2014 HEB Retailer of the Year

S O UT HW E S T RE TAI L E R O F T H E Y E A R 2 0 1 4

S O U T H W E S T R E TA I L E R OF THE YEAR 2014

H-E-B Montrose Market in Houston, Texas

Retailing is Better Here… Because People Matter The Shelby Report asked Martin Otto, CFO and chief merchant, “How would you describe H-E-B to someone who’s never been in one of your stores or heard about the company?”

“First off, we’ve been around a long time, since 1905, and we’ve always been owned by the Butt family (from Florence in 1905 to her grandson Charles today). To have that kind of continuity of ownership and constancy of purpose and value really makes a big difference for a company and it defines who we are.

“As I describe H-E-B, I would start with

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the culture, and really it’s a unique place to be. We live by two things that we talk about a lot, which are part of what you might call our vision statement, and one is that each and every person counts. We really live that. That’s each and every Partner. That’s each and every supplier. That’s each and every customer. That’s each and every community that we serve. As a culture, that kind of thing is easy to say, but it’s not always lived the way that it’s said. We really do that. That doesn’t mean we don’t mess up sometimes, but when we do, we fix it. Each and Please see page 34

Craig Boyan, president and COO; Winell Herron, group VP, public affairs, diversity and environmental affairs; Martin Otto, CFO and chief merchant.

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S OUT HWE S T RE TAIL E R O F T H E Y E A R 2 0 1 4 Life is Better Here …

Because People Matter H-E-B President and COO Craig Boyan is often asked what makes the company so successful. They want to know the “secret sauce,” he says.

The answer is not complicated.

“They could talk about how we tailor stores neighborhood by neighborhood or how we are good merchants or that sort of thing or our low prices and all that. We think all those are important,” Boyan says. “But the secret sauce is people.

People ask me how I would describe the average H-E-B person, and the words I usually use are that H-E-B people are ‘restlessly dissatisfied.’ You constantly strive to create a better future and that means constant improvement to run a better business. In the face of the intense share competition that we face, we need to constantly get better. That needs to be in our DNA. “We are really committed to investing in people and try to have the best people we can possibly have,” he says. “We think that it is very important to have people who run the best stores. We have great truck drivers. We are very committed to honoring and celebrating people. We believe in a decentralized organization where people in the field with the most information make most of the decisions. Stores have a lot of power and autonomy to run their business the way they see fit.”

That power is critical, and the result is that no two stores are identical.

“We believe that empowering great leaders is the key to success and investing in people matters,” Boyan says. “This is an industry that sometimes likes to strip out costs and automate processes to make it less of a people business.

We think great companies like Publix and Wegmans and Costco, have invested in people. We are very impressed by those companies and they’re the kind of people we aspire

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to be.”

One contrast between H-E-B and other chains of its size—about 340 stores in more than 155 communities—is that the company has no U.S. stores outside of the state of Texas.

“H-E-B is very different in that our target is a geography,” says Boyan. “We are really committed to serving our current market in Texas and northern Mexico. Our primary goal is to serve that geography Craig Boyan as well as humanly possible, President and COO and we have no plans to With H-E-B since 2005 serve any other markets.

We will continue to serve the market we currently serve as well as we can.”

That goes beyond clean stores, the right assortment and great customer service. H-E-B doesn’t just operate in the state. It invests in Texas.

“We believe we are one of the largest philanthropic givers in Texas,” he says.

The success the state has enjoyed in recent years as others waned is a blessing and a curse. Growth in population and the state’s strong energy-fueled economy have drawn retailers and they are loaded for bear. Even as Boyan understands the state’s appeal, he says the influx of square footage is far outpacing population growth.

“Obviously we’re seeing an incredible amount of competition here in Texas. There are a lot of new entrants,” he says.

“Aldi is now in the state. Trader Joe’s is opening more stores.

Winco has entered the state. Sprouts has entered and is

expanding their footprint. The Fresh Market has entered the state and is growing. Amazon is in the process of opening three large warehouses here in the state. Instacart is expanding their presence. Burpy and other e-commerce players are vying for share, so one of the main issues here is that the fight for share has gotten really intense.”

He notes that the state is Walmart’s largest market in the U.S. “by a long shot.” In Texas, Walmart operates nine distribution centers and more than 500 stores—about twice as many as in any other state. Still, it is opening what Boyan calls an “unprecedented number of stores” in Texas, especially in San Antonio, H-E-B’s headquarters city.

