Last updated on August 16th, 2012 at 12:08 pm[gn_note color=”#ff3333″] The 2011 Texas Roundup originally ran in the November 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 eyes of the nation are upon the Lone Star State because of Texas Gov. Rick Perry’s high-profile campaign for the Republican nomination for president of the United States.
Media from all corners are looking at how the state has created so many jobs during and since the recession, and, as the writer Gregg Easterbrook has said, they have tortured the numbers enough to have them confess to anything.
The “Texas Model” of economic development is low taxes, fiscal restraint and regulatory reform. There is no state income tax. Texas offers a lower cost of living and a younger workforce than many other states.
The state has produced 48 percent of net jobs created in the U.S. since the recovery began, according to the Federal Reserve Bank of Dallas. Texas gained 253,200 jobs since last August alone.
Many of those jobs exist because of the state’s natural resources, including oil and natural gas. When energy prices rose, Texas benefited.
But significant job increases also have occurred in professional and business services and the hospitality industry as well as in trade, transportation and utilities.
Texas gained 22,600 retail jobs in the past five years, according to On Numbers, a feature of American City Business Journals. That made the state a standout in this arena, too, as only five other states gained retail jobs—none more than 1,500.
Thanks to regulations put in place in the 1980s and 1990s after the savings and loan crisis, Texas avoided the subprime housing bust, which meant it didn’t lose as many jobs during the recession as other states either.
The state’s economy is the second largest in the country behind California. Its gross state product surpassed $1.2 trillion over the last decade. There are several other states that had larger increases in gross state product for the same period. Texas places 11th with 26.8 percent growth. In contrast, Wyoming’s gross state product grew 48.7 percent, and North Dakota’s grew by 47.1 percent since 2000; both those states also have benefited from their energy resources.
Texas is the darling of business publications like Forbes, which named Austin the No. 1 top-performing town in the U.S. The “economic superstar” has a demographic edge, according to Forbes. High rates of immigration and the migration of educated workers (many from northern Mexico) increased the population and the number of children in the state.
In addition, Forbes’ “future boom towns” include several Texas cities: San Antonio at No. 4; Houston No. 5 and Dallas No. 7.
Increasingly diverse population to reach 38 million
A Texas real estate broker describes Dallas-Fort Worth as “the most competitive urban grocery market in Texas retail.”
Jesus Araiza, founder and principal of Armada Commercial Real Estate, said the increasingly diverse population is driving the change.
Population is a considerable influence on the retail grocery industry as well as the state’s overall economic success. The population of Texas grew more than 20 percent from 2000 to 2010, according to the U.S. Census Bureau.
American City Business Journals, which is the parent company of publications such as the Dallas Business Journal, predicts that come New Year’s Day 2012, the population of the country’s second-most populous state (California is first) will be 26 million. While there are counties in the state with large Asian communities, approximately 9.5 million Texas residents identified themselves as Hispanic on 2010 U.S. Census forms. Nine Texas counties are among the 40 most diverse in the country according to analysis by USA Today.
Retail and wholesale grocery companies have worked to meet the needs of this growing segment.
Randy Arceneaux, president and CEO of Affiliated Foods Inc. in Amarillo, which services nearly 800 member-owned stores in seven states, told The Shelby Report, “60 percent of our end users at our retail stores, they are Hispanic shoppers, and they still cook at home. That has helped us hold that consumer at the grocery stores buying groceries.
“We cater to the specific needs of those Hispanic customers in meat and produce,” he said. But understanding the generational difference among Hispanics is important, too.
“We all think that they have to have specialty grocery items,” Arceneaux said. “There is some of that, but as the second, third, fourth and fifth generation Hispanic comes up in the marketplace, they buy Americanized products. They are getting more accustomed to buying American-type products.”
And Hispanic consumers like traditional brands, Arceneaux said.
“They are very brand loyal, not only to Mexico-branded products, but to American products like the Del Montes or Gain detergents of the world,” he said.
