H-E-B is planting its digital flag in Austin with the grocer announcing Wednesday it is building a facility there to house its delivery subsidiary Favor and expanding digital departments.
The 81,000-square-foot building, currently a warehouse near one of its stores in East Austin, is set to be completed next spring and will become home to hundreds of H-E-B’s tech workers.
Despite some recent progress, H-E-B’s intention to add hundreds of new tech positions in Austin is a reminder of the work San Antonio needs to do to catch up in regards to developing its tech ecosystem, said David Heard, CEO of local advocacy group Tech Bloc.
“[H-E-B is] racing into the new world of digital largely accelerated by Amazon’s entry into their market,” he said, referencing Amazon’s 2017 purchase of Austin-based Whole Foods. “Then you have a wonderful investment in that new part of their business heading to Austin and not here in San Antonio.
“There are a lot of super smart people at H-E-B who are entrusted with making the right decisions for their company. I’m sure they’re making choices that are right for them, but this underscores the challenge and the opportunity for San Antonio. The onus is on us to up our game and make sure we’re the more obvious choice [for new tech facilities] in the future. Today we aren’t.”
The East Austin facility will include an innovation lab and collaborative workspace for H-E-B digital team employees and will serve as Favor’s corporate headquarters. “Bringing H-E-B and Favor closer together will allow us to promote collaboration between our two companies as we strengthen our commitment to building out H-E-B’s omnichannel services,” Jag Bath, chief digital officer of H-E-B and president and CEO of Favor, stated in a press release.
The company’s San Antonio-based tech workers will stay at H-E-B’s South Flores Street headquarters, spokeswoman Julie Bedingfield said. Among the tech-centric positions officing in San Antonio are software developers, data scientists, and network administrators.
“H-E-B has a well-established technology and digital presence in San Antonio that will remain in San Antonio,” Bedingfield said. “This new building is in addition to the office spaces we already occupy in San Antonio and Austin. H-E-B will use the workspace for Austin-based H-E-B Digital Partners and Favor’s team members. With this expanded Austin footprint, H-E-B and Favor plan to add several hundred jobs and are actively hiring across all areas of expertise, including product management, product design, and software engineering.”
The announcement is a signal of intent by the grocer to grow its expanding suite of digital products – including its e-commerce pickup and delivery services H-E-B Curbside and H-E-B Delivery, respectively – but a blow to San Antonio’s ambitions of going toe-to-toe with its neighbor to the north, an established tech hub.
High-tech industries employ tens of thousands more workers in the greater Austin area than in San Antonio.
H-E-B’s new footprint in Austin is the latest in a series of moves by some of San Antonio’s largest employers to establish outposts in the state capital to take advantage of its deep talent pool. Last February, USAA launched its digital design studio in downtown Austin. Managed cloud provider Rackspace has hundreds of workers in its Austin office.
Austin was tabbed in July as the site of the forthcoming U.S. Army Futures Command, where new technologies will be developed for wartime needs.
One of Tech Bloc’s main goals is to draw more technical talent to San Antonio. Heard and other tech leaders have said the city suffers from a negative perception that makes recruiting and retaining tech talent difficult. That was an impetus behind hiring – thanks in part to local government subsidies – Chief Talent Recruitment Officer Jeannine Wild, whose job description entails placing top information technology talent in positions at local companies.
H-E-B has ramped up its digital offerings since Amazon scooped up Whole Foods last year. After the acquisition, Whole Foods began marking down much of its product line and providing free grocery delivery to members of the discounted-shipping service Amazon Prime.
Jenna Saucedo-Herrera, president and CEO of the San Antonio Economic Development Foundation, said H-E-B’s decision to build a tech facility in Austin was part of the company’s consolidation of its existing staff in Austin as well as its subsidiary Favor. Therefore, there was no competitive process for the project, she said.
“H-E-B will continue to grow substantially in San Antonio where they maintain a strong digital presence that has the potential to grow in the years to come,” Saucedo-Herrera said. “We are confident that San Antonio’s favorable business environment, skilled workforce and competitive cost of doing business will continue to support H-E-B’s success in this community.”
H-E-B acquired Austin-based delivery service Favor in February. Bath, its CEO, splits his time between Austin and San Antonio, Bedingfield said.
The company last month snapped up Mike Georgoff to be its chief product officer. Georgoff had been working in the same position at Main Street Hub, an Austin-based digital marketing firm.
H-E-B’s delivery and curbside services are available in more than 145 locations in Texas and will climb to 165 stores this year.