Kroger also is a strong and difficult competitor, particularly in Dallas and Houston.

“It’s painful for us, but we think it makes us better,” Boyan says.

The competition may or may not realize the fight they have on their hands. Boyan points to a study by the Council for Community and Economic Research that found the least expensive grocery prices in the U.S. are in a small radius around San Antonio. Several years ago, a Smart Money study found that grocery prices in Texas are 22 percent below the average grocery prices in the U.S. “H-E-B undoubtedly plays a role in that,” Boyan says. “The fight for share has made Texas a major battleground. It’s been very competitively intense. We feel this is our home market and we feel it is very important for us to fight for our share, continue to get better and find ways to better serve Texas.”

One of H-E-B’s most powerful weapons is the variety of formats it offers. While no two stores are alike, they operate under one of five different banners: H-E-B, Central Market, Mi Tienda, Joe V’s and H-E-B Plus! Central Market appeals to “foodies,” as does Mi Tienda, its Hispanic equivalent. Joe V’s is a limited assortment, low price format. The H-E-B banner is more traditional but flexible.

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Congratulations H-E-B on your Southwest Region Retailer of the Year Award!

We are at your service!

3705 St. James Blvd., Beaumont, TX 77705 409-842-1810 • zummomeat.com

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“We change our H-E-B assortment and our merchandising store by store, neighborhood by neighborhood, and that’s very complicated to do,” Boyan says. “We think that what H-E-B should stand for is the store that is the best we can imagine to serve your community, and that answer should be different in each neighborhood. It’s our best guess through lots of work that we do around what store and what format and what assortment we think would best serve each neighborhood. We do not get that right all the time. It is a constantly moving picture. Customers’ needs and interests are changing and we are trying to keep up and trying to get ahead to serve our customers as well as we can.”

Another tool in the arsenal is H-E-B’s own brand and its manufacturing capabilities.

“We want H-E-B Brand to be the best brand we can think of to serve Texas tastes and needs,” Boyan says. “We’ve invested heavily in trying to improve the quality and tailor the taste profiles of our products to better serve our customers.

It’s one of the reasons we’re so committed to our manufacturing. We self-manufacture a significant portion of our own brand products and we’re really committed to trying to deliver the best quality at the best price that we can offer.”

Another way H-E-B distinguishes itself is that, while it offers healthy products in its stores, the health of Texans is a heartfelt concern and the company is trying to do its part to help.

“Texas unfortunately has one of the worst diabetes and obesity rates in the country. It also has one of the lowest rates of health insurance in the country,” Boyan says. “We are one of the large sellers of food, so we have a real social responsibility to try to help our communities and our customers have not only lower prices and treat their families well but live a long time to be there for their kids and their grandkids.”

One example of that is H-E-B’s annual Slim Down Showdown competition, which it introduced to its Partners in 2010 and then to the community at large two years later.

Contestants vie for the top $10,000 cash prize that can be won through improving their overall health, participation and fan engagement. H-E-B also awards $5,000 “healthy hero” prizes to those who demonstrate the most progress on health markers like cholesterol levels and body mass index.

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None of this is “extra” work, Boyan says. It is just what H-E-B does.

“We are here primarily to create great careers for our Partners and invest in people so they can do amazing things, and also to try to invest in our customers and our communities so Texas can be the best place to live,” Boyan says. “Those are the two things that motivate us more than anything. We believe that we are a purpose-driven organization and we’ve got a real sense of passion in our people and we think being a purposeful group of passionate people is what makes things go.”

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S OUT HWE S T RE TAIL E R O F T H E Y E A R 2 0 1 4 Careers Are Better Here … Because People Matter Last year, H-E-B received more than 800,000 applications for jobs at H-E-B, says Tina James, SVP. This year it’s possible that even more people applied.

There are good reasons why so many people want to work for H-E-B and then stay once they do become a “Partner” (employee), but it really boils down to one thing, James says: a higher purpose. The Partners at H-E-B are serving other Texans.

H-E-B’s retention rate—90 percent—is remarkable. That’s store leaders, full-time hourly, exempt employees.

“I cannot think of any other company, with the exception maybe of Trader Joe’s, that has that level of retention,” James says.

