LASSOING LATINO GROWTH

CHRISTINA VEIDERS

When it comes to capturing the $580 billion in disposable income of the 38.8 million Latinos living in this country, supermarket operators may well ask themselves where do they go from here.

While most supermarkets recognize that the burgeoning Hispanic segment offers them an opportunity for new business, industry observers say many of the conventional chains have yet to fully capitalize on the opportunity.

Thomas Tseng, principal and co-founder of Los Angeles-based New American Dimensions, who has extensively studied the eating and shopping habits of Latinos, believes that mainstream food chains are being "reluctantly dragged into it mostly out of necessity" due to the dramatic increases in Hispanics living in neighborhoods around the country.

"Generally, I think they [big chains] have competed poorly in the Latino segment," Tseng said. "There is a fear of marginalizing their existing customer base. It's a challenge. But some are doing it with some degree of success."

Most chains do offer a small selection of token items that do little to build loyal Latino patronage, said observers. Some of the top retailers are expanding further with extended product sets, and some are opening dedicated stores for their Latino shoppers. Here are a few illustrations of how some retailers have started to experiment with Hispanic merchandising in densely populated Hispanic markets.

In Florida, Jacksonville-based Winn-Dixie Stores has run a Spanish-language ad campaign -- El Savor de Tu Pais (The Flavor of Your Country) and has been adding more Hispanic products. Publix Super Markets, Lakeland, has tried integrating products merchandised in a 70-foot Hispanic aisle throughout some of its stores to encourage Hispanics to shop the entire store.

In California, where a third of the Latinos in this country live, Albertsons, Boise, Idaho, earlier this year opened its fourth SuperSaver Foods store in San Ysidro near San Diego, where more than 70% of the population is said to be of Hispanic origin. The format, dedicated to Hispanic shoppers, features authentic foods, uses bilingual signage and nearly all store employees speak Spanish.

In Chicago, where there has been a dramatic jump in the Hispanic population from 1990 to 2000, up 69% to nearly 800,000 people in Cook County alone, Minneapolis-based Nash Finch Co. last month opened its Avanza store, another format dedicated to Hispanics. Others such as Supervalu's Cub Foods, Kroger's Food 4 Less, Albertsons' Jewel-Osco stores and Safeway's Dominick's have all ramped up their Hispanic product selection here.

The Hispanic influence has reached into middle America as well. In Indianapolis, Marsh Supermarkets launched its first Hispanic store -- Savin$ Mercado -- late last year. The store has signage in Spanish and English, and all employees are required to speak Spanish. "We're responding to the changing dynamics in the marketplace," said spokeswoman Jodi Marsh at the time the store was opened. The store operates in a market that has a 45% concentration of Hispanics, according to media reports. Also in the same market, Cincinnati-based Kroger opened a two-aisle Fiesta Market section in one of its stores that features a wide selection of Mexican foods, according to local media.

Others such as Chandler, Ariz.-based Bashas' Food City stores; Coppell, Texas-based Minyard Food Stores' Carnival stores; Fiesta Mart in Houston; and H.E. Butt Grocery Co. in San Antonio have long recognized the importance of their Hispanic shoppers.

"We try to look at each neighborhood individually, and look at what types of products we need to have in each type of store, said Liz Minyard, co-chief executive officer of Minyard Food Stores, during this year's Food Marketing Institute show in Chicago.

ACHIEVING ACCULTURATION

But according to Carleen Thissen, president, Retail Systems Consulting, Naples, Fla., not enough food retailers are making use of valuable loyalty shopper card information that would allow them to better market to their Latino shoppers.

"I've been disappointed in the supermarkets that I've talked to in what they analyze in terms of names or even shopping patterns. I see almost none of that going on. In the case of merchandising to Latinos, this could cause a retailer to remerchandise an entire section based on shopper card information," she said.

Thissen has written a book, "Immokalee's Fields of Hope," exploring the history and background of field workers from Mexico, Haiti and Guatemala.

"If you are going to market to new immigrants, you need to connect to the reality that they left part of their life behind and it's important to understand that reality. However, it's also important that they want to learn about and take advantage of the things in this country that are better than where they came from. They want to learn and acculturate into our culture."

Thissen also said she'd like to see much more theater and in-store sampling built around merchandising to the Latino community. "One of the things that is true of Latinos," she said, "is that shopping for them is a family-focused event that is fun."

Tseng said the customization of the store to local demographics is the way to pull in Latino shoppers. However, large chains can get caught up in their own bureaucratic processes, which makes it difficult to customize the store, he noted.

"It's still being done imperfectly," said Tseng. "Each retailer has a different formula for measuring the trading area and the measurements are imperfect and not geared toward understanding this particular segment."

Within the next decade, Tseng expects to see a greater portion of stores having a crossover appeal partly due to the fact that Latinos quickly acculturate.

There is also that crossover effect of Hispanic foods with non-Hispanic whites that will further drive the development of Hispanic foods. "As the population changes, more Americans are spending large amounts on food traditionally recognized as Hispanic in origin," said H. Stephen Phillips, Expo Comida Latina show director, Los Angeles, who will bring a version of the Latina food and beverage exhibit to New York on Oct. 21 to 22. The show will also be held in Los Angeles, Nov. 16 to 18. He noted that demand for Hispanic foods in U.S. restaurants is growing at more than 10% per year.

COUNTING HISPANICS

Few conventional supermarket chains around the country have ignored the power of the U.S. Census Bureau numbers that now indicate those of Latino descent are the No. 1 minority in the country.

From the 1990 census to June 2003, the Hispanic population has exploded, growing from 22.3 million to 38.8 million, a 74% increase. Those counting themselves as Hispanics who live in the United States represent about 13% of the total population, and that percentage is projected to grow to 24% by 2050, according to the Census Bureau.

The impressive population growth statistics don't stop with the numbers of Hispanics, either. Last year, the Food Marketing Institute, Washington, released a study -- "U.S. Hispanics: Insight Into Grocery Shopping Preferences and Attitudes, 2002." The study found that Hispanics on average spend more on food than non-Hispanic shoppers, $117 a week compared to $87. In addition, the study found: * Hispanics like Spanish-language advertising.

They want high-quality meats and fresh produce.

Low price is important and Hispanics will shop multichannels.

Clean stores are very important.

Courteous, friendly employees who can speak the language also are a plus.