ANAHEIM, Calif. -- The future for marketing to the nation's growing Hispanic population is now, and Gigante believes it has found the right formula.
Its stores look very much like U.S. supermarkets at first glance, but with a definite Latino flavor, Justo Frias, president of Gigante Holdings International here, operators of Gigante USA, told SN. That "flavor" includes broad varieties of produce to meet the high demand for fresh; 100% scratch bakeries; service meat cases with thin cuts, offal and marinated meats; service seafood cases stacked high with shrimp, tilapia and red snapper; wide assortments of made-in-Mexico canned and packaged goods fully integrated into the grocery aisles; and bilingual signage.
"Every study we've looked at indicates that regardless of how far removed Latino consumers are from their roots, they never lose the taste for their native foods. Those tastes stay with them," Frias said.
"Clothing and styles change, economic levels change, but food tastes and preferences endure through the generations. And we want to be there to deliver those tastes to Californians present and future.
"With the growing Latino population in Southern California and elsewhere in the U.S., the Latino consumer is demanding more service, better prices and more products geared to their particular tastes, and that's what Gigante offers," Frias said.
He also said he believes the rapid growth of Hispanics across the United States will make Mexican flavors more universal. "In 20 or 30 or 40 years, demand for Mexican foods and spices will increase across all demographic groups as the Latino population continues to grow, and the future will be a beautiful mix of Latino and Anglo cultures and tastes," Frias said.
Gigante Holdings is a wholly owned subsidiary of Mexico City-based Grupo Gigante, Mexico's fourth largest supermarket operator in terms of sales ($2.8 billion in 2002, $2 billion through the first three quarters of 2003) and the second largest in terms of store numbers, behind Wal-Mart Mexico.
Grupo Gigante operates 484 stores in Mexico, Central America and the U.S., with the Mexico store base encompassing 102 Gigante hypermarkets averaging 50,000 square feet; 63 Super Gigante neighborhood markets averaging 20,000 square feet; 54 Bodega Gigante price-impact stores averaging 45,000 square feet; 42 SuperPrecio mom-and-pop stores of 1,500 square feet; and three PriceSmart club stores of 50,000 square feet. It also operates 44 Toks restaurants and, in separate joint ventures, 85 Radio Shacks and 84 Office Depots (including six in Guatemala, El Salvador and Costa Rica), plus seven stores in Southern California.
The U.S. stores include a sixth unit that opened earlier this month and a seventh location due to open later this week, with an eighth store planned for next month. Local sources estimated annual sales for the five Gigantes open for business prior to this month are approximately $100 million.
Gigante opened its first five California stores in suburban areas with Hispanic populations of 60% to 85%; however, the store that opened earlier this month and another due to open early next month are in urban areas of South-Central Los Angeles where Hispanics predominate but where there's also a heavy mix of African Americans. A store scheduled to open later this week in Chino, Calif., is in a heavily Hispanic area.
Steve Soto, president of the Los Angeles-based Mexican American Grocers Association, told SN he believes Gigante is "doing everything right. It's a full-blown Latino market. It's not a concept store where half the store is Latino and half is not. At Gigante, 99.9% of what it offers is Latino, but with bilingual signage, it's not afraid of attracting non-Latinos who walk in."
Given its volume, Gigante "is obviously taking business from a lot of other Latino-themed markets and from some of the chains," Soto said. "Customers are going in there because they're able to find everything they want for the whole family."
The success Gigante has enjoyed has helped other Hispanic store operators, Soto added, because it's raised the consciousness of vendors about the potential in the Hispanic community. "Manufacturers see Gigante investing millions of dollars, and they begin to question their long-held belief that Latinos are tail-end consumers who don't spend a lot of money, and that prompts them to increase the amount of spending they're doing on promotions to the Latino community, which helps all retailers," he explained.
