H-E-B wants customers to open debit cards with them that offer in-store savings and can be used anywhere MasterCard is accepted.
In addition to encouraging brand loyalty, retail experts say the move could give H-E-B a wider window into customer shopping habits — upgrading the kind of market insights that drive H-E-B’s expansions.
Market insights gained from customer data also enable H-E-B to tailor its stores and product selections to specific geographic areas. This summer, for instance, the privately-held grocery chain debuted a home decor section in some stores, including its location at the intersection of U.S. Highway 281 and Evans Road.
Like most major retailers, H-E-B has tracked sales data to create market insights for decades.
The debit cards, which opened for enrollment on Tuesday, were announced in a press release touting their benefits to customers: 5% cash back for purchases of store brand items, free cash withdrawals at H-E-B brand ATMs, expedited paychecks with direct deposit and other perks.
“At H-E-B, we’re always looking to provide Texans more ways to save,” said Ashwin Nathan, H-E-B Group vice president of marketing in a prepared statement.
Insight into buying behavior
For the grocery giant, which Forbes estimates is the largest private company in Texas by annual revenue, experts say the cards are a smart business move.
Similar cards offered at retail chains like Krogers and Target have provided these companies with “a tremendous amount of insight on your buying behavior,” said Marcel Zondag, a marketing professor at Western Michigan University who works with grocery stores.
These cards vacuum up shopping data wherever they are used, regardless of whether it is at the issuing store, Zondag said, making it the “ultimate picture” of consumer habits compared to tracking loyalty program purchases or in-store credit card receipts, which typically only provide information about a shopper’s zip code.
H-E-B did not answer an inquiry into how its debit card program relates to its data collection.
H-E-B’s cards are issued through Pathward, recently renamed from MetaBank, which shares its collected data with other companies for marketing purposes, its privacy disclosure says. Federal law gives consumers the right to opt out of some but not all data sharing.
With this new customer data and some additional modeling, Zondag said, “you can predict additional buying behaviors.”
‘no fear of Walmart’
Those insights allow H-E-B to confidently dip into new product areas, such as its recent home goods expansion.
Robert Jones, chair of Texas Tech University’s Department of Hospitality and Retail Management, said H-E-B likely feels confident it can broaden its front against one-stop shops like Target and Walmart, which have in recent years become H-E-B’s biggest competitors for groceries.
“H-E-B is one of those rare retailers that has no fear of Walmart,” Jones said. “They’re willing to go toe-to-toe with them.”
He said the company’s foray into home decor was likely informed by market insight from online sales, which skyrocketed during the pandemic and allowed many retailers to test-run a broad range of merchandise.
“Online you have the endless aisle,” Jones said. “That was a great opportunity for H-E-B to put products out there in a category they might not have heavily participated in, but they can test it out and then move it into the stores.”
Its home decor sections, called “Home by H-E-B”, have opened in stores in New Braunfels, Brownsville, Burleson and Corpus Christi. Around 25 H-E-B stores will have home decor sections by the end of the year, the company said in a press release this summer.
H-E-B led the entire grocery chain industry in growth of consumer transactions, according to an analysis by Bloomberg Second Measure. Between July 2021 and 2022, total sales volume was up 17%. And the 12% year-over-year growth in average consumer transactions (H-E-B shoppers spent $64 on average in July) was higher than the increase at Kroger (10%), Aldi (8%) and Albertsons (3%).
Average grocery price inflation was also 12%, but Jones said inflation alone can’t explain H-E-B’s lead in this regard.
“This is from it being a well-run organization,” he said. “When you start looking at things like expanded merchandise, and the other services they offer to people in store, there’s a lot happening at H-E-B that’s not happening at other retailers.”
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