San Antonio Grocer HEB Announces New Digital Lab in Austin

Austin—HEB said Wednesday it is opening what the grocer calls an innovation center to house both HEB’s growing digital team and the staff of Favor, a delivery startup HEB purchased earlier this year.

“This state-of-the-art space will be a hub for creativity and innovation as we continue to develop the ultimate digital experience for our customers,” Jag Bath, HEB’s chief digital officer and Favor CEO and president, said in a news release. “Bringing HEB and Favor closer together will allow us to promote collaboration between our two companies.”

The grocer is leasing a 81,000 square-foot building in East Austin and the lab, the company says, is expected to open in 2019 and house teams in product management, product design, and software engineering. HEB, which is headquartered in San Antonio, uses the Austin-based Favor to make e-commerce grocery deliveries.

The innovation lab is the latest in a series of moves by HEB this year in response to shifting consumer preferences and an emphasis on making shopping experiences more efficient using new technologies. In addition to buying Favor in February, the store made Bath its first-ever chief digital officer, and added Mike Georgoff as chief product officer for HEB Digital.

Same-day delivery service has become ground zero for grocers as the chains seek to combine in-store products with online ordering in order to compete with Amazon (NASDAQ: AMZN), which last year purchased Austin-based Whole Foods for nearly $14 billion. Target (NYSE: TGT), Walmart (NYSE: WMT), and Google (NASDAQ: GOOGL) have each boosted delivery to keep shoppers coming back. HEB, which operates more than 400 stores in Texas and Mexico, recently expanded its delivery territory, which is now available in more than 145 locations across Texas.

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