ECONOMIC SNAPSHOT | GROCERIES

Who feeds Texas

By MARIA HALKIAS
Staff Writer mhalkias@dallasnews.com

By TOM SETZER
Staff Artist tsetzer@dallasnews.com

The Texas grocery market remains fragmented as some local strongholds defend their turf. H.E. Butt Co.s dominant position in Central Texas has made it harder for Wal-Mart in Austin and San Antonio. While Wal-Mart has a strong lead in Dallas-Fort Worth, Houston has a fierce three-way race among Wal-Mart, Kroger and HEB. Population growth encourages new chains to come into the state. North Carolina-based Fresh Market is opening stores in Houston this year, and Idaho-based Winco will open in North Texas next year. Finally, prices are lower here than in major cities outside the state.

Category market share: U.S. vs. Dallas-Fort Worth

Shopping habits vary greatly nationwide. Convenience stores sell more food elsewhere than they do in Dallas. Supercenters are more popular here as are fresh-format stores. Based on 2012 and 2013 data:

Categories
A Traditional supermarkets (Kroger, Albertsons, Tom Thumb) B Supercenters, mass discount stores (Walmart, Target, Kmart) C Convenience stores (7-Eleven, Quicktrip) D Wholesale club (Sam's, Costco) E Dollar store (Dollar General, Family Dollar) F Limited assortment (Aldi, Save-A-Lot) G Fresh format (Whole Foods, Central Market, Sprouts) H Other (Drugstores, independents, military)

U.S.
G F 1.1% 2.7% E 2.4% D 8.7% H 8.7% E 2.6%

Dallas-Fort Worth
H G F 4.4% 3.4% 2.2%

A 39.8%

D 10.4% C 1.9%

A 43.6%

C 14.9% B 21.7% B 31.5%

More mouths to feed

Texas growing population is attracting grocers. In addition to having 5 of the Top 10 U.S. cities with the largest increase in population numbers, Texas also has 8 of the 15 fastest-growing U.S. cities. The 10 cities with the largest population increase from July 1, 2011, to July 1, 2012:
Rank 1 2 3 4 5 City (not metro area) New York Houston Los Angeles San Antonio Austin New residents 67,058 34,625 34,483 25,400 25,395 Total 2012 population 8,336,697 2,160,821 3,857,799 1,382,951 842,592 Rank 6 7 8 9 10 City (not metro area) Phoenix Dallas Charlotte San Diego Fort Worth New residents 24,536 23,341 18,989 18,074 16,328 Total 2012 population 1,488,750 1,241,162 775,202 1,338,348 777,992

Dallas, Houston shoppers spend less on groceries

Each metro area market is compared with the U.S. average (=100). For example, Dallas-Fort Worths 89 means that this markets per capita grocery dollar sales are 11 percent lower than the U.S. average (for 12 months ended March 2013).
I Food stores I General merchandise stores (includes big boxes: supercenters and warehouse clubs)
140 120 100 80 60 40 20 0 New York Los Angeles Chicago Dallas-Fort Worth Houston Philadelphia Miami Washington, D.C. Atlanta Boston

U.S. average = 100

Market share by Texas cities

(For 12 months ended March 2013)

DALLAS-FORT WORTH: Unlike other major Texas cities, Wal-Mart had an easier time rolling into North Texas. It overtook the big three traditional grocers in the mid-2000s. Brookshire,
Wal-Mart 27.8% 14.5% Kroger Tom Thumb (Safeway) 10.1% 6.9% Albertsons LLC Target, SuperTarget 6.7% 5.2% Sams Club Costco Super 1 2.8% Whole Foods 1.7% Other 10.6% HEB, Aldi Central 1.7% Market 2.5%

5.2% 4.3% Fiesta Mart

SAN ANTONIO: HEB still dominates the city where it's headquartered. Wal-Mart has gained in recent years, but other traditional grocers are absent. Sams
HEB 54.9% 22% Wal-Mart Costco 6.3% Club 4.9% 4.4% Target

Other 6.1%

Whole Foods 1.6%

HOUSTON: Check out the top 3. Houston's been a tougher market for Wal-Mart to crack. But it did overtake Kroger, which had been the leader for years, in 2011.
Wal-Mart 21.4% 20.5% Kroger HEB 19.8% 6.4% Fiesta Mart Randalls (Safeway) 6.1% 5.2% Sams Club Target 4.7% Whole Foods 1.7% Other 14.2%

AUSTIN: HEB rules in Central Texas. Wal-Mart hasn't been able to crack 20 percent in Austin.
HEB 47% 18.7% Wal-Mart
NOTE: Percentges may not total 100 because of rounding. SOURCES: Metro Market Studies; Willard Bishop LLC; Chain Store Guide; U.S. Census Bureau; Supermarket News; Dallas Morning News research

Randalls (Safeway) 8.7% 5.7% Target

Sams Club 5.6%

Whole Foods 4% 3.7% Costco

Other 5.3% Fiesta Mart 1.3%

The bottom line

In the far-out areas, beyond the suburbs in the exurbs, the consumers preference for shopping in the big boxes is evident. And warehouse clubs do better here than in other markets. Traditional grocers are losing out. Being closer to Arkansas, Wal-Mart moved here (North Texas) early. Its footprint was established around the fringes before this became the metro area it is now. When they moved into HEB territory they werent able to win on price. HEB is a better operator and has been doing fresh food forever. Craig Rosenblum, partner, Willard Bishop LLC Absent here is any mention of online grocery shopping. Half a dozen companies tried to establish it in Texas during the 1990s. Its catching on elsewhere. Wal-Mart and traditional grocers may be drawn back into it someday, even in Texas.

Edward Fox, marketing professor, Southern Methodist University

Maria Halkias, staff writer, The Dallas Morning News