Top Stories Include Incoming Competition, Incredible Generosity, Historic Acquisition
Listed here are the stories from 2017 that The Shelby Report staff deemed the most impactful. The acquisition of Whole Foods Market by online retailing giant Amazon was felt across the country, but the once-independent Whole Foods still calls Austin home. Other events, like Lidl’s purchase of properties around Texas, will begin to play out in 2018. There also was untold generosity in the aftermath of Hurricane Harvey, an event that may change the Houston area in ways we’ve yet to realize for many years to come.
Whole Foods Market Acquired by Amazon
In one of the most talked-about deals in the history of the food retail industry, Amazon on Aug. 28 completed its $13.7 billion acquisition of organic/natural grocer Whole Foods Market. Immediately Whole Foods began offering lower prices on some of its best-selling grocery staples, “with more to come,” the companies said, as they “pursue the vision of making Whole Foods Market’s high-quality, natural and organic food affordable for everyone.”
John Mackey, co-founder and CEO of Austin, Texas-based Whole Foods Market, said when the deal was first announced that it was “a way to maximize value for Whole Foods shareholders and help the markets serve customers with high-quality products and a high-quality experience as well as convenience and innovation.”
Whole Foods plans to continue to open new stores, keeping the Whole Foods Market brand intact, the companies say. Mackey remains CEO, and headquarters will stay in Austin, Texas.
Keswani Takes Over as CEO of Fiesta Mart
Houston-based Fiesta Mart appointed Sid Keswani as its new CEO, replacing Mike Byars, who had been at the helm since 2015.
Keswani previously served 19 years at Target Corp., rising to the rank of SVP. Prior to working with Target, Keswani served as SVP of operations for Susser Holdings, a company with more than 625 retail stores managing more than $4.5 billion in revenue. During his tenure, he helped add more than 125 additional stores to the portfolio via acquisitions and new store growth in 18 months. Prior to that, Keswani served as the COO of Aspen Heights.
Keswani received his undergraduate degree from Sam Houston State University and his MBA from the University of Texas at Dallas. He and his wife, Leila, met in Houston more than 20 years ago.
Fiesta Mart operates more than 60 stores in the Houston, Austin and Dallas-Fort Worth markets.
Lidl Has Big Plans for Texas
Hard-discount grocer Lidl entered the U.S. market in June 2017, with plans to open more than 100 U.S. stores by the end of 2018, and more than 600 stores in five years. Representatives from the chain have been looking at sites in Dallas, Austin and San Antonio. One of the spots is in Kyle at South FM 1626 and Marketplace Avenue in Austin. In North Texas, it will open stores in Frisco, Grand Prairie, Mansfield, McKinney, Little Elm, North Richland Hills, Rockwall and Wylie. The German company owns at least 10 acres in the San Antonio area. One property is at the intersection of Seguin Road and Wood Glen Drive.
In The Shelby Report’s January 2017 issue, Doug Koontz, head of content for RetailNet Group, a retail research and advisory practice, said Lidl, like Aldi, has a long history of winning in the markets they pursue.
“We don’t expect anything different in the U.S.,” Koontz said. “Frankly, there really are no notable failure stories to tell. They each have a great track record and proven credibility.”
Koontz describes Lidl as a “little more cutting edge” than Aldi, closer to a Trader Joe’s with its affordable, higher quality products and “interesting assortments” that reinforce the foodie culture proposition.
Both Aldi and Lidl are evolving, and that is key.
“They understand that they need to change, and that’s what really makes this so powerful,” Koontz said. “They’re picking and choosing where to differentiate themselves while also still being true to that low-cost model. It ensures that they are not only top of mind because you can buy the cheapest basket, but also because you can get some really quality products.”
In May, we reported that Ken McGrath had taken over as CEO of Save-A-Lot. What does this have to do with Lidl? McGrath spent 13 years with Lidl in executive roles, including CEO of Lidl Ireland from 2009-13 and CEO of Lidl USA from 2013-15. McGrath was selected by Lidl to spearhead the company’s market entry into the U.S. before leaving to become CEO of the Caribbean and Central America regions at wireless telecommunications firm Digicel.
Brookshire Brothers’ Johnson Steps Down
Jerry Johnson stepped down as president and CEO of Brookshire Brothers at the end of April. He continues as a member of the Lufkin, Texas-based grocer’s board of directors, which he first joined in 1997. Johnson assisted Brookshire Brothers in becoming a majority employee-owned company in 1999 and began full-time as chief administrative officer. He served as chairman of the board from 2003-07. Johnson assumed the role of president and CEO in 2007.
