order to resale them for profit. There is a growing need to operate sustainably over the long term given the industry’s high usage of fossil fuels. The larger focused companies have expanded distribution chains that become increasingly expensive. Regional retailers such as H.E.B. are able to focus on local perishable items, which limits spoilage and food waste. Distribution is usually much cheaper for these regional retailers as well, because they focus on a much smaller distribution scale, as opposed to the big box stores. H.E.B. Grocery is a regional grocer who has figured it out. Since implementing the strategies of lifestyle marketing, they have taken their success even further. In 2010, H.E.B. Grocery was named Retailer of the Year. Progressive Grocer editor-in-chief, Meg Major, said, “H-E-B is a clear standout among the nation 's supermarket retailers for its ability to be a fiercely tough competitor because its values and sense of purpose are made clear throughout the company (Vaugh, 2010).” This is a major win for a regional retailer to be acknowledged as one of the industry’s best. Retailers take note achieving a level high performance can be done at all echelons.
References
Accenture.
2011. Achieving high performance in the grocery industry. Retrieved from http://www.accenture.com/SiteCollectionDocuments/PDF/High-Performance-in-the-Grocery-Industry-Web.pdf
Blank, 2014. US Supermarkets Losing Market Share. Retrieved from http://www.seafoodsource.com/en/news/foodservice-retail/25463-us-supermarkets-losing- market-share
Central Market - HEB. 2014. Retrieved from http://www.heb.com/sectionpage/our- brands/central-market/sd30990115
HEB History. 2014. Retrieved from http://www.heb.com/sectionpage/about-us/company/heb- history/3000002
Kaplan, D 2007. Different faces for different places. Retrieved from http://www.chron.com/neighborhood/spring-news/article/H-E-B-continues-to-customize- its-stores-1797780.php
Kotler, P., Keller, L (2012). Marketing Management (14th ed). Upper Saddle River, NJ:
Prentice Hall.
Kruger. 20 Lifestyle retailing: what exactly is it, and how can your . Retrieved from http://www.highbeam.com/doc/1G1-161022684.html
Vaughn 2010. H-E-B is Retailer of the Year - San Antonio Express-News. (n.d.). Retrieved from
http://www.mysanantonio.com/business/local/article/H-E-B-is-Retailer-of-the-Year-690698.php