State unemployment rate increases
The unemployment rate in the Lone Star State has increased 4.1 percent over the last four years. In August 2007, the jobless rate was 4.4 percent. By August 2009, it had risen to 7.9 percent.
In August this year the unemployment rate reached 8.5 percent, its highest level since 1987. It has increased steadily since May, when it was 8 percent. In June it was 8.2 percent and in July 8.4 percent.
Though Texas has been ahead of the pack in overall recent job creation, when compared to all states, its unemployment rate is in the middle. The state’s August jobless rate of 8.5 percent ranks it 27th in the country, according to the Bureau of Labor Statistics, tied with Colorado. Oklahoma (No. 5), New Mexico (No. 11) and Arkansas (No. 26) all had better employment numbers in August than Texas.
H-E-B puts education, reading in the spotlight
The fiscal restraints in the Texas economic model have included cuts in state spending. This year, Gov. Perry cut $4 billion in education funding. Each district faced a 6 percent cut, and state colleges and universities had their budgets trimmed by 9 percent, according to the National Education Association.
The chairman and CEO of H-E-B, a privately held San Antonio-based retail grocery chain, wrote an open letter that was published in the Houston Chronicle pleading with Gov. Perry to reconsider the cut in public school funding. H-E-B has been operating in the state since 1905. All of its more than 329 stores are in Texas.
The Houston Chronicle published the letter in June. It stated, in part, “As business people investing annually we are worried about the state’s future if we start cutting education funding—lower per capita income and higher crime rates are almost certain to result. An educated workforce is essential to all industries.”
The letter to the editor cites statistics compiled by the Financial Times, which placed Texas 44th out of the 50 states in funding per student and dubbed it “one of the most under-funded—and needy—education systems in the U.S.”
“Let’s move forward (as Texas always has), not back,” the letter states. “This isn’t about political parties or national issues; it’s about the future of Texas.”
But H-E-B is waiting for an answer. The Texas retail grocery chain has added children’s reading centers to some of its stores as part of its Read 3 campaign, which is the brainchild of Charles Butt. The campaign launched Sept. 6, and is designed to educate parents and caregivers about the importance of reading to children a minimum of three times per week.
H-E-B plans to open literacy centers in 10 of its stores. Two already have opened: one in Tomball and the other in Laredo. The rest, to be located in Brownsville, Corpus Christi, Del Rio, Eagle Pass, Kingsville, Mission, San Angelo, San Antonio and Uvalde, should open this fall.
H-E-B held a two-week celebration during which customers could learn how to turn a shopping trip into a learning opportunity for their children. Activities included in-store scavenger hunts,
H-E-Buddy story time and the launch of the H-E-Buddy Book of the Month Club. Each month the selected book will be offered at H-E-B for 40 percent off its regular price. Children earn points and rewards for reading and participating in the book club.
H-E-B also offered free books with the purchase of certain products, or vice-versa—a free products with the purchase of a book.
In addition, H-E-B’s community outreach includes a partnership with the Brownsville Independent School District (BISD), the University of Texas at Brownsville and local nonprofit organizations. During a six-week program on eight BISD campuses, instructional classes were offered for parents and children about nutrition and literacy. H-E-B provided the funding for creation of the curriculum and the program materials. Participating families got free books, a small bookshelf, a recipe box, a library card and referral to additional support services.
After the pilot program is evaluated, H-E-B hopes to expand it into other communities it serves.
H-E-B expands its retail presence
H-E-B expanded its retail presence in Texas this year. Just since mid-August, the San Antonio-based grocery company opened four stores under various banners, broke ground for another and acquired three stores from another retailer.
A new H-E-B opened in Sugar Land on Sept. 14. The 109,000-s.f. store focuses on fresh foods, including organic produce and meats, and also offers baked goods, 1,000 types of wine and a large variety of ethnic foods for the large Hispanic and Asian populations in the area. The store features a fuel station and car wash as well as a community room available for public use.
The store employs 375 “partners.”