“I think probably the biggest thing is that they enjoy working for the company and feel like they are working on something bigger than the job they have,” James says. “There is that kind of culture of, ‘Yes, you do a job. You might be a cashier, but you are so much more than a cashier. You are serving the customers at H-E-B.’” Partners work hard for H-E-B and that fact is far from unnoticed at all levels of the company—in stores, distribution centers, manufacturing facilities and in the corporate offices in San Antonio.

“We celebrate the contributions of our Partners, because we wouldn’t be here without them,” James says.

H-E-B recognizes their hard work, but then takes the employer-employee relationship at least two steps further than many companies have a reputation for doing. It respects them by giving them information about what is going on with the company. The company has an internal communications device called “PartnerNet.” “It’s refreshed minute by minute, day by day, so Partners get very real companywide information as well as store loca-

Partner happiness is an important part of the H-E-B culture. Many stay with the company for decades. tion information,” James says. “ H-E-B also has publications with similar information and daily “huddles,” and at biannual meetings, Partners hear from their top store leaders—the highest ranking in-store position—about their location and the company.

Each store has two or three store leaders, but the importance of the top store leader cannot be overstated.

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Congratulations

Southwest Region Retailer of the Year!

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S OUT HWE S T RE TAIL E R O F T H E Y E A R 2 0 1 4 From page 24

their Partners, have a relationship with them and keep them engaged in what they’re doing,” James says.

H-E-B does not hire directly into the top store leader role.

“We might hire you to be a leader-in-training,” James says.

“We obviously have a lot of pipeline programs for that, but our top store leader is considered one of the most critical jobs at H-E-B, if not the most. If you ask Charles (Butt, current owner), he might say it’s the most critical job.

“They are very well compensated,” James says. “They have a tremendous amount of tenure and experience.”

The retention rate among top store leaders is 99 percent, inclusive of people who retire.

The second step beyond getting information to Partners is that H-E-B acknowledges their lives outside of work. This is another reason why store leaders have to be very special people.

“In the store environment, we really rely on the store leader to know every single Partner, everything that’s going on in their lives as a whole person, not just the job that they do every day … what’s going on with their kids, what’s going on at school, etc.,” James says.

There are small but meaningful gestures to acknowledge the Partners’ contributions, like H-E-B’s “High Five” program. Leaders can recognize Partners with gift cards.

“We all have them available to us to give to any Partner we feel is doing a great job,” James says.

There also is an annual celebration and a ceremony during which Partners can be recognized with a “Because People Matter” award.

“That covers everything from community service to what we call the ‘Spirit of H-E-B’ to a great representative of the culture of H-E-B to a great manager to a great leader. That’s another way we recognize folks.”

Celebrations can become more elaborate as well, depending on the anniversary and the Partner.

“We have a 50-year Partner (Lisa) who has been in the

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same store, in the same department for 50 years.

We obviously celebrated her and there were lots of gifts and that type of thing, but her unit director—I’ll just mention it because it was so impressive to me— who is a young man, had a ‘Celebrate Elisa (Riojas) Day,’” James says.

“He got her sisters, who also have worked for H-EB over 40 years each, the day off. They work in different stores,” James says.

“He got a limo. He picked Tina James them up in the limo and SVP took them for pedicures and With H-E-B since 1993 manicures and then took them out for lunch, where I met them. Then we went over to the store and they had a big surprise celebration during which Charles (Butt) called her himself.”

A 50-year Partner may be somewhat unique, but a significant number of H-E-B employees have been with the company for decades.

“We’re going into our 110th year as a company and we have more than 2,000 Partners next year who will have 30 years or more of service next year. We celebrate every milestone,” James says. “The first year, first five years, 10, 15, 20, etc.

There may be something as simple as a gift and a certificate involved, or there may be a luncheon where you bring a significant other and we celebrate you there.”

There is a process for hiring hourly Partners, though it varies from store to store and leader to leader. There is a brief screening during which applicants are categorized based on experience, availability and other factors. From

there the interview process begins.

“Most store leaders are personally involved with selecting every single person who joins their store team,” James says.

“Human Resources does not get involved with that. That is really their accountability because we tell them, ‘You own this business in these four walls, everything from the product to the Partners,’ and so most of our store leaders will get personally engaged at least in a final interview in selecting folks.”

