- Texas-based H-E-B opened a two-level store this week in Bellaire, Texas, within the Houston metro area, and is planning on opening two more soon, according to Houston Public Media. The second is under construction already, while the third is in the planning phase.
- Naveen Jaggi, president of a commercial real estate firm, said building up could be a new trend for grocers and other retailers as the city of Houston becomes denser. This type of layout is common in dense markets in the Northeast and Midwest, but “relatively new” to the Southwest.
- The Bellaire store includes a number of unique features, such as a public art experience called “Blue By You,” which consists of vertical light panels that “ripple and change” as people pass, according to the Houston Chronicle. It also features a shopping cart escalator.
Although H-E-B opened a multi-level store in San Antonio in 2015 and has “several” multilevel stores in northern Mexico, the format is still relatively new, both to the company and to the Southwest region in general. Some developers note that the “building up” trend in this region is just beginning as urban sprawl continues — three cities outside of Houston and Dallas topped the list of the country’s 10 fastest-growing cities — and real estate opportunities to accommodate a large grocery store become scarcer.
Though it makes sense to fit the current, or anticipated, real estate available, operating a multilevel store has some challenges. For starters, the market has to be responsive, as margins in the grocery space are too thin (about 1%) to risk an unworthy investment. Multilevel formats also often entail higher real estate costs that come simply from being in an urban market.
Other questions include if the retailer will get the same sales activity on the second floor as it does on the first. Does having a second floor require extra marketing efforts to promote what is up there? How does a grocer ensure the right mix on the right floor for the right crowd? Will such a space be a turnoff for increasingly time-pressed consumers?
The Bellaire store’s layout won’t be its only differentiator. The art installation and the shopping cart escalator are talking points that could intrigue customers enough to come in and check them out. Whether or not they will get them to return, however, is a different question. The Bellaire H-E-B perhaps has a better shot of doing that with its curbside service, wide array of products and services, coffee shop and eatery, indoor and outdoor seating areas and its wine and beer tasting station.
In other words, regardless of format, this H-E-B is going all-in on experience, which is a critical differentiator in an competitive space. According to Euromonitor International, there has been a fundamental shift in consumer values toward experiences versus things, and the experience trend is impacting all sectors, including food.