H-E-B opened its third Houston area Joe V’s Smart Shop on Aug. 31 at 6433 W. 43rd.
The first Joe V’s opened in May of last year on Antoine Drive and the second is located on Uvalde Road.
Joe V’s Smart Shop stores carry a limited assortment of about 6,500 items, including grocery, meat, produce, drug and bakery as well as personal care and pet items. Customers pay via the iCash system—a system first introduced in the U.S. at Joe V’s Smart Shop. The iCash system frees checkers from handling customers’ money directly, which improves the speed of checkout.
Joe V’s Smart Shop stores accept cash, debit, WIC and SNAP benefits. Customers also bag their own groceries.
A fourth Joe V’s Smart Shop is scheduled to open in November at Victory and North Shepherd in Houston.
Also on Aug. 31, H-E-B’s North Woodlands Market opened at 3601 FM 1488 in the Village of Alden Bridge. The 104,000-s.f. store features full-service meat, seafood, produce and deli departments, a cheese shop, bakery, floral department, rice popper, guacamole bar and a “Café on the Run” prepared food section.
Non-food highlights include more than 1,000 varieties of the world’s best wines; a wide selection of general merchandise and seasonal items; and a “Texas Front Porch” area with décor items, potting soil and ceramics and a community room.
The store also offers an in-store coffee-roasting station, a fuel station and car wash, business center services like bill pay and Western Union and an expanded selection of cosmetics.
Produce experts provide samples of fresh fruits and vegetables while seafood experts, artisan cake decorators and certified, trained meat specialists are on hand to assist customers. The store employs more than 400 people.
On Sept. 9, the H-E-B in Granbury opened at 3804 U.S. Hwy. 377. The store features a business center and Cooking Connection, where chefs prepare a variety of recipes every day. It also has a cheese shop, deli, bakery, pharmacy and fuel station.
H-E-B revealed Aug. 19 that it acquired three Albertsons stores located in College Station, Kerrville and New Braunfels. Albertsons was to close all three locations in October (after press time).
The Kerrville store is located at 313 Sidney Baker South. H-E-B has committed $4.5 million as an overall investment to expand the store’s parking lot and retrofit the store. The Kerrville location will be converted to an H-E-B, the second in the community. The remodel of the 49,000-s.f. store was expected to be complete in mid-November.
H-E-B was founded in Kerrville in 1905.
In New Braunfels and College Station, H-E-B opened brand new stores in July and September 2010, respectively. As such, the acquired Albertsons locations in those communities will not be converted into H-E-B stores, but instead be made available for lease. H-E-B aims to attract new retailers and jobs to the area with the available space. Those Albertsons are located at 615 E. University Dr. in College Station and 955 N. Walnut in New Braunfels.
An H-E-B Plus! is scheduled to open in mid-November at Ridge Road and Cage Boulevard in Pharr. The 116,000-s.f. store will replace an older H-E-B on the south side of U.S. 83 at I Road.
H-E-B broke ground on a new store at the corner of Church Street and Sarah DeWitt Drive on Aug. 17 in Gonzales. The new 53,00-s.f. store will feature a deli, bakery and pharmacy as well as an expanded general merchandise selection. It also will have a fuel station and a pharmacy with drive-through.
A new, Latino-focused store is planned in San Antonio at the former site of The International Common Market of Houston at U.S. 59 and Little York.
Mi Tienda (“my store”) stores feature a panaderia offering pan dulce, flan, tres leches and other desserts; a tortilleria; and a carneceria with marinated cuts of chicken, beef and pork. These stores have décor reminiscent of a Mexican village.
H-E-B is planning a first-of-its kind green store in Austin. The 75,000-s.f. H-E-B will feature high efficiency air conditioning, refrigeration and lighting systems. Sensors will brighten and dim lights as needed throughout the day, and ceilings and walls will have beefed-up insulation.
Measures to conserve water, according to the paper, include low-flow sinks and toilets. Landscaping will feature drought-resistant plants, and sprinklers will use reclaimed water.
