HISPANIC IN THE HEARTLAND

LIZA B. ZIMMERMAN

CHICAGO -- From fresh tomatillos and imported ancho chiles to thin-cut flank steak and tamales to go, retail food competition is hot in Pilsen, one of Chicago's largest Mexican communities, with stores courting Hispanic clientele and boosting their sales by stocking up on fresh Mexican products.

Major Chicagoland chains, such as Dominick's and Jewel, that have chosen to incorporate a wide range of Mexican items into their fresh-food offerings in Pilsen are vying for business with small, independent operators, like the single-store Casa del Pueblo, whose stock is tailored exclusively for the Mexican community.

"It's a specialty for them, while it's a mainstay for us," explained Nicholas Lombardi Jr., a vice president of the Casa del Pueblo supermarket on South Blue Island Avenue in the heart of the Pilsen neighborhood southwest of the Loop. "Jewel and Dominick are still trying to figure out the neighborhood."

These chains may not be catering exclusively to the ethnic communities in their midst but "they are, by necessity, doing much more micromarketing than ever before," commented Ray Coen, president of Coen Co., a consulting firm to supermarkets and food service, based in Pacific Palisades, Calif.

Half a mile down the road from Casa del Pueblo, the spanking new Dominick's Fresh Store on South Ashland Avenue was remodeled in May, according to Cory Hedman, Dominick's director of public affairs at the corporate office in Northlake, Ill.

Hedman had not responded to further requests for information about Dominick's Mexican product offerings.

Inside the Dominick's store, a wider selection of Mexican produce, similar to that found at Casa del Pueblo, was available, with a slightly smaller selection of dried prepackaged chilies. Much of the produce was laid out in brown wood baskets or kept under a sprinkler system to maintain moisture.

An island case was stocked with rounds of Mexican-style cheeses, cross marketed with packaged chorizo and cans of salsa. A Mexican flag and bright pink and purple pinata hung over the case.

More hot sauce, bags of chiles and cans of peppers and beans were relegated to a Hispanic aisle, evidence of a dual marketing strategy that lets shoppers either concentrate on those products or bypass the aisle entirely.

Coen, the consultant called the decision to separately market ethnic products a prudent one, because "it results in more impact on the selection available to that group. And ethnic communities are not put off by having sections devoted to them; in a way, it shows how important they are."

Behind the full-service meat counter at the back of the Dominick's Fresh unit a blackboard announced specials in English and Spanish. All the meat in the case, from tip sirloin and tripe to two kinds of chorizo, was labeled in both Spanish and English.

Coen said this bilingualism can also be reflected in a chain's fliers, where "different parts will talk about and micromarket different merchandise." The same approach, he said, can be taken in merchandising the store floor to appeal both to specific ethnic groups and the mainstream population.

"You might have a meat department with thick cuts for Anglos and thin ones for Hispanics at the other end," Coen commented. "This way an Anglo or a black doesn't feel ignored. He sees a lot of Hispanic merchandise he's not interested in and he sees lots he is interested in.

You have to have enough for each group to make it appealing for them to come to the store.

The nearby Jewel on West Cermak Road offers an extensive selection of Mexican produce. Shelves along the right-hand corner of the store, and the square wood island cases in front of them, overflowed with wrinkly black chile pasilla and round little yellow habanero peppers.

Moving toward the back of the store, a bakery island case offered such specialties as rounds of Mexican sweet breads and carrot cake. A cheese case in the far corner offered hunks of paprika-dusted and jalapeno-studded white cheese that was labeled "great for grating over beans and tacos."

Three walls of a four-level, self-service meat case -- where several kinds of steak and packaged chorizo mixed with packages of chicken feet -- form an alcove around the small full-service meat station in the center.

A red, yellow and green ribbon imprinted with the names of the various departments, like the Poultry Shop and the Chef's Kitchen, runs the length of the back wall.

Jewel's corporate headquarters, in Melrose Park, Ill., had not responded to requests for more information about its Pilsen location.

A meatcutter in the store, who asked not to be identified, said the department's best seller was sirloin tip roast, sliced very thin. He said the department even had a machine with an extra thin blade to ensure the proper cut that his Mexican customers wanted.

