Hispanic Operators Grow in Southern California

ELLIOT ZWIEBACH

A strong core of Hispanic operators has established a solid niche in Southern California.

As a group, they account for at least 10% of the area's market share, according to some observers.

The largest of the Hispanic-oriented chains, Superior Super Warehouse, operates 24 stores and has a market share of 3.3% — about the same as Whole Foods Market's 3.1% share with the same number of stores, albeit in different demographic areas.

Superior even runs TV ads that present the chain as a conventional supermarket, with no mention made of its store locations in heavily Hispanic areas. The commercials also pronounce the chain's name in an American English fashion, rather than putting the accent on the last syllable, as the name is usually pronounced among Hispanics.

There are approximately 7 million Hispanics in Southern California, accounting for approximately 44% of the area's population, and their numbers are growing.

Randy Delgado, general manager of the Southern California region for Unified Grocers, Los Angeles, said close to half the volume at his company comes from operators who cater to the Hispanic population.

“A lot of those companies have very young ownerships, and they're doing a good job not only with succession planning but also developing good people within the organizations that enable them to grow,” he said.

However, for any of them to challenge the major chains, “they would have to cross over to more conventional operations,” he said — something unlikely to happen, given the fate of Gigante, the Mexico-based chain that came and went in the course of nine years because Hispanics considered the stores too Anglo-oriented and Anglos felt they were too Hispanic-oriented. “The locations were not correct — they were trying to attract too broad an audience,” one observer told SN.

The seven Gigante stores were acquired last year by Bodega Latina, which operates as El Super, boosting El Super from nine to 16 stores, including one in Phoenix.

In May, Nogales Investors, a Los Angeles-based private equity firm, and Breco Holdings, a Houston-based investor, formed a joint venture called El Marchante to purchase Numero Uno Markets in Los Angeles, with an eye toward using the eight stores as a base to make additional Hispanic-oriented acquisitions.

Alfredo Brener, chief executive officer of Breco and a 50% partner in the joint venture, said his group plans “to acquire other independents or open our own stores.”

He said the company hopes to have close to 40 stores within two years, though those locations will probably be spread over a wide geography that might not be contiguous.

“We would like them to be contiguous, but that is not a requirement,” he told SN.

Although the Numero Uno stores compete with a couple of Ralphs locations, “we believe we understand the Hispanic consumer better,” Brener said.

Hispanic shoppers have a variety of options, with Superior Markets, K.V. Mart and El Super operating price-impact stores, while Northgate, Vallarta, Big Saver, Super A and Pro's all operate more conventional supermarkets.

A couple of those chains are becoming regional, with Pro's expanding to Arizona, Texas and New Mexico, and Vallarta moving north to Fresno and south to San Diego.