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2011 North Texas Profile: Vibrant Market Draws New Retailers, New Ideas

The North Texas retail grocery market continues to be muy caliente. In fact, some may say it is fairly well saturated, as far as traditional supermarkets are concerned. The competition just keeps on coming, and established retailers are opening newer formats at a rapid rate.

Last updated on June 13th, 2024 at 11:55 am

[gn_note color=”#ff3333″] The 2011 North Texas Profile originally ran in the March 2011 edition of The Shelby Report of the Southwest. Due to reader requests we will be posting our Profiles from each edition of The Shelby Report. The profile will be published on theshelbyreport.com one month after it has run in print.[/gn_note]

by Terrie Ellerbee/associate editor

The North Texas retail grocery market continues to be muy caliente.

In fact, some may say it is fairly well saturated, as far as traditional supermarkets are concerned. The competition just keeps on coming, and established retailers are opening newer formats at a rapid rate.

The Kroger Co., which has been in North Texas since 1955, introduced its Fresh Fare concept to the Lone Star State this year, and has opened new Marketplace stores, the most recent in far north Fort Worth, in addition to growing its Signature format count in the state.

Aldi brought its no frills deep discount format to North Texas in 2010. H.E. Butt Grocery Co. (H-E-B) opened its northernmost store in Texas in Burleson last September and construction is under way on another in Granbury. Many prognosticated last year that H-E-B would introduce a new format for the area.

Kroger brought the Marketplace format to North Texas in Frisco in January 2010. The second recently opened this January in Fort Worth, the first major retailer to open in the Alliance corridor, the Star-Telegram reports.

Both stores were new construction and both have fuel centers.

Last summer, Kroger introduced its Fresh Fare concept to the Lone Star State with a store near Texas Christian University. The building was an acquisition from Albertsons. It got a three-month remodel, and when it opened on June 22, the Star-Telegram described it as “a somewhat up-market concept.”

The first Fresh Fare in Texas—but not the last—was designed with the younger TCU demographic as well the more established clientele in Fort Worth in mind, said Gary Huddleston, director of consumer affairs for Kroger. The 48,743-s.f. store offers fresh sushi, 125 cheeses, 400 varieties of beer and a “chef shoppe” that serves breakfast, lunch and dinner items. It offers grab-and-go convenience with prepared food and deli counters close to the entrance. It also features a TCU blend of organic coffee, locally grown produce and organic items in every department.

Lately Kroger has see real growth in natural and organic foods, as well as bulk offerings. Huddleston said they are “almost becoming mainstream today,” and becoming more integrated on store shelves. But Kroger also has a store-within-a-store called Nature’s Market where organic and natural foods as well as specialty, unique and bulk items are showcased.

Huddleston said the pet department also has been a growth area for the chain. The pet aisle in the new Alliance Marketplace store is large.

“We actually have a refrigerated area and a frozen area within the pet aisle,” he said. “It’s unique to sell more gourmet pet foods that are fresh and refrigerated. That’s pretty cool.”

Huddleston told The Shelby Report that North Texas has a lot to offer.

“One, it’s the growth of both of those areas—both the Alliance area of Fort Worth and the Frisco area—and then it’s the availability of land and a quality developer,” Huddleston said.

Huddleston said Kroger plans to open a total of six stores this year in the Dallas-Fort Worth Metroplex area, and that count includes the recently opened Alliance Marketplace. The other five will consist of two new Fresh Fare stores, two new Signature stores and another Marketplace store (in Mansfield). All will be new construction.

The Marketplace concept brings a “market” of goods under one roof, offering jewelry, bed and bath products and furniture along with grocery items. The Signature concept is about half the size of a Marketplace and more emphasis is on grocery offerings.

Natural and organic grocer Sprouts Farmers Market grew it store count when it opened its first Fort Worth store on Jan. 26 at 4650 SW Loop 820, another former Albertsons location. The 30,000-s.f. store also carries natural and organic foods items and has a bulk foods department.

Arizona-based Sprouts sells fresh produce, vitamins and supplements, all natural meats, fresh seafood, bulk foods and an array of natural and organic grocery items. Sprouts opened its first Texas stores in 2005.

Tyler-based Brookshire Grocery Co. is set to debut its “fresh” concept. Fresh by Brookshire’s will open March 10 in Tyler. (See story, page one.)

Albertsons still has a strong presence in North Texas, but recently announced that it is closing stores in Carrollton, Garland, Richardson, Plano and Southlake. After the closings, Albertsons will still operate 54 stores in Dallas-Fort Worth. Liquidation sales began immediately after the Jan. 14 announcement. The stores were expected to close around Feb. 20.

Locations affected are 4025 Old Denton Rd. in Carrollton; 3046 Lavon Dr. in Garland; 111 North Plano Rd. in Richardson; 3513 East Park Blvd. in Plano; and 2201 West Southlake Blvd. in Southlake.

