H-E-B, Publix take on Kroger with new stores in its hometown and other fast-growing markets
In March, dozens of people waited in a long line — for sandwiches known as “pub subs,” baked goods or other items — wrapping around the new Publix store in Walton, Kentucky. It was the Florida grocer’s first in the region and a direct challenge to Kroger, whose corporate headquarters is just over 20 miles north in downtown Cincinnati.
In Texas growth markets, Kroger faces another formidable opponent: Since 2022, the popular San Antonio-based grocer H-E-B has been rapidly expanding its presence in the Dallas-Fort Worth area with about a dozen new stores now open or in the works. The chain had previously taken market share from Kroger in Houston over the past couple of decades.
Meanwhile, other grocers have announced growth plans on a national scale. Aldi plans to open 225 stores this year, a record for the chain, as part of a five-year strategy. Sprouts has plans for at least 35 new stores this year. Walmart opened its first new Neighborhood Market grocery store in three years in 2024 and its first Supercenter in four years in 2025.
All of this is putting further pressure on Kroger, the largest traditional supermarket operator in the U.S. by revenue — not including Walmart or Costco — according to Deloitte. The company currently lacks the direction of permanent leadership after its longtime CEO Rodney McMullen resigned in March after an investigation of personal conduct. The company is also working to cut costs, closing 60 underperforming stores, after spending more than $1 billion on its failed pursuit of competitor Albertsons. A Kroger spokesperson did not respond to a request for comment for this story.
Additionally, these retailers also beat Kroger in revenue growth, according to the NRF and Kantar’s annual list of the top 100 U.S. retailers by sales. Aldi grew 14% from 2023 to 2024, Sprouts grew 13%, H-E-B grew 7%, and Publix grew 5%, while Kroger grew 2%, per the report.
Erich Kahner, director of strategy and insights in the Americas for Dunnhumby, told Modern Retail that, because of improvements in the consumer and economic environment since the worst of the Covid-19 pandemic, grocers now may be more willing to make longer-term bets on expanding their private labels, growing their store count or making acquisitions.
“Compared to the last five years, the past 12 months have been relatively unique in the sense that customers haven’t faced a ton of disruption in their monthly budgets, unemployment has been pretty steady, interest rates have been creeping back down and inflation has been relatively normal,” Kahner said.
‘A key battleground’ for Kroger
A Dunnhumby study measuring both customer perception and financial data found H-E-B to be the No. 1 grocery store in the U.S. in 2024, the fourth time within eight years. Kroger ranked No. 17.
“Given the strength of H-E-B in Texas, I think that’s a key battleground for Kroger that represents the challenge they face in a lot of their frontier markets,” being markets outside of its home region of the Midwest, Kahner said.
He added that the further away grocers get from their home markets, the share of customer grocery budgets they are able to capture erodes. The average Kroger customer in Cincinnati gives about 50% of their grocery budget to Kroger, according to Kahner, based on his firm’s data (which is based on the consumer perception study as well as Placer.ai foot traffic data from cell phones), and in Dallas, it’s 30% of their grocery budget. In Louisville, Publix gets about 20% of the average shopper’s grocery budget, but 40% in Orlando.
Kroger has been in Texas since the ’50s, but Kahner believes its market share is at risk, given H-E-B’s strong perception throughout Texas.
“Each Kroger location only has one or two H-E-Bs [in the Dallas area] to go up against, but we would expect H-E-B to continue to densify in Dallas until that number is more like four or five locations that each Kroger is going up against,” he said.
Kroger versus Publix
On the Publix front, Kahner pointed to Louisville as a model of what could happen in Cincinnati. Louisville saw its first Publix store open in 2024, and already, that store is drawing shoppers from 15 of Kroger’s 25 Louisville locations, based on the firm’s shopper data. “That Publix is definitely a threat to Kroger – just that single Publix alone.”
Dunnhumby found Kroger’s strength lies in its loyalty and personalization capabilities digitally, while H-E-B has the upper hand on private brand quality and its local community connection and, Publix wins on assortment and store experience. Kroger has still improved over the past four or five years, Kahner said.
“Kroger has actually been on an upward journey in the strength of its overall brand equity with customers,” Kahner said. “They haven’t always been in our top quartile; they’ve snuck in the top quartile the last couple of years.”
Ross Cloyd, grocery analyst for Kantar, said he has personally seen changes in Kroger’s merchandising, assortment and store experience from market to market, based on which competitors are nearby. He said he noticed in Georgia that Kroger would have signs in its stores detailing at which local farms and farmers the produce came from, similar to messaging created by Publix. Additionally, in Texas he noticed “Texas proud” signage and dedicated local sections that would remind him of H-E-B — neither of which he would see in his home state of Indiana.
And as Publix began expanding in Ohio and Kentucky over the last couple of years, Kroger has invested tens of millions in its stores in the area. “I feel like that’s the response from Kroger that they’re now seeing this pressure, that that’s now becoming a new battleground area,” Cloyd said.