H-E-B will construct a 150,000-square-foot tech center at its downtown San Antonio headquarters, bringing 500 new jobs to power the growth of its digital arm, the company announced Wednesday, just weeks after launching a new tech hub in Austin.

Expected to be built by summer 2022, the new five-story facility in the heart of H-E-B’s Arsenal campus – bounded by the San Antonio River and Arsenal, South Flores, and César Chávez streets – will house about 1,000 employees. Construction is slated to begin next summer, according to a press release.

After the company disclosed plans to stand up a tech hub in Austin last fall, handwringing ensued among some in the local business community who took H-E-B’s decision as a slight toward San Antonio’s smaller tech talent pool. They also saw it as a sign San Antonio’s quality-of-life appeal still fell short of the Texas capital’s.

“The creation of 500 jobs right here in the heart of downtown San Antonio will be great for the city, not just great for H-E-B,” said Jag Bath, H-E-B’s chief digital officer. “We are all collectively hopeful that the response will be good” from the business community.

Foraying deeper into the world of e-commerce and on-demand services, the grocer has in recent years acquired tech-enabled delivery startup Favor and rolled out new e-commerce tools, such as placing orders online for delivery or curbside pickup; autonomous vehicle delivery; and smartphone-enabled self-checkout.

It’s all part of a strategy to “stitch digital into the fabric of H-E-B,” Bath said. 

“H-E-B is a well-established brand and company,” Bath said. “Our customers love us. Our customers have very quickly adopted what we’re offering through our digital channels. Our digital channels offer additional options for our customers to shop how they want.”

A map shows the general location of H-E-B’s future 150,000-square-foot tech center at its downtown headquarters.

Although H-E-B’s share of the South and Central Texas grocery store market has verged on monopoly in recent decades, Amazon’s recent arrival into the realm of grocery e-commerce with its purchase of Whole Foods has cast a pall on H-E-B’s ability to maintain the same foothold.

But the grocer’s recent investments in technology initiatives and advancements to its e-commerce offerings show an increasing willingness on the part of the more-than-a-century-old company to go toe-to-toe with arguably the most disruptive force in retail in the 21st century, along with its more traditional competitors in the space, such as Kroger and Walmart.

“They are up against what many would argue is the fiercest competitor across any industry, across the globe, which is Amazon,” said David Heard, CEO of local tech trade group Tech Bloc. “H-E-B has committed to not just being a follower in digital and sort of replicating other things people are doing. They’ve made a commitment to innovate. They want to lead in this space.”

A City official with knowledge of the matter said no economic development incentives would be sought in connection with the project.

H-E-B Digital’s staff comprises more than 1,000 employees in San Antonio and several hundred at its newly established East Austin tech hub. Bath said new roles created by H-E-B Digital’s expansion at the downtown San Antonio campus will consist of software engineers, mobile app developers, product designers, and other technical positions.

Mayor Ron Nirenberg said H-E-B’s decision to locate its new tech center in San Antonio reaffirms the City’s vision of becoming a 21st-century economy with a thriving tech sector.

“This is a signal to the corporation internally and to the community more widely that San Antonio is in fact growing as a hub for the [tech] industry,” Nirenberg said. “A talented, capable tech pipeline is present here enough to plant a very clear flag. This is a focal point for the commerce of the future.”

That a large enterprise employer of H-E-B’s caliber is growing its tech workforce in San Antonio is a big win for the region, said Jenna Saucedo-Herrera, president and CEO of the San Antonio Economic Development Foundation.

With a presence spanning nearly all of Texas and northeast Mexico, the company employs more than 116,000.

JJ Velasquez

JJ Velasquez

JJ Velasquez was a columnist, former editor and reporter at the San Antonio Report.