As mentioned previously, H-E-B continues to be the object of speculation in North Texas. At a recent real estate forecast event in Tarrant County (Fort Worth), a speaker said that the San Antonio-based chain is “poised to attack the Metroplex,” according to a Fort Worth Business Press report. The company continues to insist that the Central Market format will be the growth vehicle for the Dallas-Fort Worth Metroplex.

What has fueled the speculation is the completion of the company’s distribution center in Temple. The 450,000-s.f. facility opened last year. It was commonly thought that the chain would bring a new concept to the Metroplex. The grocer did introduce a new format last year called Joe V’s Smart Shop, but the no-frills concept opened in Houston, not North Texas.

H-E-B already has been in North Texas by way of its Central Market concept for several years. Central Market stores are upscale and offer a variety of fresh and prepared food. There are four Central Market stores in the Dallas-Fort Worth area, with two in suburbs Plano and Southlake.

Central Market stores focus on offerings for “foodies.” Central Market Fort Worth opened in 2001. Central Market Dallas opened in 2002, and has the distinction of being the first to offer Kitchen Kit, an international food and recipe station that offers everything needed to make dishes in one place. The Plano store also opened in 2002, and features chair massage services. The Southlake store opened in 2006.

The chain opened its northernmost H-E-B store in the Fort Worth suburb of Burleson last year. The 88,000-s.f. store on John Jones Drive opened Sept. 17 offering customers both H-E-B and Central Market brand products. It also features hand-rolled fresh sushi, a tortilleria, a cooking demonstration area, 400 varieties of cheese, nearly 1,000 wines, a drive-through pharmacy, gas station with car wash and a scratch bakery. It has expanded selections of health food offerings and organic items as well.

The northernmost H-E-B store also has amenities like Cooking Connection and a Showtime Kitchen where culinary experts prepare recipes during interactive cooking demonstrations and shoppers can take cooking classes.

Jeff Thomas, an SVP with the chain’s Central Texas region, told the Fort Worth Star-Telegram that Burleson was a “natural progression” for the growth of its H-E-B stores in North Texas because it is close to stores in Cleburne and Waxahachie.

Meanwhile, H-E-B has an 88,000-s.f. store under construction in Granbury’s Luton Ranch, and it is expected to open in the second quarter of this year.

Craig Boyan, COO and also now president of H-E-B, told a group attending a recent entrepreneurship breakfast event in San Antonio that the company’s hallmark is “restless dissatisfaction.

“We constantly want to make our business better,” he said. He also said that H-E-B is not planning to expand outside of Texas and Mexico, but the goal is “to try to serve everyone in Texas.”

Aldi, which also opened a distribution center in North Texas, in Denton, didn’t allow room for any speculation. Aldi ventured into Texas in 2010, opening a total of 29 stores in North Texas. The deep discounter began opening stores in March 2010 after completing the $50 million, 500,000-s.f. distribution center in Denton. In all, Aldi planned to invest more than $150 million in the Texas market. The latest two stores opened last July in Duncanville and Saginaw.

Supervalu’s Save-A-Lot, another hard discount format, expanded in Texas last year, too, opening nine stores. Another six locations in the Houston area also became co-branded Save-A-Lot El Ahorro (saving) stores, the result of collaboration with established Hispanic operator Rafael Ortega.

“Depending on the source, approximately 45 percent of Texas households make less than $40,000,” said Mike Stout, Save-A-Lot director of new business. “Population has grown steadily in Texas with an increasing minority population. Today 50.2 percent of Texas population is now ‘majority-minority.’ These statistics bode well with our target consumer and we certainly have plenty of room to grow in the state.”

Most of the existing 40 Save-A-Lot stores in Texas are in the Dallas/Fort Worth, east Texas and Houston areas. More openings are planned this year as the most aggressive expansion plan in the company’s history continues.

California-based Safeway added to its North Texas presence last year when it opened a new Tom Thumb store in Rockwall May 5. The Lifestyle format used for the new store emphasizes customer services and offers more specialty items and prepared foods.

In late 2005, Safeway closed nine Tom Thumb stores in the Dallas area and began remodeling its existing stores there. In July 2010, the chain closed the original and only Simon David store left in Dallas. The two-story, 35,000-s.f. store was leveled to make way for a new one-story, 42,000-s.f. Tom Thumb store. The new store opened in November and features free Wi-Fi, a Starbucks and sushi.

There has been an executive change since The Shelby Report last profiled North Texas. Tom Schwilke, who was president of Safeway’s Texas division, moved to the corporate office as merchandising president and general manager of perishables. Paul McTavish took over the role of Texas division president in May 2010. He had been VP of retail marketing execution for the company’s Denver division.

Walmart, of course, is ever-present, though it has not been opening stores in Texas like its competitors. The most recent activity occurred last October.

Stout told The Shelby Report that Walmart is feeling the impact from extreme value, edited assortment chains like Save-A-Lot, Aldi and even Dollar General and Family Dollar.

“It will be interesting to see if the consumer will be responsive and if Walmart will be satisfied with less general merchandise sales and services,” Stout said.

