Strong Texas economy sparks retail expansion

01/14/2014 03:41:00 PM
Vicky Boyd

Spurred by energy development and a rebounding technology sector, Texas has become a hotbed of retail activity.

Greensboro, N.C.-based The Fresh Market; Phoenix-based Sprouts Farmers Market; and Batavia, Ill.-based Aldi have established grocery stores in the Texas, while Boise, Idaho-based WinCo Foods plans to expand into Texas this year.

Other retailers with a presence in the state have expanded their offerings with new concepts. San Antonio-based H.E. Butt Grocery Co., for example, introduced the supercenter format with H-E-B plus!, while Houston-based Hispanic grocer Fiesta Mart. Inc. opened its first Fiesta Market Place concept store in July in Sugar Land, Texas, a Houston suburb.

Coupled with the accompanying influx of new residents, the economic boom should bode well for many produce-related companies that serve Lone Star retailers, those in the produce industry say.

“We’re in a good spot in Texas,” said James Baker, director of procurement for Dallas-based Lipman Texas.

John Hayes, president of Houston-based Integrity Distribution Services, agreed and said he has seen tremendous growth in retail and food service since about 2010.

“I’d say definitely the economy is better,” he said.

Hayes said he believes the growth is due not to just one factor but a combination, including new companies moving to the state and overall population growth.

Baker credited the energy boom in south and west Texas for the tremendous retail growth in those regions.

As an example, he cited Carrizo Springs, Texas, a town about 115 miles southwest of San Antonio with a population of 5,400, according to a road sign on the outskirts. Thanks to the discovery of the Eagle Ford oil shale deposit, the region is now home to thousands of new workers.

The boom prompted H-E-B to build a store in Carrizo Springs, complete with an expanded produce department, expanded bakery and deli, fuel station, car wash and business center.

The tech corridor, running between the Dallas-Fort Worth, Texas, metroplex and Austin, Texas, also has seen formerly vacant campuses refilling, Baker said.

With the newcomers also comes an increased demand for produce, he said.

Rather than just focusing on organic, the movement promotes consuming a wider array of fresh fruits and vegetables.

Mark Frazier, vice president of WG Frazier & Son Inc., San Antonio, said he also has seen produce demand grow.

“Volume has increased, and with the new interstate coming in from Mexico that will help with supply,” he said.

Frazier was referring to I-69, which will cross the border at McAllen, Texas, and is set to open by midsummer.

“We’ve seen some people moving from Nogales (Ariz.) already,” he said.

Brent Erenwert, vice president of Houston-based Brothers Produce, credited retail for much of the wholesaler-distributor’s 25% overall revenue growth in 2013. That should continue at about a 15% pace in 2014, he said.

Two large retail customers — Bentonville, Ark.-based Wal-Mart Stores Inc. and H-E-B — and their continued expansion helped bolster Brother Produce’s bottom line, he said.

Continued population growth is one reason why Lubbock-based United Supermarkets LLC began looking to expand into the Dallas-Fort Worth region with its Market Street specialty stores more than 10 years ago, said Eddie Owens, director of communications and public relations.

“It’s really the antithesis of what’s we’re experiencing in West Texas,” he said. “West Texas is losing population to the larger cities, and smaller communities are struggling to maintain their population.”

Market Street opened its most recent store in December in Fort Worth-suburb Flower Mound, and the company doesn’t plan to stop.

“I don’t think there’s any doubt, we’re continuing to look at other opportunities down there,” he said of the Dallas-Fort Worth mextroplex.



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