CORPORATE CASE STUDY: Texas shoppers buy into H-E-B's focus on community

Long known for its philanthropic efforts and innovative ideas, grocery giant H-E-B has begun to embrace PR as it adds to its already substantial presence in Texas and Mexico.

Long known for its philanthropic efforts and innovative ideas, grocery giant H-E-B has begun to embrace PR as it adds to its already substantial presence in Texas and Mexico.

Actions, not words, define PR for Texas grocery powerhouse H-E-B. Forget about media filters. Shoppers from Waco on south may seldom hear or read flowery news stories about H-E-B, but chances are the company's many charitable programs have affected them personally. In the fiercely competitive grocery world, H-E-B steadily gains ground. The chain's low prices, wide selections, and innovations such as the wildly popular Central Market specialty format, undoubtedly play into the company's success. But Trish DeBerry, founding partner of H-E-B's PR firm Guerra DeBerry Coody, thinks a "genetic propensity for philanthropy" has something to do with it as well (even though the company had a longstanding tendency to keep quiet). Florence Butt founded the H-E-B empire in 1905 when she opened the family's first grocery store in Kerrville, TX. The Butts had moved from Memphis to the Hill Country's drier climate because her husband suffered from tuberculosis. A devout Baptist, Florence wouldn't sell tobacco and alcohol. She also often took her youngest son Howard along when passing out food to homeless people camped along the banks of the Guadalupe River. Howard took over the business after World War I, lifted the tobacco ban, adopted modern marketing methods, invested in farms and manufacturing, and began expanding. H-E-B languished in the '60s because the family refused to sell alcohol or open on Sundays. Howard's son Charles, who took over in 1971, abandoned those policies and undercut competitors' prices to make H-E-B the dominant grocer in south and central Texas. All that time, philanthropy remained a Butt family priority. Howard adopted the motto, "He profits most who serves best." His wife, Mary Holdsworth Butt, championed causes including mental health, education, tuberculosis control, children's health programs, and juvenile justice. "Howard felt like the best way to endear yourself with customers is to give back," says Winell Herron, group VP for public affairs and diversity. The company would go on to create an excellence awards program for teachers, outfit trucks for providing meals and water to communities stricken by disaster, and founded Mexico's first food bank in Ciudad Acuña, across the border from Del Rio. Today, H-E-B operates 305 stores in Texas and Mexico. Its original Central Market - with cheese, vegetable, and bread isles that would make a gourmet weep with joy - is Austin's second-most-visited destination after the State Capitol. And the company donates at least 5% of its pretax profits to charity. H-E-B also remains privately held under chairman and CEO Charles Butt. "The Butt family is a very modest family," Herron concedes. "They're a little hesitant to tout what they're doing." In the past, reporters say they had trouble getting basic boilerplate information from H-E-B. Media relations was centralized at headquarters, which kept a tight hold on information. H-E-B starts to tell its story While H-E-B still doesn't always reach out to the trade press, other reporters see the company starting to come out of its shell. "They're a hard nut to crack," admits one editor, who sees progress in the fact that H-E-B's once-elusive CEO now grants the occasional interview. And national publications like Fortune have recently met with friendly receptions when they came knocking. H-E-B began making progress on the PR front before Herron moved into public affairs in April 2002. She moved up through H-E-B's store management ranks, although some of her regional public affairs directors come from more traditional PR backgrounds. She previously ran H-E-B's customer-service program, and also oversees its diversity initiatives, which in addition to workforce and contractor programs include sponsoring celebrations in key markets commemorating ethnic holidays like Juneteenth and Diez y Seis. Historically, H-E-B didn't seek much attention for its do-gooding, but in March of last year it began shifting part of its ad budget away from its traditional product- and price-focused ads to highlight its philanthropic programs. Its "Helping Here" spots focus on charitable and community-service projects, such as the Feast of Sharing holiday-meal outreach. H-E-B lines up local media sponsors for some of its philanthropic projects, garnering valuable PSA time and news coverage. On the Gulf Coast, for example, H-E-B produces severe-weather guides for viewers through a hurricane-tracking program cobranded with a local station. In San Antonio, the company collaborates with a local affiliate on its "Check Out Hunger" program, through which shoppers can use coupons available at check stands to make food-bank donations when they buy groceries. Going directly to the customers "It gets our name out in front of thousands and thousands of customers," says Eric Cooper, executive director of the San Antonio Food Bank. "As a charity, we're not able to pull down that kind of media support." Unlike some other companies that may exploit the food bank's name through shallow cause-marketing schemes, H-E-B comes through regularly as one of the organization's largest contributors. "H-E-B really takes care of us," Cooper says. In another example of the grocer taking marketing and PR straight to the customer, in March 2000 H-E-B debuted H-E-Buddy, which DeBerry describes as the chain's answer to Mickey Mouse. Every store has an H-E-Buddy costume and an employee (H-E-B calls them "partners") trained by the San Antonio Spurs' Coyote mascot. The character hands out Buddy Bucks redeemable for school supplies, and the company sells H-E-Buddy-branded healthy foods for kids. Other internal and external communication advances are on the horizon for H-E-B, Herron reports. While the company is rethinking employee communications strategies, next year it will roll out an incentive program to encourage employee volunteerism. And this month, it will begin a pilot through which store and department managers will receive four hours of community- and media-relations training. That program should expand company-wide next year, Herron says. H-E-B has also reassigned former Central Texas PA director Kate Rogers to concentrate on preparing for the company's upcoming 100th anniversary. The rising awareness of and attention to PR at H-E-B comes during an expansion phase. H-E-B is aggressively taking on Houston's market leader, Kroger, by expanding and revamping stores there and converting those bought from Albertson's when that grocer pulled out of the city last year. The company also added three new Central Markets in the Dallas area - and one in Houston - over a two-year period beginning shortly after the turn of the millennium. Resembling Whole Foods on steroids, Central Markets feature cooking classes, visits by celebrity chefs, extensive deli restaurants, and vast meat counters. As a testament to the format's popularity, Plano, TX residents embraced their sprawling new Central Market while Dallasites down the road fought to block construction of an urban-format Wal-Mart. Herron credits the lack of neighborhood opposition with what she calls "share of stomach" research that focused not on what sort of store H-E-B wanted to build, but on what format shoppers wanted. H-E-B hires local PR firms to help with Central Market openings. Events in Houston included VIP previews with top chefs preparing samples in the store, while the company threw a who's who party in image-conscious Dallas. Food editors get lots of ideas strolling the aisles of Central Market, like writing features on last month's Hatch Chili Festival. But don't bet on H-E-B relying too heavily on the press for something as important as getting its messages out to customers. The company prefers a more direct approach through which actions speak louder than words. "It's really all about establishing those personal relationships, those deep relationships that build loyalty," Herron says. ----- PR contacts Group VP of public affairs & diversity Winell Herron Regional public affairs directors Greg Flores, San Antonio; Holly Montalbano, Houston; Debbie Lindsey-Opel, South Texas Special projects coordinator Lyn Selig 100th anniversary project coordinator Kate Rogers Hunger relief consultant Retired H-E-B warehouse executive Eddie Garcia Total in-house staff 15 Agencies Guerra DeBerry Coody (San Antonio), agency of record. Works with additional local agencies for store openings and other projects

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