Two New Hispanic Retail Strategies Test Limits

Hispanic retail, like the customer it serves, is evolving very quickly. So it's dangerous to make assumptions about this segment because you're likely to be proven wrong.

Two recent cases — regarding Save-A-Lot and Mi Pueblo Food Stores — exhibit diverse growth avenues that test conventional assumptions.

The case of Save-A-Lot is interesting because so far few non-ethnic food retailers have completely succeeded in the Hispanic realm, although a number of chains are making progress with experiments. The challenge is that local Hispanic retailers generally do a better job than other grocers in serving Hispanic needs.

But you can't assume that will always be the case. Save-A-Lot's new initiative is a bid to bring new resources to Hispanic retailing. The company recently partnered with a Houston grocer to turn six former Save-A-Lot stores in South Texas into a new co-branded format called El Ahorro Save-A-Lot.

That Houston grocer is Rafael Ortega, who brings to the arrangement many years of local Hispanic expertise, including his operation of 15 El Ahorro supermarkets in South Texas. Save-A-Lot brings the resources of a large division of giant Supervalu, along with know-how in store label marketing. A Save-A-Lot official wasn't available for comment, but it's safe to assume the retailer hopes this will be a wider growth platform. So this deal is a hybrid for Save-A-Lot: It's not an acquisition of an ethnic retailer or an attempt to go the Hispanic market alone, but rather a partnership that falls somewhere in between. That's why it's a new wrinkle and well worth watching.

The case of Mi Pueblo is quite different but no less interesting. At a time when mainstream grocers strive to reach Hispanic clientele, we don't hear as much about Hispanic retailers trying to diversify beyond their base. But that doesn't mean it isn't happening. In fact some are actively trying to extend beyond their core.

That's a key reason why Mi Pueblo, the San Jose, Calif.-based operator of 17 Hispanic food stores, has hired industry veteran Rich Donckers as its president. Donckers is known for his work with Wal-Mart's supercenter operation in the 1980s and later involvement with upscale supermarkets. He wasn't tapped for his Hispanic expertise, but rather for his retail know-how, and a major goal will be to extend Mi Pueblo's customer base, the company said.

“While Mi Pueblo remains committed to serving its core customer and providing an authentic Hispanic shopping experience, Rich certainly will bring a lot of expertise in how we might more broadly market Mi Pueblo to new, diverse audiences,” the chain’s chairman and CEO, Juvenal Chavez, told SN recently.

In some ways the Save-A-Lot and Mi Pueblo situations are mirror images of each other. In the first case a chain with general appeal is hoping to further tap the Hispanic market, in the second scenario an Hispanic operator is trying to broaden beyond its niche.

All of this underscores the blurring lines and quickly changing dynamics in Hispanic retailing. This segment is likely to confound anyone who attempts to predict developments because it's nowhere near maturity in the United States.