H-E-B'S FOOD-SAFETY LAB PROVIDES AN INDUSTRY SERVICE

David Merrefield

It has been observed more than once that the retailing side of the food-distribution business is divided into two camps, publicly held companies and privately held companies.

Public companies aren't having much fun these days since they face harsh competitive conditions while simultaneously trying to produce ever-growing returns for an intolerant Wall Street. And that all happens under the glare of unremitting publicity. Private companies, meanwhile, are able to quietly toil away, developing methods and strategies that can give them a significant competitive advantage.

One example of the latter is H.E. Butt's approach to food safety. That privately held, San Antonio-based retailer has long been in the forefront of food-safety initiatives and has operated its own laboratory for many years dedicated to ensuring that product it sells is safe.

Now, it develops, about six months ago, H-E-B opened a successor laboratory. It's a larger and improved facility dedicated, as was the previous lab, to ensuring that consumers of the 300-store chain are buying safe product.

As you'll see by reading the feature article about the new lab on Page 39, it's no small undertaking. The new 13,500-square-foot lab cost some $3.5 million to build and it has an annual operating budget of up to $1.2 million. The lab runs 12 hours a day, seven days a week, testing some 50 to 75 samples of ground beef and 300 samples of produce on a weekly basis. Another useful function is in the testing of consumer-returned product to determine if anything has gone wrong. If so, manufacturers can be informed. Some 32 people work in the lab on these and other functions.

This shows a real commitment on the part of H-E-B. And it's a level of commitment that few other retailers would care to shoulder, largely because of the substantial cost, but also because of less tangible considerations. Chief among them is the consideration of liability. It could be reasoned that the more direct responsibility a retailer takes in the process of testing for pathogens, the closer it is to answerability for any incident that might occur despite the exercise of that responsibility.

Luckily, H-E-B doesn't see it that way and instead turns that strange logic around to where it should be. H-E-B's thinking seems to go something like this: "Our shoppers are likely to direct their spending elsewhere should a contamination episode occur, so let's be sure we're doing all we can to prevent one from happening instead of relying on, say, the governmental inspection process."

This is good business. In 1999, H-E-B was way ahead of the U.S. Department of Agriculture in the detection of a problem with ground beef. H-E-B issued its own recall. The following week, sales of ground beef were not just restored, but were higher than had been anticipated. H-E-B was in control of the process and consumer trust was won.

But H-E-B's food-safety efforts are more than that. They also contribute greatly to the whole industry by alerting manufacturers to any defects in their processes that could creep in. And, it gives a glimpse into how different food retailing might be if financial pressures were to let up for a time.