HEB is the largest supermarket chain in Texas and one of the most competent in the United States. Founded in 1905, HEB has among its company values, one that I have never seen in another company: “Heart.” “People matter. Here, people are at the heart of every decision made and everything we do – no store cares more.”
HEB was the only retailer that managed to maintain service to the hardest-hit areas when Hurricane Harvey hit Texas (besides providing donations and logistics to help victims). “Heart” is not just a word; it is a commitment to be met at any cost.
Coronavirus did not take HEB by surprise: the company had been prepared since 2005 for such a tragedy. That year they created a crisis plan to address the emerging danger of avian influenza, H5N1. When the swine flu (H1N1) crisis emerged in 2009, they were able to put the plan to the test, and again in the case of Harvey. In each instance, they perfected the strategy.
HEB was better prepared than most countries in the world, giving a lesson in strategic planning. One could wonder what a crisis management plan has to do with strategic planning. Everything: strategic planning should be done for the long term, taking into account even things that may never occur. However, when they do happen, it can prevent the company from meeting the needs of its customers, employees, and business partners, and even destroy the business.
HEB was prepared because it had:
- A formal crisis and emergency plan updated and ready to be adapted and executed
- An Emergency Preparedness Director, to lead the Crisis Operations Center
- A Chief Medical Officer (yes, health is highly strategic, as we are learning by force)
- A crisis monitoring system
- A granular information system that allows consumer behavior to be mapped real-time, store by store, by SKU
Crisis monitoring is based on a close relationship with business partners around the world. By mid-January, they were already talking to their Chinese business partners and supermarket chains in Wuhan to understand what could happen in Texas. They still talk daily with supermarkets in China, and also in Italy and Spain.
Ironically, a company from a state known for its fierce sense of independence understands the inevitable interconnection between all countries in the world. Much better than the country’s leadership.
A month ago, when only 50 cases of coronavirus had been reported in the US, HEB stores decreased the number of hours of operation, so that they had time to prepare stocks for the forecasted demand and, at the same time, began to limit the number of essential items that each consumer could buy.
HEB monitors sales, trying to correlate spikes in demand with possible causes. The first big spike occurred on the day the NBA season was canceled, and Tom Hanks announced he was with covid-19. With information, they try to predict future spikes in demand.
Based on the experience with previous crises, HEB was prepared for the surge in demand for masks, hand sanitizers, water, and canned goods.
But Craig Boyan, president of HEB, confessed they could not predict the demand for one item: “We did not see runs on toilet paper as one of the first things to go out of stock. That was something we still kind of have a hard time understanding.”
Consumer behavior can be surprising. Understanding it is a challenge that makes one passionate about marketing.
(For more on HEB & coronavirus, see the Texas Monthly article at https://www.texasmonthly.com/food/heb-prepared-coronavirus-pandemic/.)