Some hold group interviews and others prefer to meet with applicants one-on-one.

“Our only request is that they really take ownership of the talent on their team, and that includes every single Partner who works on the team, because every single person either comes in contact with an H-E-B customer or an internal HE-B customer,” James says.

James fell in love with the company’s Partner approach and culture when she began her career with H-E-B. James is from Washington, D.C., and earned an undergrad degree in finance at the University of Maryland College Park.

Then she came to the company right out of one of the top MBA programs in the country, the Kellogg School of Management at Northwestern. H-E-B had come recruiting.

“There was something very intriguing to me about H-E-B, specifically our owner Charles Butt,” James says. “I had the opportunity to visit with him as well as our president, and Charles and I—you have to understand from a business school interview, it’s very unusual—all we talked about was corporate philanthropy and giving back to community for over an hour, and I was doing something very similar at school.

“He obviously lives that approach to life and it was very different than any other business school interview I ever had.

So I knew there was something very fascinating about this place,” she says.

H-E-B gave her the opportunity in human resources. It is Please see page 34

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S OUT HWE S T RE TAIL E R O F T H E Y E A R 2 0 1 4 Safety is Better Here…

Because People Matter H-E-B Driver Reaches 4 Million Safe Miles

In July, H-E-B driver Andy Corona was presented with the H-E-B Platinum Crown Award for hitting four million safe consecutive miles.

Four million.

“Now, just to put that in perspective, it takes about nine years of consecutive no incident—you can’t hit a mirror on a wall, no incident— nine years to hit a million safe miles,” says Tina James, SVP. “I hit my garage door like a week ago. I wouldn’t qualify. It took him 37 consecutive years of safe driving.”

H-E-B has hundreds of drivers in the “Million Mile Club.” Corona was the first H-E-B truck driver to hit 1 million safe miles. A handful of drivers has achieved 3 million safe miles.

For his 4 millionth safe mile, Corona got more than a party, pedicure or piece of paper.

James says she gets goosebumps just thinking about the celebration the company had for him when that 18-wheeler pulled into the transport center parking lot.

“We know the mile marker where they are going to hit their actual 4-millionth mile,” James says. “The TSP (Texas State Patrol) went out on the highway, met his truck—probably freaked him out—and escorted him in. A helicopter was overhead filming the whole thing because we wanted to show other Partners.

“As he came into the yard, after having hit his 4 millionth mile, we had hundreds of Partners out there lining the roads all the way into the dispatch office, holding up signs, balloons, banners, to celebrate him,” she says. “His family was there.”

H-E-B literally rolled out the red carpet for Corona that day. There was barbecue and a mariachi band, too.

The company later held a luncheon so other drivers and Partners who couldn’t be there that day, July 9, could celebrate with Corona. Guests also included state senators and representatives, local officials, the state patrol and more who all came to celebrate the safety milestone.

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Andy Corona steps from his 18-wheeler after having achieved four million consecutive safe miles.

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Delivering results.

Promoting sales.

Relationships well rooted.

Success well seeded.

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S OUT HWE S T RE TAIL E R O F T H E Y E A R 2 0 1 4 Employee Loyalty is Better Here … Because People Matter H-E-B refers to its employees, particularly hourly associates, as “Partners.” People who work for the company don’t want to leave, even those plenty old enough to retire.

H-E-B SVP of Manufacturing Bob McCullough has 23 years with the company, but says, “Compared to some, I am an absolute rookie.”

About five years ago, a director in McCullough’s area had to be convinced to retire. Even after a minor health issue, he wanted to keep working at H-E-B. “He said, ‘I’ve got 49 years. I’d like to get one more,’” McCullough said. “That gives you a feel for what true loyalty looks like around here.”

McCullough is a West Point graduate and fiveyear Army veteran. Beyond that, his career has been in manufacturing, and mostly with H-E-B. During his tenure, the number of manufacturing facilities H-E-B operates has grown from four to 13.

H-E-B also works with suppliers to develop Bob McCullough products. No product has been more popular than SVP of manufacturing MooTopia. It is real milk, but lactose-free with 50 With H-E-B since 1991 percent more protein and 25 percent more calcium than “regular” milk.

McCullough describes it as one of the company’s “most innovative products,” and said it never would have come into being without collaboration with the people who milk the cows.

