Dive Brief:

• H-E-B opened a 92,000-square-foot, two-story location last week in the Heights neighborhood of Houston, Texas, that has all the “bells and whistles” according to Scott McClelland, company president. Extensive seafood, produce, and dry good offerings, a plethora of organic products, a sushi station, a scratch bakery and a full-service pharmacy are a few amenities on display. The Roastery, a New York café, also set up shop inside, offering tea, fresh doughnuts and salads.
• Well known for customizing its stores to the neighborhoods it serves, H-E-B noted the large number of young professionals and families in the area in deciding to offer curbside delivery, cooking demonstrations and wine tastings, company officials said.
• The Texas-based chain had promised residents that if they voted to repeal regulations prohibiting the sale of beer in wine in the neighborhood, it would replace what was formerly a Fiesta Mart store with the upgraded H-E-B format. The Heights location now boasts an expansive selection with 1,800 bottles of wine and 300 beers to choose from.

Dive Insight:

H-E-B’s Heights store is hoping to attract millennials and young professionals with more than just groceries. The red neon sign out front omits the “I” in Heights to allow users to stand in its place, providing a perfect “Instagrammable” marketing opportunity for the store.

Adding to H-E-B's 300 other stores in Mexico and Texas, the new two-story location is a foodie wonderland where shoppers can lose serious time floating between the in-house ready-made meal options and the scratch bakery after taking in a cooking demonstration or admiring the art installations.

Some may balk at the idea of art installations in grocery stores, but studies have shown that millennials think differently about consumables shopping than their parents’ generation, preferring new experiences and technology in addition to a valuable product assortment. Across the board, goods are less important to the maturing demographic than experiences and its critical that a brand tells a story that will be memorable long after the latest social media post fades. To that end, the new location hosted a Sip + Stroll to engage with the community soon after opening.

The “bells and whistles” location is an unsurprising move for H-E-B, which Eater dubbed “the cultiest cult grocer in America” last year. Similar to fast food chain Chik-fil-A, H-E-B has cultivated a reputation for superior customer service, unique product offerings and happy employees. There’s a strong theme of Texas pride that underscores the brand’s operations, as well, starting with its company ethos: “outfitting Texas families with all they need for Texas lifestyle.” Incentivizing locals to repeal laws prohibiting alcohol sales in exchange for the forward-thinking mega store likely intensified the chain’s connection to the community.

H-E-B appears to be on an upward trajectory overall. In December 2018, it opened its ninth discount store, Joe V’s Smart Shop, in Pasadena, Texas, just months after announcing the acquisition of on-demand delivery company Favor. Prior to that, it broke ground on a 1.6 million-square-foot “super grocery regional warehouse” in San Antonio — its largest warehouse yet — that will begin operations in 2020 and rolled out scan-and-go technology to more of its stores. H-E-B also recently unveiled its twelfth new restaurant concept — a shrimp and crawfish joint called True Texas Boil House — at a Houston store.