When H-E-B launched their line of Joe V’s Smart Shop in 2010, retailers across the industry were curious to see how the value-first store would perform. Aside from initial criticism by Trader Joe’s on account of the name, the first store received a highly positive response from shoppers in the Greater Houston Area.
The barn-like entrance of the store differentiated it from other discounters, and once inside, customers were met with great values. The chain’s motto is “Low Prices, Quality Groceries,” a phrase that rings true today based on a price analysis conducted by Engage3. The ninth Joe V’s Smart Shop opened at the end of 2018 in Pasadena, Texas, showing that H-E-B’s investment in a discount banner continues to draw in new customers year after year. We visited a Houston-area Joe V’s to compare it to H-E-B’s main stores.
To begin, Joe V’s Smart Shop has a very distinctive entrance. The recessed sign is eye-catching and separates it from other stores in the area. The carts were standard supermarket size, and there were no flatbed carts like those available at warehouse retailers like Sam’s Club and Costco.
When we entered the store, items marked as “special buys” lined the sides and advertised especially good deals. From here, it was easy to guess that the majority of the products in the store would be bulk-packaged.
These deals continued into the main aisle, with prices marked on large yellow signs leading all the way into the produce section. Products were stacked in pallets three levels high and were priced lower than an average grocery store, but they were also in their original bulk packaging.
Produce and Fresh Food
When we reached the end of this aisle, the store opened up to the produce section and the other areas inside. Fruits and vegetables were piled high, allowing customers to move between the different produce items, a big change from the carefully curated displays in a normal H-E-B store. The focus here was on the value and volume Joe V’s offers.
Alongside the produce section was a Sushiya booth, a staple of H-E-B markets. This is where sushi is prepared and sold. From here, we had the option of going into the warehouse-style portion of Joe V’s or continue in grocery. We stopped by the meat section, seeing a sign advertising freshly-butchered meat. The selection was not as expansive as a traditional H-E-B location. This trend continued in the bakery, where there was a large sign boasting eight bread rolls for a dollar.
Once we left the fresh food areas, Joe V’s resembled a warehouse retailer much more closely. Bulk items, pallets, and spacious aisles made the store feel entirely different from a supermarket. Here lies Joe V’s biggest strength – the prices that consumers typically find at warehouse retailers without the membership fees. The store’s true character came out in these aisles, making the store seem inviting despite the bulk packaging and bright yellow signs.
General merchandise like cookware were also scattered throughout the store, but it was never overwhelming or unexpected. Joe V’s mainly sells groceries, and these items were stocked to complement the rest of the store’s inventory. The store’s weekly ad, available on the Joe V’s website, only lists food items and related products like paper towels.
A Hybrid Checkout
When we were ready to leave the store, we had a checkout experience we have never seen before. At first, it resembled a typical grocery store setup. There was a long conveyor belt, a cashier, and a bagging area. The difference was how the customers were paying for their goods.
The cashiers do not handle money. No cash, no coins, and no cards ever cross their hands. Instead, they were focused on ringing up the items and bagging them as quickly as possible to keep the lines down. The cashiers were friendly and had animated conversations with shoppers as they loaded up the carts. Customers either used the card payment system or inserted their bills and coins into a device that looked like an ATM.
The hybrid system created an experience similar to a self-checkout machine without having shoppers bag and scan their own purchases. It looked like this unassisted payment system was quicker and let customers still interact with a human cashier.
Warehouse Prices – Is it Sustainable?
Though Joe V’s Smart Shop shares many characteristics with other stores like warehouse retailers, it gave us a unique shopping experience. It provided value comparable to a membership warehouse, but without the membership fees.
Joe V’s checkout system is notable in an industry adopting tech innovations. Pure self-checkout kiosks face criticism from customers who are looking for a human connection while shopping. With Joe V’s checkout method, shoppers get human interaction, and cashiers are freed up to scan and bag quickly.
Overall, we think that the store delivers on its promise — “Low Prices, Quality Groceries.” The combination of an efficient labor model (cashier-less payment and the use of vendor boxes for display), bulk-size offerings, less assortment, and the use of H-E-B’s low-tier private label — all add up to a unique strategy that might prove to be a winning idea.