“We’re fortunate to work with, in my mind, some of the finest dairy farmers in

America,” McCullough says. “They’re very progressive. They’re very innovative and MooTopia is one product that we worked hand-in-hand with them on, and frankly their research and development work was the key to getting that product to market.”

MooTopia is such a hit that H-E-B has been asked if it would sell it to other grocery companies. The answer is no.

McCullough said that while there haven’t been other products quite as innovative as MooTopia yet, the company’s snack foods are extremely popular.

“If you look at our meat plants, as an example, we make what we call poppers, which are peppers that are stuffed with cream cheese and other ingredients and then wrapped in bacon. It is amazing how many of those poppers we sell. They’ve really become a big hit. We sell a bunch.”

Since McCullough began working for the company in 1991, H-E-B’s manufacturing side has certainly grown, but that isn’t the only transformation.

“The biggest change has really been in the technology and the sophistication of the plants and the resulting sophistication of our Partners,” McCullough says. “They are very, very highly skilled. We’re constantly in the training and education business. We like it and it deepens our relationship with them.”

As an example, he said one of the most sophisticated processes is ultrahigh temperature pasteurization, which gives milk a 60-day shelf life.

“You’re taking the milk from 40 degrees to about 290 degrees, holding it there for 2 seconds and then bringing it back to 40 degrees,” McCullough says. “It’s a sophisticated controls process and the Partners that we have working in that area, we trained completely. There’s no school you could send them to be certified on an ultra-high temperature process.”

Partners evidently believe H-E-B is a great place to work. McCullough says that in manufacturing, there was a 90 percent retention rate last year.

“While we think that’s a very good number considering that our folks work as hard as they do and they work rotating shifts, we’d like to be higher. Ninety percent is a pretty good number; probably better than most. In fact, I’m sure it is, but again, if we could get to 95, I’d love to be there.”

The company has the tools and the culture to reach that goal, McCullough says.

“H-E-B at times is almost as much a cause as it is an employer, he says. “We’re so focused on the community and making the community a better place, we’re so focused on our Partners and making their lives as powerful and successful as they can be—that becomes overriding. That becomes more important than ‘Gee, we set a new record on gallons out of the milk plant.’ That really becomes our focus.”

Congratulations to

on being selected the 2014 Southwest Retailer of the Year!

Thank You for supporting On The Border® in delivering quality products to our consumers.

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“HEB has consistently stepped up to the plate as a great corporate Partner in Houston. The company’s commitment to our special projects shows they understand the value of community spirit.”

“Three notable projects include: title sponsorship of our Thanksgiving Day Parade; providing funding to our parks and recreation department to create and build spraygrounds; and funding the production of one million My Link Library Cards.”

— Houston Mayor Annise Parker

“H-E-B is a great Texas-based success story in retail that is truly employee driven. By that I mean they believe if they take care of their employees—called Partners at H-E-B—their Partners will give every H-E-B customer great service, and to H-E-B, good customer service is the measure of success.”

— Joe Williams, Texas Retailers Association

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“H-E-B is more than a first-rate grocery store and major corporate presence in San Antonio. It’s a trusted community Partner and friend who, beginning with Charles Butt, understands that investing in the people of San Antonio is an investment in San Antonio’s future. It doesn’t surprise me that in selecting its first Retailer of the Year in the Southwest, The Shelby Report would choose H-E-B.” — San Antonio Mayor Ivy R. Taylor

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Teamwork is Better Here … Because People Matter The words “fun” and “lucky” don’t spring to mind when thinking about a job description for a CFO, but Martin Otto uses those exact words to describe his work at H-E-B. Otto also serves as H-E-B’s chief merchant, responsible for the teams that do all of the buying and merchandising of the products H-E-B sells. He works with the company’s manufacturing team as well as the company’s own brands development and marketing teams. That role is in addition to the financial planning and analysis required of a CFO. He credits the teams and Partners for his own success.

“I’m lucky. I’ve got a great team of people whom I work with—and a lot of people say that, but it’s really true,” Otto says. “If that weren’t the case, I wouldn’t be able to oversee and work with as many groups as I do.”

Born in Houston, Otto grew up in South Carolina. For the past 23 years, he’s lived in Texas, the place his company Martin Otto CFO and Chief Merchant With H-E-B since 1991

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calls home.

