H-E-B begins construction on its largest supply warehouse to date

Dive Brief:

H-E-B recently broke ground on a 1.6 million square foot “super grocery regional warehouse” that will be the grocer’s largest supply facility yet, according to a company press release. The warehouse is located on an 871-acre site on the east side of San Antonio, Texas.
The super warehouse will expand H-E-B operations and help it better serve its customers, the company stated. The facility will have a capacity for 170,000 items and up to 180 trailer loads per day, according to Carson Landsgard, H-E-B’s senior vice president for supply chain and logistics.
San Antonio’s city council will waive as much as $1.5 million in city and utility fees for the project. Construction is expected to be completed in 2019 and operations will begin in 2020. The new facility will employ around 600 people, including existing employees and new hires.

Dive Insight:

H-E-B's regional warehouse is a much-needed facility that the retailer will use to support its continued growth and additional volume, while also taking pressure off of two other nearby warehouses that need to be retrofitted, according to the Rivard Report, a local news site. H-E-B appears to have the sales and customer demand in place to make this building a necessity, rather than the facility being built in anticipation of future growth.

“As San Antonio grows, we’ve been honored to grow with it, expanding our footprint of stores and digital retail offerings to serve more Texans. More than anything, the construction of our newest warehouse facility supports H-E-B’s future and ongoing commitment to be the best in-store and digital retailer in Texas,” said Landsgard in a press release.

The new warehouse, which is said to cost about $130 million, is the grocer’s largest investment ever and a significant bet on its continued growth. H-E-B has been serious about expanding this year, announcing a new digital headquarters in Austin, opening a Central Market in Dallas and piloting frictionless checkout. Last year, the grocer also announced plans to build a 46,000 square foot snack manufacturing plant in Houston, Texas, which is expected to open sometime next year.

At this point, the expanded distribution capabilities will be a more obvious benefit to H-E-B shoppers in the San Antonio area. This could mean faster online order fulfillment and a better array of products in-store to keep the grocer competitive in San Antonio, which is home to a vast number of grocery stores including fan favorites such as Sprouts Farmers Market, Trader Joe’s and Whole Foods.

The new facility may also give H-E-B the space to pilot new technologies or streamline operations, serving as a testing ground for other possible warehouses in locations such as in Houston and Dallas. While the grocer has not announced plans to open additional super warehouses, over the summer H-E-B did share plans to convert an underperforming store in Houston into its first e-commerce fulfillment center in the area. It may just be a matter of time before more regional warehouse plans come to light.

Clearly H-E-B is in growth mode, both in terms of its physical footprint and its e-commerce capabilities, and it continues to find ways to differentiate itself in the increasingly crowded and innovative Texas grocery market.