"The Dallas saga” isn’t just an ancient TV melodrama starring Larry Hagman.

Competitive Dallas retail scene helps produce

Dan Galbraith
Sections Editor

“The Dallas saga” also could be a term to describe the competition in the produce departments of retail stores, which could soon resemble the knock-down, drag-out battles fought by members of the Ewing family.

With population in the Big D booming, including a growing percentage of citizens from Mexico and others with Hispanic backgrounds, retailers such as H.E. Butt Grocery Co. Inc. and Aldi Inc. are scheming on how they can get a bigger piece of the retail pie.

They really do like everything big in Texas, including fresh produce sales, and the winner(s) in Dallas and northern Texas very well could use the success there as a springboard to become bigger national players.

Dallas, in fact, ranks as one of the nation’s fastest-growing cities, according to recent U.S. Census reports, and it stands to reason that retail strategies that work there should work increasingly well in other parts of the U.S. as the country’s overall Hispanic population grows.

In fact, Hispanics will represent 20% of the total U.S. population by 2030, according to Jim Perkins, president of Ulatam Retail Solutions Group, a Chicago-based group specializing in transforming trends and growth patterns in Hispanic markets into increased sales.

H.E. Butt as J.R. Ewing?

H-E-B may be the star of the show in the Dallas area now, boasting more than 300 stores in Texas and northern Mexico now and ranking as the largest private employer in the entire state of Texas, according to business development manager Jaime Buentello.

Speaking to the National Watermelon Promotion Board at a recent conference in Dallas, Buentello said that while H-E-B is proud of its accomplishments so far, the recession hasn’t put the company in any kind of a rest-on-laurels mode.

Already boasting $15.8 billion in annual sales (2009) and a store average of 3.7 times greater fresh produce sales volume than the average competing source, H-E-B plans 14 new stores in 2010 — 10 in Texas and four in Mexico.

The company, which enjoyed the largest growth (4.4%) of all groceryretailers in the final quarter of 2009 (according to Buentello), hopes to reign in Dallas and move northward in Texas over the next decade.

H-E-B hopes its upscale Central Market format, catering to foodies, grabs up a big share of the market, but is also banking on market growth in lower-income and Latino markets with a different format, called Mi Tienda (My Store), Buentello said.

Hispanics are increasingly fond of super-size seeded melons, which accounted for huge growth at H-E-B in the company’s melon category in 2009 and now makes up about 15% of the company’s overall melon sales mix. Another 15% goes to value-added melons.

Priding itself to growers in its ability to “sell the whole acre” (sell all sizes of melons that a grower might produce), H-E-B is increasingly concerning itself with factors that are becoming more important to Hispanics and non-Hispanics, both in the Dallas area and elsewhere.

That short list in a down economy includes value, visual appeal, safety, availability, and, first and foremost, consistent good taste.

“Value-added is the fastest-growing segment (in melon sales) now, and why? Because you can see it,” Buentello said. “They see that bright red watermelon 100 yards away because they’re showcasing it (at roadside stands and by savvy retailers).”

Aldi seeks value market

While H-E-B’s attack on northern Texas is two-pronged, going after value-oriented customers and value-added customers who’ll pay a premium for fancy snack packs, kid packs and hot new varietals, Aldi appears more narrowly focused.

Mainly wanting to challenge H-E-B in the lower-income markets, Aldi also entertains big expansion plans in northern Texas.

Aldi is in the midst of opening 27 new stores in northern Texas this spring, according to The Dallas Business Journal.

While H-E-B often believes the bigger the store, the better, Aldi is going for the small-scale store niche, and its investment in the area is a steep one. In fact, it plans to throw $150 million into the north Texas market, expanding on its plans from two years ago to break into the Dallas-Fort Worth market, according to the Business Journal.

Aldi also boasts a $50 million distribution center in Denton, Texas, that covers a massive half a million square feet.

Thus, Aldi, too, is going big in Texas. Aldi’s expansion is part of a national expansion plan in Florida and other markets.

Both retail chains seek the same thing in Dallas/north Texas: gaining repeat customers, a staple in any economy and especially in down times.

With already-proven success in their niche markets, H-E-B and Aldi stand a good chance to pick up market share in north Texas in 2010, and probably in many other markets, using their fresh produce marketing strategies, by 2020.

E-mail dgalbraith@thepacker.com

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