US: Wal-Mart studies HEB for lesson in ‘fresh’

Wal-Mart can do grocery home delivery as well as any retailer given its successful model used by ASDA in the United Kingdom, but it’s looking closely at Texas-based HEB for a tutorial on “fresh," according to Jack Sinclair, executive vice president of the grocery division at Walmart U.S.

Last week Sinclair told a group of analysts attending the retailer’s annual investor meeting that “HEB is the best food retailer in the world, particularly on fresh.” He said Wal-Mart opened an office in San Antonio to work with HEB vendors to learn how to do fresh better, specifically meat and produce. At the time, he said “people still want to feel their apples before buying them,” which is why he believes mainstream grocery delivery in the U.S. in still years away. At the same meeting Wal-Mart said it was expanding its test on grocery home delivery into the Denver market, adding to the ongoing tests in San Francisco.

The retailer’s bigger initiative is in trying to convince the American shopper it can do “fresh” as good as anyone and at a better price. With that, Wal-Mart has set its sights on HEB, the nation’s 13th largest retailer in food and beverage sales, according to Retail Net Group.

HEB is a full-service grocer with annual sales of $13.7 billion, roughly 10% of Wal-Mart’s food and beverage sales last year. The supermarket chain operates 350 stores in Texas and Northern Mexico, under the banners HEB and its upscale Central Market. The company has been in business more than 100 years.

Analysts like Jason Long, of Shift Marketing Group, are familiar with HEB and applaud Wal-Mart’s focus on “fresh” because it seems to make strategic sense. “To grow beyond their core customer – those on a limited budget – Wal-Mart needs to think and act differently. This is a step in the right direction,” Long said.


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