John Alston, a 35-year veteran of the company who was COO, succeeded Johnson as president and CEO. Alston also had served the company as store director and district director and as a member of the board.
WinCo Foods Opens Distribution Center in Texas
WinCo Foods opened an 800,000-s.f. distribution center on Feb. 14 in Denton, Texas. The $135 million facility is located at 300 South Western Boulevard. Boise, Idaho-based WinCo opened its first Texas stores in 2014 and now operates nine locations in the state. The new distribution center supports stores in Texas and Oklahoma and also has space to expand another 130,000 s.f. in the future.
WinCo also is building a new store in Carrollton, Texas, that is expected to open in the first quarter of 2018.
WinCo Foods opens first (and second) Oklahoma location
Employee-owned WinCo Foods opened the doors of its new 84,000-s.f. Moore store—the company’s first location in Oklahoma—on May 25. It is staffed by about 200 full- and part-time employees. WinCo’s trademark is a “Wall of Values” at the entrance. The store also offers a full produce section and meat, deli and bakery. WinCo supermarkets also have a 700-plus item bulk foods department with a range of organic and all-natural offerings that include rice varieties, dried beans, pastas, baking ingredients, cereals, snacks, candies and pet foods.
WinCo opened a second Oklahoma store in Midwest City on Aug. 31.
H‑E‑B Surpasses 100,000 ‘Partners’ to Become Largest Privately-Held Employer in Texas
H-E-B now employs more than 100,000 “Partners,” making it the largest privately held employer in Texas and one of the largest privately held retailers in the nation. H-E-B employs more than 90,000 people in 332 Texas stores and more than 10,000 Partners in 56 stores throughout Mexico.
“This milestone represents our deep commitment to improving the lives of Texans and their families, and creating a work environment that brings the spirit of community to life every day while encouraging innovation, engagement and success,” said Craig Boyan, president and COO. “It takes great people to build a great company, and we look forward to providing even more Texans with meaningful career opportunities that bring new experiences, growth and lifelong connections at H-E-B.”
Generous Responses in Hurricane Harvey’s Wake
Hurricane Harvey made landfall Aug. 25 near Rockport, Texas. It was the first major hurricane to make landfall in the U.S. since 2005 and was the wettest tropical hurricane ever in the contiguous U.S., dropping more than 40 inches of rain over some areas of eastern Texas in just four days. The flooding was devastating not only for residents but also for many businesses, including grocery chains. Six of H-E-B’s Houston-area stores were flooded. Five would reopen.
As Hurricane Harvey’s impact was first felt in Texas, H-E-B immediately donated $100,000 toward relief efforts and began accepting customer donations for the families and communities devastated by the storm. H-E-B also administered financial and housing assistance to its employees in Houston who lost their homes.
H-E-B mobilized its Emergency Response Team and dispatched its Disaster Response Units (DRUs) and H-E-B Mobile Kitchens on Aug. 27. H-E-B’s DRUs are fully equipped with an H-E-B Pharmacy and mobile Business Services unit, which allows displaced residents to fill prescriptions, cash checks and pay bills, as well as access to an ATM. The H-E-B Mobile Kitchens are each designed to serve up to 2,500 meals per hour. They were set up and served hot meals to first responders and storm victims.
H-E-B Chairman and CEO Charles Butt made a personal, $5 million contribution to the Justin J. Watt Foundation Houston Flood Relief Fund, which eventually reached a total of more than $37 million from donations.
Other independents also gave big. Among them was Tyler-based Brookshire Grocery Co. (BGC), which shipped 250,000 bottles of water to areas affected by Hurricane Harvey. BGC stores also raised tens of thousands of dollars through coupon scan donations.
Lufkin-based Brookshire Brothers sent truckload after truckload of products to Southeast Texas.
Convenience Store Chains Enter Texas Markets
Iowa-based Yesway acquired 35 Wes-T-Go and Chillerz Convenience Stores in Abilene, Texas. They were added to the company’s existing portfolio of 38 units that operate in Iowa and Kansas.
For the first time in six years, convenience store chain QuikTrip (QT) expanded into a new market—San Antonio and Austin, Texas. The first QT stores in each city are expected to open in summer 2018, the Tulsa, Oklahoma-based company said in late June.