The goal, H-E-B told the American-Statesman, will be to qualify for Austin Energy’s Green Building program an—at a minimum—a silver Leadership in Energy and Environmental Design rating from the U.S. Green Building Council. Work is expected to begin late next year and the store is scheduled to open in 2013.
H-E-B also completed a number of remodels this year, including one at a nearly 60-year-old location in Allandale, an Abilene location that got a $1.3 million makeover and a comprehensive project at the H-E-B in Seguin.
Brookshire Grocery Co. gets ‘Fresh’
Tyler-based Brookshire Grocery Co. opened Fresh by Brookshire’s, its newest concept, on March 10 this year.
Fresh has as many as 100 fresh food offerings a day—all prepared daily on site—with selections from gourmet comfort food to a full burrito and taco bar, a sandwich bar, a soup and salad bar and an outdoor grill.
The 55,000-s.f. Fresh by Brookshire’s store also features a coffee and gelato bar, an artisan bakery, organic foods, gluten-free foods, bulk foods and expanded healthy living items.
In addition, it has a pharmacy, a bank and the more traditional grocery items and staples.
The LEED-qualified store features LED technology; an integrated control system for heating, ventilation and air conditioning; and controls that will monitor lighting levels. Approximately 60 percent of the building value is recycled content, including brick from the original Brookshire Grocery Co. store in downtown Tyler.
The roof has a white surface that produces approximately 80 percent solar reflectance.
The opening of Fresh by Brookshire’s is the latest in the company’s ongoing innovations to cater to changing consumer behavior.
Brookshire’s launched the Nu-Val program, a nutritional scoring system for food products, in its stores last summer.
In August, BGC re-launched its Thank You Card loyalty program, and a “Thanks A Million Collect & Win Game,” with two chances for customers to win $1 million.
Operationally, (BGC) implemented a program called STARS, for Saving Time and Resources Systematically. Its aim is to standardize processes throughout all the stores in the company.
On March 9, Brookshire Grocery Co. cut the ribbon on a new store in Bridgeport, 45 miles northwest of Fort Worth. The 37,200-s.f. store boasts an eight-pump fuel center offering unleaded gasoline and diesel and a pharmacy with a drive-through window.
The store provides grocery, produce, perishable and frozen foods, and meat and seafood departments, as well as a bakery, deli and floral department.
United Supermarkets opens first c-store
United Supermarkets officially entered the convenience market with the ribbon cutting of its first United Express location at the southeast corner of 4th Street and Milwaukee Avenue in Lubbock on May 4.
The location includes a six-pump fuel station and features fresh offerings along with the traditional items one would expect to find at a convenience store.
It is, generally, a new concept for the company, the fourth phase of the company’s growth in the fuel/convenience business since it opened its first fuel station in 1997.
The new store differs from A Taste of Market Street in that it is a stand-alone convenience store.
All three existing Taste of Market Street locations operate on the same property with full-size Market Street stores—at 98th & Quaker in Lubbock, as well as Frisco and Coppell. At 3,100 s.f., United Express is more than twice the size of A Taste of Market Street across town in Lubbock.
Whole Foods opens ‘greenest’ store
On June 22, Whole Foods Market opened a 40,450-s.f. store in Montrose on the corner of Waugh and West Dallas.
The store offers expanded specialty sections and The Bayou Bar, a wine bar with a sit-down counter that includes 12 beverages on tap.
It is Whole Foods’ “greenest” store in the Houston market. Rainwater is collected off the roof to be used later for irrigating the grounds. Old apple crates and other reclaimed wood are used as wall coverings. And when sensors detect enough daylight is shining through the ceiling’s 48 skylights, the electric lights are dimmed.
Other green features include two electric car-charging stations, a bike station with screwdrivers, wrenches and an air pump for small repairs, LED lighting throughout the store and parking lot, recycled glass used in the floors of the wine section and a secondary cooling system where water circulates through a rooftop cooling tower to help cool the refrigeration cases.