"Roasts don't go. The Hispanic community isn't used to pot roasts and rump roasts," the meatcutter noted as shoppers lined up for thin slices of tip roast. "For most people this is a steak," he said, pointing to a porterhouse, "but Hispanics like it sliced thin.

"Sirloin tip roast, cut thin, says budget buy," he explained, echoing the sentiments of local independents on the importance of low price points in Pilsen. He said that it was by far the most popular cut, of which he sold "at least 80 pounds a week." He added that "we also promote it a lot, by selling it for $1.99 instead of $3.79."

Signage around the meat case announced the recent arrival of Black Angus, which, primarily because of its additional cost, "isn't selling in the two weeks that it's been here," said the meatcutter.

He also commented that although some of the fish, such as orange roughy and salmon, weren't very popular, "we have to have them in our counter anyway" because all Jewel locations are required to carry certain species.

The meatcutter estimated that although the store had been open since the early 1980s it had only had a full-service meat case for the past seven years. He added that Jewel used to make its own chorizo but "stopped after about six months because the shoppers didn't like the taste of Americanized chorizo."

The meatcutter estimated that 75% of Jewel's shoppers at the Pilsen location were Hispanic.

He went on to explain that Jewel's meat department in Pilsen didn't do any prepared foods. "We tried to get it licensed, but keeping the food warm didn't work."

Coen said that supermarket chains, by deciding to market both ethnic communities and their mainstream customer base, have a lot of advantages.

"Many neighborhoods are too eclectic to walk away from a large part of your customer base. Chains can compete by offering nicer, cleaner stores and can afford media coverage to get their message across."

On the other hand, Coen pointed out that independents have a different set of advantages. "They tend to be able to change merchandise more quickly, have more personal contact with the customer and are able to offer specialties for small groups."

The single-store independent Casa del Pueblo has been supplying a steadily growing Mexican community with fresh foods like jalapenos, Mexican-style cheeses, five kinds of pork skins and the small popular sweet rolls called conchas, since it opened in 1962. President Nicholas Lombardi Sr. estimated that 90% of his clientele was Hispanic.

"We were among the first to import Mexican items from Mexico in the early 1960s," said his son, Nicholas Lombardi Jr.

Even today, "60% of the produce comes from Mexico and 50% [of the total items in the store] come from Mexico," explained the elder Lombardi. "We have seven labels of peppers that are popular in Mexico."

The produce section, to the right of the entrance, sports piles of prickly cactus leaves, deep-green wrinkly poblano peppers and two large walls covered with bags of dried, prepackaged chilies. Signs in Spanish advise shoppers that produce must be weighed in that department.

At the back of the store, brightly colored pinatas and crepe paper balloons hang in front of the meat department's long counter where packaged chorizo and white ribbons of uncooked pork skin are for sale. Five different kinds of steak share the case with prepared foods like tripe soup and pork loin marinated in hot sauce.

Crunchy fried strips of pork skin made in the store -- which Lombardi Sr. said customers just grab off the tray to snack on while shopping -- line the meat counter, where thin cuts of steak are the top sellers. "We probably sell 2,000 to 3,000 pounds of flank steak a week," he said. "They do all their grilling with it."

When he originally opened the store it had a Mexican restaurant inside it, which he chose to move outside to the other side of the parking lot 10 years ago. "It was doing a lot of business and we needed the space," he said.

Although he said he doesn't usually sell most of the Mexican food from the store's namesake restaurant at the retail operation, he does use the occasional tamale. The restaurant buys exclusively from the store, and the proximity across the parking lot from each other generates business for both.

The bottom line in Pilsen, Lombardi Sr. said, is that "people want cheap. We depend on volume."

He said he is always doing promotions and that meat and seafood are being sold at just 5% to 10% over cost. "We are probably 10% less than Jewel, and Dominick's isn't even a factor."

Food consultant Coen, however, noted that Casa del Pueblo's reportedly low price points weren't usually the case with small operators. "Chains can kill ethnic independents on price points on most merchandise," he said. And even when they do charge more, chains can often get their price "because the shopping environment is so much more attractive."