Why grocers like HEB and Target are vying for college students

Grocers eye college campuses to attract students.

Supermarket chain HEB and the University of Texas at Austin partnered last month to offer same-day grocery deliveries to college students and campus staff, according to the school’s website. The partnership comes just months after HEB entered into a food delivery partnership with Sam Houston State University in November. Target just recently opened its first small store within walking distance of the College of Charleston — one of many locations the retail giant has opened near campus in recent years.

While college-age students have less purchasing power than their older peers, they can be a long-term investment for many grocers. Experts say that building a relationship with buyers early on can help retailers build a loyal and digitally-savvy customer base. Some retailers have partnered with the university itself to create delivery centers, while others have chosen to open locations very close to campus.

“College students make up Gen Z, a large emerging shopper base that these retailers will hopefully gain the loyalty of over time,” said Rachel Dalton, head of retail insights at Kantar.

Young and tech-savvy

College students are much more comfortable using apps or online delivery services to shop for groceries, said Dhruv Grewal, professor of marketing, commerce and e-business at Babson College. Students are just beginning to develop their shopping habits, which means they are much more open to trying new methods of acquiring groceries, he said.

“If they are deployed [pilot programs] students would be more inclined to provide more input,” Grewal said. “It would be great for a proving ground.”

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In the case of HE-B, everything it offers online, from products to cleaning products, is available for the University of Texas at Austin students to purchase through the HEB app or heb.com. It also gives buyers the option to choose a delivery time and location. HEB partnered with Texas A&M for grocery deliveries back in 2021. HEB did not immediately respond to requests for comment.

“HEB has been a proud sponsor of academic programs and research at the University of Texas since 1976 and is fortunate to have hundreds of Longhorns working at our company today,” said Laura Estes, marketing director for HEB in Central Texas, in the announcement the University. “Over the years, our partnership has become a source of pride for both organizations. With that in mind, we started on-campus HEB delivery to the University of Texas at Austin community. As a former Longhorn, I hope this added benefit becomes a widespread convenience for all students.”

At SHSU and Texas A&M, HEB has dedicated on-campus delivery zones for easy pickup. Kroger followed the same strategy when it partnered with the University of Kentucky in October. The school has made the southwest corner of the Kroger Field Orange Lot a pickup location for online grocery orders.

Pedestrian traffic all day

With thousands of students living on campus, Kantar’s Dalton said grocers have an opportunity to own large numbers of shoppers and gain more market share by targeting colleges. In Texas, where many HE-B collegiate partnerships exist, the average college student spends about $181 a month, according to researchers at the Education Data Initiative. The research firm estimates that the average grocery cost for a college student is $250, while the average person spends around $356.

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Dalton said that while college students’ grocery transactions are smaller than those of working-class individuals, targeting this demographic can be beneficial for overall retailer branding and awareness.

“They probably have smaller pockets overall in terms of spending. They don’t do big grocery stores every week,” she said. “But for a grocer looking to break into this particular generation and shopper, it’s really a unique opportunity to do so because it’s not just the immediate time [results] which they look at in terms of total basket sales, but it’s longer term if they can make those connections.

But what they lack in basket size, they make up for in foot traffic. Because college students have different schedules, neighboring grocery stores might experience a more even number of shoppers coming into the stores, Grewal said.

“If it’s near the university, it would definitely have a much broader time horizon for foot traffic than, say, a suburban grocery store,” he said. “Students are up much later and quite a number of them are up much earlier.”

Target specifically designed these stores to fit the lifestyle of college students. Businesses near campus—like the University of Southern California, Boston University, and the University of North Carolina at Chapel Hill—make for quick and convenient trips. In 2018, Target opened 10 small-format stores on or near college campuses. The Daily Pennsylvanian reported in November that Target plans to open a location near the University of Pennsylvania.

Similar to Target, Trader Joe’s recently opened a store in College Park in October. 300 customers lined up on opening day, including college students from the nearby University of Maryland, The Hyattsville Wire reported.

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