Why not San Antonio, HEB must think the only people at have education is warehouse workers, the smart people must be in Austin
Well, that’s basically how it is. Despite being smaller than San Antonio, Austin has almost double the amount of college graduates than we do. And in the tech industry, that number is even higher. They blow us out of the water. Out of the top 50 markets, we ranked 47 (and falling) on tech talent; Austin ranked 6th:
https://therivardreport.com/heres-how-san-antonio-ranks-for-tech-talent-in-north-america/
So why would HEB put these jobs here when they have a much larger and talented tech workforce in Austin? That would make zero sense. Not to mention the fact that the kinds of people who get these jobs would prefer to live in Austin nine times out of ten. It’s a much more exciting place to be than San Antonio. No point in denying that; we need to accept it and figure out how we can address it. The only thing we’ve got going for us right now is affordability. But these days people are willing to pay more for better quality of life.
It is what it is.
As much as I love HEB, this is kind of a slap in the face.
Why does everything have to be painted as “San Antonio vs. Austin”? Austin has advantages and so does SA. It would have nice (and very doable) for HEB to have put this facility in SA, but let’s not forget that those people in Austin will be answering to the people at HEB’s headquarters here in San Antonio. And don’t forget that HEB has lots of stores in Austin, so it has to show Austin some love now and then, too.
HEB missed a great opportunity to showcase San Antonio in this limelight. HEB has dissapointed the citizens of SA. Another missed opportunity. All about the dollar and HEB flaked on SA.
I think in this case it was “all about the talent.”
Very true. This wasn’t about the money. HEB could have probably saved $ keeping this in San Antonio. I’m a native San Antonian but have been gone 20 years now. I’ve been in Austin 4 years and no way would I ever consider moving back to San Antonio – I just can’t put my finger on it but the close-mindedness of San Antonio overall the culture is a turnoff. The machismo exhibited by many people there is a turnoff. The massive pockets of crime infested areas is a turnoff. On top of – my similar Tech Job in Austin would pay 20-30K less in San Antonio. I’ve looked. No thanks. Austin is a bit more to live in – but not THAT much more to justify a 20-30K paycut. This was purely about talent and knowing HEB would have a much larger talent pool in Austin than San Antonio.
If you have been gone for twenty years then you have no idea what San Antonio is actually like today. To each his own, but there’s no way that I would choose to live in Austin over San Antonio. As a place to live, San Antonio has steadily gotten better and Austin has gotten much, much worse.
And you lived in Austin for how long?
Companies with a strong brand and broad reach will continue to make game changing investememts in places with a sound history of taking calculated economic risk that yield a strong ROÍ. congrats to HEB and thank you for your local presence and support.
Funny how people voice their frustration on company profits rather than
The city’s lack of focus on economic power. The city council and Mayor N have their focus on the wrong areas. I’m speaking from an MBA perspective.
HEB would have to realize that professional people with an education require a salary!
San Antonio has a culture of underpaying employees. There are how many colleges here? Sorry, but SA has a lot of college educated people who realize if they want to make any money to raise their standard of living they have to go elsewhere. SA is a great town to visit or retire in, but not to practice one’s profession.
My 26 year old son has been wanting to leave San Antonio for that exact reason. He graduated with a degree in computer programming from UTSA but the jobs are just not here like they are in Austin or elsewhere so he will be moving soon.
KoolKat86, would you enlighten us with your not-at-all douchy-sounding MBA wisdom and tell us what our Mayor and City Council are getting wrong about “economic power”?
San Antonio continually finds it hard to attract top talent in every industry. It’s almost as if talented people who can work anywhere, are looking for more than just low cost of living. Some interesting things are happening here, but there’s still a strong isolationist, status-quo mentality that’s evident in our culture and local politics that makes our culture less inviting to outsiders. Also, Austin offers some great recreational opportunities with the Greenbelt, Zilker Park, Town Lake and the nearby swimming holes out of town. In the San Antonio area, we’ve turned most of our local, interesting natural features into drainage ditches and subdivisions (though we’re starting to try and recover some of them.) Ironically, we’ve let this happen in the name of “economic development,” while it simultaneously makes our city less appealing to anyone who might relocate here.
HEB has added a significant number of jobs here locally–and those are not warehouse jobs, they’re skilled marketing and tech jobs–they just don’t get press for adding them here. Favor was HQ in Austin before HEB acquired them, and it makes sense to expand their presence in Austin as Favor/HEB digital grow, as opposed to requiring all of those Favor employees to move to San Antonio and expanding in SA. They’d lose a lot of employees if they forced a move to San Antonio on them. Also, creatives and digital employees need collaboration in order to innovate, so I think HEB made the right move in getting them under one roof. They’ll continue to grow and expand in San Antonio as well. Everyone calm down.
and we continue to give HEB tax incentives, their headquarters is on a street that the city closed off for them! Your tax payer rewards.