Walmart’s most recent work in North Texas included remodels in Mansfield, Mesquite and the Fort Worth suburb of North Richland Hills. They were completed last fall. New Walmart Supercenter stores opened in Benbrook, also a Fort Worth suburb, and in Denton. The 203,000-s.f. Benbrook store and the 188,180-s.f. Denton store both opened on Oct. 13 last year.

Wet/dry initiative passes in Dallas

Dallas-area retailers are getting a boost from the passage of Propositions 1 and 2 last November. Grocery stores and gas stations in some Dallas counties that were dry now may sell beer and wine.

Tom Thumb, for example, with 63 Dallas-area stores, began selling beer and wine on Jan. 21 at its Snider Plaza location where before it had been prohibited.

Kroger’s Huddleston was instrumental in making that change happen. He served as chairman of Keep the Dollar in Dallas (formerly Progress Dallas), a group formed to petition for the change. They gathered more than 217,000 signatures for the petition. Only 67,000 were required.

Huddleston said the change has been good for the city of Dallas, good for the customer, and good for the company. He continues to work on getting dry areas to allow the sales of beer and wine.

“We actually just finished a petition drive for the city of Mesquite, which is a little southeast of Dallas,” he said. “That issue, beer and wine in supermarkets, will now be on the ballot in May. We have three stores in Mesquite. That would leave just a couple of stores for us around the Metroplex that still do not have the ability to sell beer and wine.”

Population and job growth add to appeal of North Texas market

Texas has four cities in the “10 from 2010” list from Gadberry Group. The Little Rock-based demographics research firm lists the most notable high-growth areas in the U.S. each year.

Gadberry looked at new households and included other data as well. The second and third on the “10 from 2010” list are Haslet and Keller, both Fort Worth suburbs, while Frisco, a Dallas suburb, came in sixth. (The No. 1 spot went to Katy, a Houston suburb, meaning it is the fastest-growing area in the U.S.)

The firm said the 10 cities on the list had average household growth of 150 percent from 2000 to 2010. Haslet had the top overall fastest growth rate—at 735 percent. Gadberry reports that the city has 300 millionaires and an average household income of $87,140. Its Hispanic community grew almost 20 times to 1,376 households.

Keller added 25,028 households since 2000, an increase of 226 percent for the decade that just ended. Its average household income was $100,607, with more than 3,200 households having income greater than $200,000. In Keller, the Asian community grew 635 percent over the decade, according to Gadberry.

Frisco grew 5 percent since 2009, and had an average household income of $94,802. Among ethnic groups living in Frisco, people from India make up the largest at more than 1,000 households.

This population growth has not been lost on grocery retailers.

“Over the last 10 years, over 1.2 million people have moved into the North Texas area,” Huddleston said. “From 2009 to 2010, about 150,000 new people came to the North Texas area.”

Demand for apartments in the Dallas-Fort Worth metro area soared in 2010, according to the firm MPF Research. The Dallas Business Journal reports that demand was at a 10-year high at 23,470 apartments.

New apartments are rapidly going up in the Dallas-Fort Worth area. A total of 10,753 units were built in 2010—more than anywhere else in the country. Construction is under way on nearly 4,000 more units.

In fact, the Dallas Business Journal reports that homebuilding increased 12 percent in North Texas in 2010. Builders started 16,843 homes in the region in 2010 and closed on 15,275. Frisco, McKinney and Little Elm, all in North Texas, had the biggest increase in new home starts last year.

Texas construction companies predict that they would hire more workers than they laid off this year, reports the Houston Business Journal. The Associated General Contractors of America and Navigant survey showed that 28 percent of construction companies plan to hire more workers, while 21 percent said they would decrease their workforce.

Commercial real estate activity looks good, too—thanks to grocery retailers. Dallas-Fort Worth area shopping centers anchored by a strong grocery store had an occupancy rate of 86.1 percent in 2010, up from 85 percent a year earlier.

The Dallas Business Journal reports that retailers driving the growth include Kroger, Tom Thumb, Aldi, Whole Foods, H-E-B and Walmart.

As for jobs, manufacturing activity is expected to take off in 2011. The San Antonio Business Journal reports that the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey results show that the index for new orders has reached its highest level since 2005. More than half of manufacturers surveyed expect increases in order volumes in the next six months.

Texas’ December 2010 unemployment rate was 8.3 percent, an increase from 8.2 percent in November. But North Texas metro areas are seeing their jobless rates fall.

The Dallas-Fort Worth-Arlington area registered an unemployment rate of 7.9 percent, down from 8.2 percent in November.

The Dallas-Plano-Irving unemployment rate was 8 percent in December, down from 8.3 percent. The Fort Worth-Arlington jobless rate was 7.9 percent, down from 8.2 percent in November.

About the author

Shelby Team

The Shelby Report delivers complete grocery news and supermarket insights nationwide through the distribution of five monthly regional print and digital editions. Serving the retail food trade since 1967, The Shelby Report is “Region Wise. Nationwide.”

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