We Are Family

WENDY TOTH

For members of the burgeoning U.S. Hispanic population, an ethnic section in an elusive corner of the store just isn't going to cut it.

That's why mainstream retailers like Sam's Club, United Supermarkets and Publix Super Markets are opting for formats that cater to Hispanics in areas of the country where the demographic's growth has been particularly pronounced.

Stores that are surrounded by what has proven to be a very loyal, brand-conscious customer base have been able to attract Hispanic shoppers by providing not just the right product mix, but an experience that approximates shopping “back home,” retailers told SN.

Before Grande Foods, Cornelius, Ore., converted from its 70-year-old Hank's Thriftway banner two years ago, the consumer mix was about 80% Anglo and 20% Hispanic, said owner Tom Evans. But now that mix has reversed.

After converting the store as a way to avoid direct competition from a nearby Wal-Mart, Evans found that he could draw much of the area's 40% Hispanic population by accommodating an already existing shopping style.

“On Sundays, entire families come out to shop together,” he said. This led Evans to create a spacious, communal store, packed with an authentic product mix.

His conversion strategy included shrinking Center Store in favor of a targeted product mix and more space for fresh and freshly prepared selections.

“When I went from mainstream to Hispanic, I took out three full aisles in Center Store, going from 14 to 11, and doubled produce and meat,” Evans said. He also reduced the frozen food section from 180 feet to 60 feet and added the La Cocina kitchen section, which features seating for 60 and employs three cooks, who prepare original recipes every day.

“The whole family will stop in front of the kitchen, especially on Sundays, and sit down to have lunch,” Evans said.

The Grande Foods Center Store shopping experience is also worlds away from what it was.

For example: Ketchup barely leaves the shelf, while hot sauce sells consistently; American detergent, like Procter & Gamble's Tide, sells little, taking up 2 feet of shelf space, while Mexican brands of laundry detergent, like P&G's Ariel, take up 8 feet and are top sellers; Styrofoam cups and plates are popular, while paper plates and cups lag behind; and Mazola oil sells well, but the top-selling brand is 123 Cooking Oil, imported from Mexico.

Although the Grande Foods format struggled in its first year, winning over Hispanic shoppers by catering to their needs has put the store “in the black.”

This process can take time, especially since members of the demographic usually prefer to visit stores they can identify with, Luis de la Mata, president of consulting firm Churchtree, Los Angeles, observed.

This shopping preference may have played into Lakeland, Fla.-based Publix Super Markets' decision to dedicate entire stores to Hispanic shoppers.

After steadily increasing the Hispanic selections in its mainstream locations, the chain piloted Publix Sabor banners in Kissimmee, Fla., and Hialeah, Fla., in 2005.

“We opened our third location a little over a year ago, in Miami,” said spokeswoman Maria Brous.

Such stores are more conducive to the lifestyles of Hispanic shoppers, industry observers note.

“Hispanic consumers regard shopping as a social experience,” said Robert Passikoff, president of Brand Keys, New York, a brand and customer loyalty research consultancy. “You can't just bring your family along and talk about food and recipes in one corner of one aisle.”

United Supermarkets, Lubbock, Texas, took advantage of this knowledge when it opened its first Amigos banner in Plainview, Texas, in 2007. A second Amigos store opened in Lubbock late last year, and a third is slated for Amarillo, Texas, this summer. All three were converted from existing United banners.

Amigos also made space for fresh and community-oriented sections by shrinking Center Store.

“When you look at the Center Store set in Amigos compared to our traditional stores, we did a very in-depth SKU rationalization at Amigos,” said Juan Enchinton, business development manager of innovation for United's international stores division. Authentic brands like Hispanic-owned Goya, Secaucus, N.J., and Mexican dairy brand Lala, Torreón, Mexico, made the cut.

“We also take dry or canned items and display them around the store as part of a meal solution,” Enchinton said. “For instance, we'll place certain dry goods next to fresh meat and have an associate talk about how to cook the two together.”

Sales results have been positive, said Enchinton.

Although Amigos' meal solutions are displayed storewide, the majority are promoted through demonstrations at an in-store sampling and sales station.

“We added this area in our first two Amigos stores, but it isn't about the items as much as it is about interactions,” Enchinton said. “One-on-one interaction with customers is a part of Hispanic culture and tradition, so we want to provide that. “

The Plainview store covers 43,000 square feet, while the Lubbock store is 53,000 square feet. Meanwhile, the soon-to-open store in Amarillo will be a smaller 35,000 square feet and will lack the specialized promotional area, focusing instead on meal solutions displayed throughout the store.

Lessons learned from the three sizes of stores will help Amigos gain knowledge to help it best cater to the demographic in the future.

“With the Hispanic population rising in Texas, we feel the chance to expand will present itself,” Enchinton said.

This sentiment has been echoed by retail giant Sam's Club, which is opening a Hispanic club store in Houston later this year. The warehouse store, to be dubbed Mas Club, will be a sprawling 143,000 square feet, with 88,000 square feet dedicated to shopping and the remaining area used for warehouse space.

“The warehouse space will be necessary, since most of the products will be exclusive to Mas Club,” said Sam's Club spokeswoman Kristy Reed.

These products will be directly imported from Mexico and other Latin American countries, she said.

Elizabeth, N.J.-based Wakefern Food Corp. employs lifestyle category managers who are knowledgeable about Hispanic customer trends.

“Many of our stores serve Hispanic populations, and our lifestyle managers make sure they have the right product assortment, which includes our private-label line, ShopRite Authentico,” said Wakefern spokeswoman Karen Meleta.

Although Hispanic shoppers are known for being brand-conscious, some private-label ethnic offerings are gaining popularity because they offer good quality at a lower price. “That's why it is so important to sample and demo products with Hispanics, as a relatively inexpensive means to achieve trial and gain consumer awareness,” said de la Mata.

These same principles are also bringing mainstream shoppers into Hispanic-format stores, retailers told SN. “We see a lot of crossover, because authentic Mexican dishes are very popular for dining out in Texas, but a lot of folks don't know how to prepare the meals,” United's Enchinton said. “Shoppers of all different backgrounds look to us for help with those types of dishes.”

While mainstream shoppers don't come into Amigos stores every week, they do come in once a month or more to “find a meal solution or just to get something different,” he said.

At Publix stores as well as at the Publix Sabor locations, “we have a wide variety of products that resonate with our Hispanic customers, but also with our non-Hispanic customers who enjoy the taste profiles of Hispanic and Caribbean foods,” Brous said.

Regional Tastes

Carrying the right product mix in a Hispanic-format store depends on the specific Hispanic nationalities prevalent within a particular area, said Luis de la Mata, president of consulting firm Churchtree, Los Angeles.

“Hispanic stores need to be aware of the communities they serve, and identify themselves with them,” he said. Among the examples of regional food and brand preferences are: