Texas grocery wars: Walmart vs. H-E-B

SAN ANTONIO AREA – Groceries are the most competitive area of retailing, and nowhere is that more apparent than in the San Antonio area, where H-E-B and Walmart are engaged in an intense game of real estate one-upmanship.

Last year, H-E-B remodeled its 97,000-sf store in Universal City, only to have Walmart snap up a 13-acre site right next door, where it plans to open a 182,000-sf Supercenter this summer.

Walmart’s land grab is part of a major push by the global retailing juggernaut into the home turf of Alamo City stalwart H-E-B, a 110-year-old family business that has become a Texas powerhouse over the past 40 years.

H-E-B has made it clear that it won’t be intimidated: between 2009 and 2014, Walmart snapped up 250 acres for about $123 million, and H-E-B matched that land grab acre for acre. 

While it’s too soon for H-E-B to declare victory, Walmart remains a distant second; last year, H-E-B controlled 48 percent of the San Antonio market, compared with Walmart’s anemic 28 percent.

Or does it? In 2015 Walmart’s share of the local grocery market rose nearly 5 percentage points, while H-E-B’s slipped about 3 points. Those are the sort of numbers that will keep both parties on their toes.

H-E-B may be a scrappy competitor, but Walmart really doesn’t like to lose—and it has the financial resources to stay in the market as long as it wants. 

“H-E-B can’t put Walmart out of business or drive them out of the market,” says Leigh McAlister, a marketing professor at the University of Texas and co-author of Grocery Revolution: The New Focus on the Customer. “Walmart could lose money in South Texas from now until eternity and it wouldn’t matter.”