KROGER, UNITED DEBUT HISPANIC FORMATS

ELLIOT ZWIEBACH / JON SPRINGER

Southwest retailers United Supermarkets and Fry's are flying "Mercado" banners over converted conventional supermarkets.

Fry's, the Phoenix-based division of Kroger, Cincinnati, debuted Fry's Mercado at a location in Phoenix last week. Lubbock, Texas-based United Supermarkets last month rebannered two acquired stores in Wichita Falls, Texas, as Super Mercado, though the company said it will take several months to convert them to a full Hispanic-oriented format.

The new stores follow other recent experiments with Hispanic-oriented banners by mainstream operators. Lakeland, Fla.-based Publix Super Markets last year opened two "Sabor" outlets in Florida, and Minneapolis-based Supervalu in January of this year opened its first Hispanic store - called El Primero Mercado - at a converted Shoppers Food & Pharmacy in Manassas, Va.

Fry's Mercado - the first store in Kroger's network designed and bannered specifically to serve Hispanic shoppers - could serve as a prototype for additional stores and remodels, Fry's spokeswoman Kendra Doyel told SN last week, though she added that no additional Mercado stores were currently under development.

Features of the redesigned 66,000-square-foot store include leased space to independent merchants selling items such as clothing, bridal wear, jewelry and accessories, and food offerings including a restaurant for in-store or take-home consumption; a Hispanic tortilleria and scratch bakery; and renamed and remerchandised product departments.

The store, located on West McDowell Road in Phoenix, competes with other Hispanic-themed retailers, including a neighboring Food City operated by Bashas', and is located only a few miles from the site of a 100,000-square-foot Ranch Market set to open later this year, Brian Ward, a retail specialist with real estate services firm Retail Brokers Inc., Scottsdale, Ariz., told SN. "The Hispanic population in Phoenix overall is roughly 25% to 30%, but we've had such an influx, in some neighborhoods the concentration is probably 65% or 70%. There's great demand for a Hispanic grocer, and it will be interesting to see what the format looks like."

The Fry's Mercado banner, Doyel said, "has been in the works for several years," and illustrates Kroger's ongoing initiative to fine-tune its stores under a common banner to individual neighborhood demographics. A new Fry's store opened late last month under the Fry's Signature banner - featuring items like kitchenware, wines and furniture - in the affluent Grayhawk community in neighboring Scottsdale.

Also late month, United's Super Mercado stores reopened under their new banners. The stores were acquired from Brookshire Grocery Co., and have been outfitted with increased produce selections, more Hispanic-oriented baked goods, more prepared foods and more Hispanic items in the Center Store, according to United. The retailer also is considering adding fresh tortilla makers and tropical fruit frescas, and converting the meat sections to full-service carnicerias, featuring fresh fajitas, carnitas and chorizo, among other specialty items.

"The extent of the remodel activity could depend on the success of these stores," Eddie Owens, the chain's director of communications, told SN. "If we think this format will work for the long term, the stores will undergo a significant overhaul."

United operates 48 stores in northern Texas, encompassing 40 conventional units utilizing the United banner, five upscale stores in several larger cities under the Market Street banner, and, following the acquisition, three Super Mercados.

The two newest stores - one of 49,000 square feet, the other at 52,000 square feet - are located about five miles apart.

United opened the original Super Mercado in 2001 in Plainview, Texas - "one of the most heavily Hispanic regions in our operating area," Owens said - and because it was built from the ground up, it features a more Hispanic approach, including Spanish architecture, an area for outdoor dining and a panoply of fresh and packaged offerings. The two acquired stores are starting with a smaller Hispanic assortment, he noted.

Because the company is already operating several United-banner stores nearby and the area was too small to accommodate a Market Street format, it opted to go with the Super Mercados format, he said.

United also chose that format at the urging of the North Texas Hispanic Chamber of Commerce, Owens said.

Since United opened the original Super Mercado five years ago, "our focus has been on developing the Market Street brand," Owens said. "But we've refined that to the point where now we're ready to focus on the Super Mercado format."

The two stores will have an advisory board of consumers to solicit community feedback.