“H-E-B is a fun team to be a part of, and that’s why I’ve been here for as long as I have,” Otto says. “It really is a wonderful place to work and it’s a very fun industry to be in. I’ve been very lucky. I really love it.”

He didn’t set out for a career in the grocery business.

“It took me a little while to figure it out,” he says.

Otto likes being on his feet. That is one of many reasons he was drawn to the industry.

“In retail every day is different. I like the stores. I like working with the Partners. I like working with customers. Really it’s the variety of the job and the interaction that you have, and the combination of skill sets it requires really makes it a lot of fun.

As part of his responsibilities, Otto and his teams introduced an organic line earlier this year.

“Anytime we launch something like that, it takes some time to put it together and to sort through the products we want to carry and make sure that the producers can produce them to the specs that we want and that our customers expect,” Otto says. “And to put together the marketing program we get for it and to figure out how we get it all on the shelf in the right way and make sure we’ve got plenty in the warehouse to keep the stores full—all of that takes a lot of time and effort, as you would imagine.”

That kind of teamwork keeps the work interesting, fun and ultimately unique.

“Each year is different and each group of years is different than the ones before, so you always have to be focusing on what it is that our customers are expecting and anticipating how that is going to change over time,” Otto says. “It’s a very competitive industry, so we’re always having to pay attention to what the competition is doing, because the fact is they’re very good, in most cases.”

The challenges, the responsibilities, the way of life for the H-E-B executive, all these aspects have an element of fun.

Staying on top of trends may seem daunting and even mystifying, but Otto says that after a while, instinct kicks in. He explains how it works.

“It’s not going to be anything fancy,” he says. “It’s all true and probably pretty obvious after I say it, but I spend a good amount of my time visiting stores, both ours and the competitions’. I spend a fair amount of time traveling and seeing what’s going on in the rest of the country and the rest of the world.

“Like most people, I like to eat out, so I’m able to see what’s happening in the restaurant world and the products that customers like,” he says. “I do that across a broad spectrum.

“We’re in the general merchandise and drug store business as well, so I keep up with what those competitors are selling and what’s happening in the industry and in the world in general, paying attention to what people are buying, what they like, what they read, what they are eating,” Otto says. “By doing that, it just sort of becomes second nature to pay attention.

“It’s certainly a conscious effort to be out there visiting different cities, areas, our stores, competitors’ stores and so on, and spending time in different manufacturing plants and whatnot,” he says. “It becomes almost second nature. You develop some intuition about where things are trending, where they’re going.”

At cocktail or dinner parties, people like to tell him about the products they want to see in H-E-B stores, or to give him, as he says, “friendly feedback around things we could do better.”

His work is more a lifestyle of observance, one his family is familiar with, he says. When they are out shopping or dining, they understand that he is naturally on the lookout.

“You don’t really turn it off,” he says. “But it’s fun, so it’s easy to do.”

All of the information he takes in is used to help steer H-E-B ahead as it seeks to satisfy the needs and wants of its shoppers.

“I’m not always right about it, but more often than not, fortunately, we are. Making sure that we stay competitive in every single way is critical to our success,” he says. “If you don’t do that, then you don’t stay in business very long. We’ve been fortunate to stay in business for a long time.

It’s a matter of staying relevant to our customers and staying on top of what the competition is doing and trying to do it just a little bit better.”

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Congratulations to on winning Southwest Region Retailer of the Year ©/® The J.M. Smucker Company. Folgers Classic Roast is a trademark of The Folgers Coffee Company. Pillsbury, the Barrelhead logo and the Doughboy character are trademarks of The Pillsbury Company, LLC, used under license. Borden and Elsie trademarks used under license. © 2014. DD IP Holder LLC (as to Dunkin’ Donuts and all other trademarks, logos and trade dress of DD IP Holder LLC) used under license.

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More Coverage theshelbyreport.com

The Shelby Report of the Southwest • DECEMBER 2014

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S OUT HWE S T RE TAIL E R O F T H E Y E A R 2 0 1 4 Retailing is Better Here…

From page 17

every person counts.

“The second thing is we work every single day to be better than the day before in order to be a great retailing company, and again, that’s a goal that we fall short of just like anybody does from time to time, but we work very hard to be into the details of our business and to correct the things that need to be corrected and improved. So, this kind of spirit of constant dissatisfaction is part of what fuels us.

