Hispanic grocers

Sunday, June 1, 2003

SANTA ANA, Calif. -- In the produce section, piles of shiny, green pasilla chiles sit beside paddle-shaped cactus leaves and bumpy brown yucca roots. At the meat counter, a customer greets a clerk in Spanish and asks him to marinate some ranchera-style beef.

Red, white and green balloons -- the colors of the Mexican flag -- decorate the grocery store, and pop star Marco Antonio Solis croons a love song over the piped-in music system.

At Super Saver, there's almost no trace of the store's owner, Albertsons, the nation's second-largest supermarket chain. That's intentional. For the first time, the company has designed a store to cater to a specific ethnic group -- and Hispanics make a good target.

At 37 million, they're the nation's largest minority group, wielding about $580 billion in buying power in 2002, according to data from the Census Bureau and the Selig Center for Economic Growth at the University of Georgia.

"We're everywhere," said Steven Soto, president of the Mexican American Grocers Association, a trade group. Hispanics are "corporate America's competitive edge for the future. They're saying, 'Wait a minute. This is our future customer.'"

Retailers' rush to court Hispanic consumers extends to almost every sector. But in the Los Angeles area, with about 6 million Hispanics, marketing to Latinos has become a "dogfight," in Soto's words, and supermarkets serve as a prime example.

Some chains, like Super Savers and Gigante, Mexico's third-largest retailer, are opening entire stores catering to Hispanics. Others, like Ralphs and Vons, owned by national supermarket chains, and Wal-Mart are taking a different approach, incorporating imported items and brands popular among Hispanics in stores located in Latino neighborhoods.

Either way, companies know they must appeal to Hispanics -- or be left behind.

'We have to reach out'

"The Hispanic population is becoming the predominant population and to be successful we have to reach out to them," said Ralphs spokesman Terry O'Neil. The chain is trying to "bring in the products that the customers are looking for, and asking for, and, frankly, not coming to Ralphs to get."

Grocers "shied away from the ethnic communities" after the 1965 Watts riots and again after the Rodney King verdict in 1992, Soto said. But "today, you see they all want a piece of that pie."

Soto expects Gigante and Albertsons to have the most success because "to have a whole Latino concept is totally different."

Certainly, Albertsons sees Super Saver, which it hopes to open across the country, as one way to seize its share. It has also added items to appeal to Hispanics in its regular stores.

Last fall, it closed three underperforming stores in largely Hispanic areas and reopened them as Super Savers. Sales increased by double digit percentages.

The Santa Ana store's produce department is 30 percent larger than a typical Albertsons, with stacks of tart tomatillos, fragrant cilantro and bins of deep red, dried chile pods.

The service meat counter -- a display of whole tilapia fish, marinated carne al pastor pork and other varieties and cuts popular among Hispanics -- stretches 48 feet, a third larger than typical stores.

"The meat department's good," said Art Brambila, who was buying 40 pounds of thinly sliced beef for a recent barbecue. "If you buy more than three pounds, they drop the price."

The employees are bilingual, as are the signs advertising products on the shelves. Loaves of white Wonder Bread sit alongside Bimbo, a popular Mexican brand. Johnson & Johnson brand baby shampoo is next to Para Mi Bebe; Jarritos guava soda near Coke and Velveeta close to crumbly Mexican cotija cheese.

"Not being an Albertsons frees us to do things that we wouldn't normally do," said Andrew Kramer, Albertsons' director of ethnic marketing. "It also doesn't hold us to the same sort of traditional offerings that an Albertsons would have."

Super Savers' prices also are lower than a typical Albertsons, although the company won't say how much. They've been kept down in part because the company reached an agreement with the retail clerks union. Employees at Super Savers make an average of $13.40 an hour, while those at an Albertsons make about $15.

While many Super Savers customers may not know the stores are owned by Albertsons, competitor Gigante is betting shoppers will recognize its name.

Gigante, which has 220 stores in Mexico, has opened five in Southern California since 1999. Three more are set to open this year.

The stores are smaller than those in Mexico but similar in style. Some products are new, designed to cater to Americanized tastes. Bolillo rolls, for example, are available in whole wheat.

Gigante plans to follow its customers to the suburbs and beyond, and wants to eventually be "the No. 1 Latino chain in the United States," said Justo Frias, president of Gigante USA, Inc.

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