PALM SPRINGS, Calif. -- Independent retailers are challenging manufacturers to change the way they think about the Hispanic population and other ethnic segments.
That was the message that came through loud and clear during two panels -- on efficient store assortment and efficient product introductions -- during the 13th annual Mexican American Grocers Association conference here.
Retail panelists and others repeatedly urged manufacturers to adjust their focus within the independent marketplace.
Dick Gordon, vice president of sales for El Tapatio Markets, Maywood, Calif., said manufacturers do not give new Hispanic items the same kind of support they give to new mainstream items.
"What we see happening is that new items get the full media treatment in the Anglo community, plus in-store sampling, slotting allowances and heavy promotions, while items geared to the ethnic community do not," Gordon noted. "We think manufacturers need to make the same commitment to ethnic items. They need to get into a product area to stay, not dart in and out with promotions.
"Since manufacturers know how to introduce items into the Anglo community, we suggest they treat new-item introductions in the Hispanic community as if they were entering the Anglo community."
Jerry Valenzuela, director of operations for 32nd Street Market, Los Angeles, said manufacturers ought to realize "that the multicultural segment of Hispanics, Asians and blacks has become the general market. These groups are no longer minorities -- they are becoming mainstream, and they are here to stay. So manufacturers have to get on the bandwagon with product introductions -- not only to introduce new products but also to introduce new consumers to alternate products.
"With that kind of new attitude, they must find ways to strengthen their brands. But it's not simple, and it can take many years.
"Some companies have already made the commitment to cater to emerging population segments -- companies like Procter & Gamble, Anheuser-Busch, Coca-Cola, Pepsico, Philip Morris, Colgate-Palmolive, AT&T and McDonald's -- and they have adapted their marketing programs to create brand awareness and ultimately customer loyalty," Valenzuela added. "Independents are not a minority. We have a strong commitment to serving these segments and a willingness to partner with committed suppliers. But we can't strengthen your products without your commitment.
"Share with us by promoting not just ethnic items, but items that ethnics buy."
According to Valenzuela, most manufacturers consider independents as minority players, "and they don't know how to deal with us. But what they fail to realize is that each of us is more than one or three or five stores. When you look at independents as a group, you'll see there are 3,000 of us in southern California, and that's a pretty big chain."
Richard Rodgriguez, vice president of marketing for Mercado Latino, a distributor of Hispanic products based in Industry, Calif., said, "People say Hispanics are not big coupon users. But most coupons are not bilingual. Offering bilingual coupons would not add to the cost, so with all the Hispanics in this marketplace, it makes sense to make more coupons bilingual."
Gary Bernius, director of category management for Bradshaw-South, a food brokerage based in Santa Fe Springs, Calif., said the challenge for manufacturers trying to evaluate the Hispanic market segment is whether to look only at movement of national brands or to include Hispanic brands.
"The question is: At what point do we treat Hispanic brands like national brands?" Bernius said. "Many Hispanic brands are overlooked in analyzing sales data because they are often direct-store delivery items or bought by different buyers.
"The answer is to identify your Hispanic stores and look at their needs. For a large chain, that means combining DSD with mainline grocery items and evaluating movement. And for an independent, it means securing brand rankings for the overall market and comparing movement against Hispanic brands."
While manufacturers may sometimes overlook the significance of ethnic-oriented operators, chain retailers do not, John Mas, specialty foods category manager for Vons Cos., Arcadia, Calif., told the MAGA audience.
"A chain like Vons is just beginning to realize the need for different mixes of items at different stores to support the needs of each store's specific clientele," Mas said, "and that's what independent operators have been doing for years -- long before we knew the term 'Efficient Consumer Response.'
"Item selection must be community-based and store-specific," he added. "We can't operate cookie-cutter stores and expect to be successful. Having the right items in the right quantities to meet the needs of a specific store is how the better independents have been operating for years.
"Efficient assortment has to do with fine-tuning selection at store level to offer the right choices and the right quantities. Does a store have what a consumer wants and enough of it to keep demand up? It has to do with discontinuing some items in a given store so there's enough room for items that are needed. For a chain, efficient assortment means operating different stores with the same name on them and having the items customers want and knowing how much it takes to satisfy their needs at each store."
Mario Chavez, vice president of center store merchandising for Furr's Supermarket, Albuquerque, N.M., detailed the use of category management as a means of zeroing in on efficient assortment.
"Using category management, you can reduce the number of stock-keeping units up to 25% and still improve your selection image, or else you can continue to carry too many SKUs, use space inefficiently and have out-of-stocks," he said.