Gigante's first two U.S. stores, which opened in 1999 in Pico Rivera and Arleta, serve a clientele that's more than 85% Hispanic, Frias said. The third store, opened in 2000 in Covina, serves a Hispanic population in the low 60s, "though that population is moving up dramatically," Frias said. The fourth and fifth stores, opened in 2002 and 2003, respectively, in Santa Fe Springs and Anaheim, serve a customer base that is around 60% Hispanic.
Of the two new urban stores, the one opened earlier this month serves a population that's 55% Hispanic and 45% African American, while the customer mix at the store due to open next month is 65% Hispanic and 35% African American. The Chino store will serve a 65% Hispanic base, with a mixture of Asian and Anglo consumers accounting for the rest.
Soto said Gigante's decision to open two stores in urban areas with a large mix of African American shoppers "shows the company knows how to work with the community."
Before it moved forward on plans to open those two stores, Frias said the company worked with African-American residents in the area to make sure the stores would meet their needs by taking busloads of them to its Pico Rivera store "to see how they felt about the format, the prices and the services, and to determine their comfort levels in our stores.
"What they told us was they liked what they saw, and those trips also raised the community's awareness of what we were doing so that we were able to become part of the neighborhood before we opened," he said.
"Our conclusion is that African Americans, like Latinos, want the same things in a supermarket -- nice facilities with good, aggressive pricing, quality products and friendly employees who respect them as customers."
Frias said it was difficult finding good locations in inner-city areas "because our stores require a lot of acreage," though he said Gigante would be willing to pursue more such locations.
The company anticipates opening four or five new stores next year -- all in suburban areas, though Frias declined to say where they would be located specifically.
He did say that reports the company plans to expand its operations into Northern California are incorrect. "There are some real-estate brokers saying that, but we do not have any plans at this time to go into Northern California, nor are there any specific sites there that we're pursuing," Frias told SN.
Gigante's current prototype runs 45,000 to 50,000 square feet, down from the 60,000 and 75,000-square-foot prototype of its first two stores, "because we think we can offer everything we want to, and do it efficiently in the smaller footprint," he explained.
According to Frias, the Gigante stores in California are more food-oriented than those in Mexico. "The stores in Mexico are 80,000 to 100,000 square feet, with a lot of nonfoods -- very similar to a Wal-Mart Supercenter," he explained.
"We believe our expertise lies in our ability to acquire Mexican food products, which is something Latino customers in Los Angeles want from their supermarkets."
After only four years in Southern California, Gigante is still a new name for some shoppers compared with a variety of independents who have been serving the area for 20 years or more.
Frias said the name recognition for the Gigante banner among first-generation Mexicans helps.
What might strike customers first as they enter a Gigante store is how bright it is. "Anyone who knows me knows I think lighting is a very important part of the store," Frias said.
The stores use high-intensity discharge lights suspended from white ceilings, and the combination "gives everything a nice glow, and brings out all the colors of the products," he explained. "Light makes a customer feel comfortable, and the combination of electric light, the natural light from the skylights, and the white ceiling gives the stores a warm feeling."
The newer stores utilize conventional shelving, with a 22-foot-high ceiling to give it a more upscale look.
The stores also feature wide aisles -- up to nine feet across, compared with a norm of seven at most supermarkets -- "because our customers, particularly in the evenings and on weekends, include a lot of families, with three or four people or more to a group, and we want the aisles to be large enough so they feel comfortable and to avoid clutter," Frias explained.
Wall signs feature both English and Spanish to denote each section -- indicating both "Frutas y Verduras" and "Fruits and Vegetables" above the produce, for example.
The walls also display merchandising slogans in Spanish only, more for spacial and aesthetic reasons instead of an unwillingness to translate them, Frias said -- for example, "del huerto a su hogar" ("from the field to your house") over produce; "nutritivos y deliciosos" ("nutritious and delicious") over the milk section, or "cortes con calidad certificada" ("cuts of meat with certified quality") over the service meat counter.
Aisle markers are bilingual, with English on one side and Spanish on the other. Decorative or informational signs are also bilingual, including signs featuring items "on sale" ("oferta").
