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H.E. Butt Grocery Company Jae-Young Chung Ian Kwan Doris Lim WonShik Woo.

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Presentation on theme: "H.E. Butt Grocery Company Jae-Young Chung Ian Kwan Doris Lim WonShik Woo."— Presentation transcript:

1 H.E. Butt Grocery Company Jae-Young Chung Ian Kwan Doris Lim WonShik Woo

2 Company Overview n 12th largest grocery retailers n Over 7 billion in sales n 260+ supermarkets, mostly in Texas n Gas 'N Go outlets. n Operates facilities for processing milk, meat, ice cream, and baked goods.

3 Industry Overview n A wave of Consolidation - Through acquisition to increase efficiencies and strengthen market positions - Some small & localized stores – bankrupt n Online grocery - customer segment - save time and the trouble involved in going to the store.

4 Total Electronic Grocery Spending n Percentage of industry total

5 Suggested Services by HEB n Online Service - Provide info services: recipes, food safety info. - Kiosks in the stores for web site access - Provide value added services & retain customers n Transactional Pharmacy Web Site - Order online and receive delivery via direct mail - Leverage existing assets, build e-commerce expertise n Pick Up Service - Pick up from the stores or convenient location

6 Efficient Consumer Response (ECR) n Industry cost-reduction initiative n Responsive, consumer-driven systems – combine manufacturers, brokers and distributors – maximize consumer value & minimize the supply chain cost. n Example: use of paperless system between retail checkout & the manufacturing line.

7 Structure of new supply chain n Store Replenishment System - Use POS data to produce a perpetual inventory - SRS – judges stock-outs at the shelf level, not warehouse level. n Fast – Slow Warehousing - To manage fast & slow-moving items from different distribution centers & delivery systems n Intranet & B2B infrastructure - Use of Extranet – collaborate with suppliers - Use of Intranet for info exchange within HEB

8 Differences of its approach n Avoid last mile delivery by having depots n Kiosks inside the stores to provide access to their web site n Launch transactional pharmacy web site n Use Internet to accompany its retail store business n Focus on improvements in its retail store

9 Comparison between HEB and others

10 Benefits created by its approach n Reduce shipping cost by avoiding last mile delivery n Depots could be used as cross-docks to enable home delivery model in the future n Tap into new market n Deepen relationship with customers n Increase data volume for internal marketing analysis n Give options to customers

11 Challenges of the approach: n Process Engineering n Huge Investment (8 digit) n Increase in fixed costs

12 Electronic Tagging Currently no electronic tagging due to expensive price and ethical concerns Should implement in the future n Price decreases n Customers are willing to allow HEB to check down on their behaviors

13 Conclusion n HEB’s approach (establish online presence and improvements in operations and supply chain) will work given the benefits outweigh the costs n Implement electronic tagging and loyalty card program in the future


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