As part of the “Movers and Shakers” event, UH’s Retailing and Consumer Sciences department hosted a talk given by H.E.B. President Scott McClelland Wednesday titled “The Future of Retailing: Being an Entrepreneur in the Food Industry.”
He addressed what H.E.B. is doing about the economic and demographic issues facing Texas; the state may have weathered the recession of 2008, but the per household income is still dropping.
“While the total economy is larger, the reality is it’s only larger for some people and that tends to be for people who have money,” McClelland said. “As a result, over time we are seeing a shrinking middle class.”
McClelland said the line between the people who have and people who have-not is becoming more pronounced in Texas, which affects the way people shop.
“In Houston today, 26 percent earn less than $25,000 per year and 15 percent earn over $100,000,” McClelland said. “If you think about the type of items you would put into a store, no two customers are the same.”
Houston has grown more diverse; it has a vast Latino population and a rapidly growing Asian population.
“When you start to look at what the average American looks like and there isn’t an average American,” McClelland said. “When you try to merchandise towards average, you’re not going to be gaining anything.”
Retailers tend to bisect themselves into two different types: those that are perceived to have high quality but also have high prices and those that are perceived to have low prices and low quality, McClelland said.
Retailers should strive to have low prices and high quality, McClelland said.
“With this positioning comes expectations from the brand,” McClelland said.
“To try and lower expenses to make more money will violate what the brand and the experience stands for and all of the sudden people stop shopping there.”
Houston is a complicated city in which to do retail in both the demographic and competitive sense, McClelland said, and the formats of Houston stores are different in various locations to cater what sells better in those areas.
With the Latino population growing, McClelland said he decided to build Mi Tienda, which is a store that focuses on and markets to first generation Latinos.
McClelland said he traveled around Mexico and Central America and brought back new, unique ideas.
“We realized we needed to build bigger stores and sell items that others can’t, won’t or haven’t yet thought of,” McClelland said. “We have distinct advantage of living in Texas and there are unique idiosyncrasies of living here that you won’t get elsewhere.”
This was an incredible presentation for students in the retailing program at the University of Houston. The honest data, product strategies, and intelligence that were shared by President Scott McClelland told the amazing story of HEB!. We appreciate the coverage by the Cougar and participants in this forum are still commenting on the content and rich learning experiences.