Meanwhile, the opening date for a new Whole Foods store in Southwest Austin has been pushed back from the fall of 2011 to the summer of 2012, company officials told the American-Statesman.
The store in the Shops at Arbor Trails at South MoPac Boulevard (Loop 1) and William Cannon Drive was originally set to open this fall. The store is now scheduled to open next summer, along with another new Whole Foods in the Hill Country Galleria in Bee Cave.
Whole Foods plans to open a third new store at Endeavor Real Estate Group’s Domain development at Burnet Road and North MoPac Boulevard. Construction on the 55,000-s.f. Whole Foods began in late August and is expected to open in March 2013.
Kroger opens Marketplace stores
Kroger is expanding across the state. Up in the Dallas-Fort Worth metroplex, The Kroger Co. opened its 47th Marketplace store in the country in Alliance.
The 123,000-s.f. Kroger Marketplace store, which opened in January, is located off Heritage Trail and I-35W. The store offers furniture and jewelry as well as large selections of produce, deli items, organic products, wine and beer.
An 80,000-s.f. Signature store is planned for The Shops at Timberland Crossing development at Timberland Boulevard and Alta Vista Road, about six miles from the new Marketplace in Alliance Town Center.
The Kroger Co. also is building the first Fresh Fare in Dallas in a shopping center called Cityville at Cityplace at N. Haskell and Capitol Avenue. The 60,786-s.f. Fresh Fare store is scheduled for completion in summer 2012.
Fresh Fare will feature a variety of regionally grown fruits and vegetables and other grocery products, including international and specialty items, and premium-cut meats and exotic seafood.
A broad assortment of natural, bulk, organic, soy, vegetarian and wheat-, lactose- and gluten-free products will be available.
The store also will have an executive chef who will prepare meals daily for the bistro and chef shop. A pastry chef will create gourmet sweets, and the store will offer fresh sushi prepared by a skilled sushi chef. An impressive variety of wine as well as import, craft and specialty beers will be stocked.
Kroger announced its intent to invest in Houston earlier this year, too. Beside a new Marketplace store in Willis, the retailer planned to complete five major and six minor remodels on well-performing stores in the Houston area.
The Willis Marketplace is the third of its kind in the Houston area.
Marketplace stores feature home decor and home furnishings, jewelry, bed and bath products and toys in addition to traditional grocery offerings.
The five Houston-area stores getting major remodels this year include locations at 7747 Kirby Dr. at South Main; 3300 Montrose Blvd. at Lovett; 10306 S. Post Oak at W. Bellfort; 6616 FM 1488, Magnolia; and 1550 Grand Pkwy. at Bayhill, Katy.
These stores are getting new decor, including new color schemes and signs, stained concrete floors to replace tile and new frozen food and perishables cases.
The Willis store brought Kroger’s store count in the area to 100.
Retailers try new markets, formats
Phoenix-based Sprouts Farmers Market opened its first Fort Worth location in January.
The 30,000-s.f. store occupies part of a building that was an Albertsons. The natural and organic grocer’s 11th north Texas store opened Aug. 17 in Carrollton. Sprouts Farmers Market has two dozen locations in the state.
RLS Supermarkets LLC bought the last batch of Minyard Food Stores, once a local chain of 80 supermarkets.
The San Angelo-based company purchased 10 stores. Five stores are in southern and East Dallas, and there’s one each in Balch Springs, Fort Worth, Irving, Lancaster and Mesquite.
Garland-based El Rancho, a family-owned grocery chain, leased a former Minyard store at 1212 N. Beach St. for its first Fort Worth location.
Oklahoma City-based HAC Inc., parent company of Homeland Stores, acquired Super Save Foods in River Oaks, Sanger, Justin and Weatherford.
HAC, an independent subsidiary of Kansas-based Associated Wholesale Grocers, will keep the Super Save banner on the stores and make no personnel changes.
Jamail’s Fresh Market will open in 2012 in Horseshoe Bay.
Work on the 15,800-s.f. store started in August and should be complete by late spring 2012.