“What that’s driven over time is that people who want to be part of a culture like the one that we have tend to find their way here and then they tend to stay. I’ve been here 23 years and we’ve got a lot of Partners here on the team who’ve been here a lot longer than I have been. We just had an event earlier today, it was a recognition ceremony and one woman was there being honored for 50 years.

“Another thing I would say about H-E-B that is pretty unique is we serve every group of customers there is, every ethnic group that’s in our trade areas, every income level in our trade areas. And we work hard to have every store speak to the neighborhood and serve the neighborhood that it is in. We can always keep getting better at that and we need to work at that. I’d say we do a pretty good job with it at this point.

“Beyond that, we work hard on knowing the details of our business very well across product development to the marketing to store operations. We’ve got a fantastic team of people who manage our stores and that’s very important to our business.

“We, like many retailers, have a lot of people in different areas of the company who have spent time working in stores, and that’s important because that’s where our customers are whom we serve every single day. To have a fair number of people in the company who have spent time in stores and understand how they work and how to make them better is important. I’ve been here 23 years and spent the first 13 years in store operations. Of that, the first maybe four years I spent running individual stores and it’s a lot of fun. And to have, throughout

the company, people who have spent time working and serving customers directly, really makes a difference.

“We probably have more format complexity than most retailers do in terms of the number of sizes we operate (30,000-170,000 s.f.) and the different combinations of departments that we include in different stores. That’s in an effort to serve each neighborhood in the best way that we can.

“We do work hard every day to be better than the day before, and most of the time we pull it off. Sometimes we goof it up, but most of the time we pull it off in a pretty good way.”

Careers Are Better Here …

Please see page 26

important to her that H-E-B’s employees are happy.

“I hope they are,” James says. “But even as we have folks go out and visit our stores and our warehouse, overall, our Partners are very happy. I think probably the biggest thing is that they enjoy working for the company and feel like they are working on something bigger than the job they have.”

Once hired on at H-E-B, there are leadership development processes for those wanting to learn more or move up. One is called the “development series,” where Partners learn about other departments.

“Let’s say you’re a brand new hourly cashier, a 16- or 18-year-old, you’re still in high school, you just graduated but you want to know more than just the job you have,” James says. “There is a development series for that. You go to a series of classes that your store leader offers and you find out more about other departments, current opportunities, etc.”

Some are selected into a department manager training program.

“We have hundreds of folks who go through that every year,” James says. “We have the same thing to be a store leader. So I can hire you in to be a store leader trainee, if you will, and you will get a set of experiences both in the classroom as well as the store before becoming what we call an assistant store leader. Then as you’re successful, you can become a store leader and ultimately a top store leader.”

H-E-B certainly has the applicants to fill the slots. Some apply for store leadership positions, and James says only about a quarter of them are accepted into leadership training program.

“That’s internal H-E-B Partners, as well as college graduates, or if you came from another retailer. I think H-E-B enjoys being an employer of choice, for having that reputation, so I

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think we’re fairly attractive to folks who are interested in the retail industry.”

James shared a pair of anecdotes about H-E-B’s popularity as an employer.

“One is, we have a number of candidates who come to interview with us and almost all of them will go visit a store or even ask the taxi driver on the way from the airport, ‘What do you think about H-E-B?’ That to me is some of the best feedback,” James says. “It’s not what we orchestrate here, but what you really experience with our Partners. I’ve never, ever, in 21 years, had anyone say, ‘I got some bad feedback on H-E-B.’ It’s always, ‘Wow, you’re employees are so engaged. Even the taxi driver says H-E-B is such a great company.’ So we enjoy a tremendous amount of good will and reputation in the communities.

“The other piece that I will tell you that I’m very proud of is, we asked our Partners several years ago, ‘How was your experience with H-E-B? Why did you come here and why do you stay? Because it doesn’t matter what Tina James says or what HR says. It matters what their actual experience is, and what they came back with loud and clear became our motto internally, which is ‘I came to H-E-B and I stay at H-E-B because at H-E-B people matter.’ And that’s actually our internal brand: ‘Because People Matter.’ Whether that’s a fellow Partner or a customer or a community member, a supplier, a vendor, it doesn’t matter. They know that at H-E-B people matter.”

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