Express Checkout For Retailing Innovations: Charles Butt, W’59

An an 8-year-old, Charles Butt began bagging groceries in his family’s stores — a business his grandmother had started with a $60 loan in 1905 on the ground floor of her home in the Texas Hill Country.

Today, Butt chairs the privately held, San Antonio, TX-based H-E-B supermarket chain, with 320 stores, including 25 locations in Mexico, and $13 billion in sales. The third-generation grocer became H-E-B’s CEO in 1971, and has led the company’s evolution into a major regional retailer with significant vertical integration in food processing.

Described by a retail trade publication as “a benchmark for market domination,” H-E-B has gobbled up two-thirds of the local supermarket dollars in several Texas metro areas, “in the process offering some encouragement to grocers that have resigned themselves to living in Wal-Mart’s lengthening shadow.” Indeed, the company is today the nation’s 15th largest grocery chain based on revenue and the leading company of its kind in Texas. In 2006, H-E-B was number 11 on Forbes’ list of largest privately held companies and the largest privately held company in Texas.

H-E-B is also known for its generosity, with 5 percent of annual pre-tax earnings given to civic and charitable organizations in the communities in which the company operates, including schools and food banks. H-E-B manages to offer the customers varied store formats: from the H-E-B Plus stores of 140,000 square feet to its 75,000-square-foot specialty gourmet offering, H-E-B Central Market. Each is tailored to the demographics and ethnicities of its immediate neighborhoods, experts say.

As Butt himself told Wharton Alumni Magazine in 1997, “The most important place a retailer can be is in the store. That’s where you can speak with customers personally and learn about their changing needs.”

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