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As North Texas Grows, Grocery Industry ‘Very Competitive’

photo of Gary Huddleston, grocery industry consultant for the TRA.
Gary Huddleston

When looking at northern Texas – and specifically the Dallas-Fort Worth Metroplex – it is important to note it is a region that spans more than 9,000 miles. Depending on the source and direction viewed, North Texas is either teeming with retail grocery options or in desperate need of them. 

Take Dallas, for instance. To the naked eye there appears to be no shortage of grocery stores, but a closer look reveals many are clustered downtown and in northern Dallas, while areas such as the city’s south and east ends much less so. Some figures show half a million Dallas residents live in food desserts.

People moving in

The area has seen a large influx of new residents moving from other states in the past two years. Along with that, there has been an uptick in retailers coming in. 

In fact, the population of North Texas has grown to more than 8 million. Recent estimates show 200 new families are moving to the area every week.

Gary Huddleston, a grocery industry consultant for the Texas Retailers Association, summarizes the market in two words – “very competitive.”

“North Texas has some of the best grocery operators in the industry, with a number of different formats for customers to choose from, including full-service grocery stores, membership warehouse clubs, mass merchants, specialty and home delivery,” he said.

In response to this growth, more grocers are opening new locations. Home delivery facilities are being built as well.

“The potential for these grocers seeing an increase in sales is very good due to the average income levels of the new residents moving here,” Huddleston said. 

While such a change in type and size of population could paralyze some regions, Huddleston said North Texas grocers are handling it with ease. He described the region as very diverse in the metro areas as well as rural neighborhoods.

“It’s been a very busy time in North Texas, and our retailers have risen to the occasion. Grocers throughout the region are doing an excellent job merchandising to a diverse population,” Huddleston said. 

Among the ways grocers here are growing their business are through private label programs and focusing on perishables. “Interest in store brands has grown since the pandemic and remain high. Sales are up some 10 percent right now,” Huddleston said. 

Retailers also are adding unique departments to drive sales. Sushi has become popular, he pointed out. “Grocers are also expanding their deli sections to include more in-store dining options, as well as restaurant style products to take home to heat and eat.”

Attracting new entrants

According to The Shelby Report, the first Joe V’s Smart Shop is set to open in the DFW area this summer. The innovative value-price format run by H-E-B is the first of its kind in the South Dallas market. The company has announced plans to open a second store in 2025 in East Dallas. 

Joe V’s Smart Shops are typically smaller than the average H-E-B – the South Dallas store is 55,000 square feet – and will carry many of its parent company’s store brands. Assortment is expected to be a combination of “uniquely curated community focused products and the high-quality, fresh products H-E-B is known for.”

Leveraging the buying power of H-E-B, Joe V’s offers low pricing throughout the store. But unlike most budget-based grocers, the emphasis is on perishables. A typical Joe V’s features a variety of fresh in-store cut meat, chicken and seafood, including $20 bundle boxes and Texas-sized club packs. 

The store will have an expansive assortment of Latino cheeses, a Sushiya offering handmade sushi selections made in-store daily and an Asian grill with rice bowls and teriyaki. There will also be ready-to-bake pizza, a large produce section and bakery featuring freshly made tortillas, bolillos, pastries and breads.

The company is in the process of hiring 200 employees.

A Tom Thumb is also slated to open in South Dallas by next year. The full-service grocery store is expected to have a ­pharmacy and offer online shopping and delivery services. 

The Dallas City Council awarded Albertsons, the parent company of Tom Thumb, an incentive package to support the development of a supermarket in the RedBird area in South Dallas, which has been defined as a food desert, much like its East Dallas neighbor.

RedBird residents currently drive several miles for groceries. The plan calls for a 50,000-square-foot store to be built at Camp Wisdom and Westmoreland roads, across from a new luxury apartment complex. 

Community leaders said the store, which is expected to create more than 90 permanent jobs, represents a “significant improvement for their community to have a grocery store and new employment opportunity for residents.” 

Regional challenges

With the number of grocers increasing in North Texas, some companies are struggling to attract and retain help. Fierce competition for workers, combined with escalating costs of employment, are pushing grocers to think out of the box.

“Grocers are in competition with restaurants, fast food establishments and other types of retailers for good quality employees,” Huddleston said. “At the same time, the cost of employment has risen due to labor costs, health insurance premiums and payroll taxes.”

Add in inflation and it’s easy to see how retailers in this region and throughout the country are up against some key challenges, he added.

“Inflation has hit every category in the store. Supplies like bags and packaging, plus electricity, maintenance, insurance, rent, credit card fees, technology, and distribution costs have all risen. In this low profit industry, grocers must balance the rising costs of products with pricing to compete in this market.” 

However, Texas does have an advantage over other parts of the country in that there are several major manufacturers based there, including Blue Bell, Frito-Lay, Dean Foods and Pioneer, among others. 

In addition, numerous types of produce are grown in Texas, which helps to moderate fruit and vegetable pricing. Another positive is the Port of Houston, where a large amount of fresh produce and other food products arrive from Central and South America. 

“All of these factors result in reduced transportation costs for retailers in our area,” Huddleston said.

Rising cost of theft

Also included in the cost of doing business in North Texas is the impact organized retail grocery crime has had on retailers’ bottom lines. In 2023, Texas recorded a $5.9 billion loss from ORC. 

“Every retailer is working on the prevention, apprehension and conviction of organized crime. The losses from ORC are formidable,” Huddleston said. “This is measured not only in the ‘shrink’ from the theft but also the cost associated with prevention and apprehension, such as cameras, wages for additional security, etc.”

TRA was a leader in the establishment of two organized retail crime task forces in Texas. One is housed within the Department of Public Safety and the other in the State Comptroller’s office.

In addition, TRA along with the Texas Organized Retail Crime Association, has developed partnerships between retailers, law enforcement and district attorney offices to share best practices and information on criminal theft.  

Investing in technology, training, services

With a competitive market, rapidly growing population and no shortage of job prospects for employees, North Texas grocers are investing in technological advancements in stores and facilities.

Huddleston said most of the major grocers have large distribution centers in the state, and the smaller grocers buy from several regional distribution centers. These DCs, he noted, have invested in robotics to maximize efficiency and accuracy. 

“Self-checkouts are helping to improve the customer experience and enable grocers to reallocate staff to the shelf/backroom management, stocking and selecting products for pickup,” he said.

In addition, several grocers operating in the region are developing apps that aid shoppers in finding products and offer special pricing. 

“Many of our retailers are also pairing their loyalty programs with fuel discounts, which is very popular with customers right now,” Huddleston said. “Fewer retailers are using paper coupons in favor of e-coupons which is more efficient and cost friendly.

“We also see retailers driving customer traffic to their websites, and more grocers are offering online ordering, curbside and home delivery, all of which have gained sales each year.

“The future of retailing is bright in our state and the Texas Retailers Association is poised to support the growth across the grocery industry.”

Read more association news from The Shelby Report.

About the author

Carol Radice

Senior Content Creator

Carol joins The Shelby Report with more than 25 years writing for B2B magazines that cover the drugstore and supermarket industries. A Rutgers graduate, she earned her B.A. degree in journalism and mass communications more years ago than she cares to admit. She is thrilled to be working with such an accomplished team and to share her knowledge of the industry with Shelby’s readers.

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