VONS CITES UFW IN TIANGUIS DEMISE

ELLIOT ZWIEBACH

PALM DESERT, Calif. -- Vons Cos. was driven to abandon its once-promising Tianguis format because of the effects of a secondary grape boycott by the United Farm Workers union, along with the rapid assimilation of its Hispanic consumers, Roger E. Stangeland told the Western Association of Food Chains convention here.

"The UFW's efforts were eminently successful, and Tianguis' volume reverted to free-fall," said Stangeland, chairman and chief executive officer of Vons, Arcadia, Calif.

Tianguis is the store format Vons developed in 1986 that featured numerous ethnic specialties intended to address the needs of the growing Hispanic population in southern California.

In its peak year of operation -- 1989 -- Vons had nine Tianguis stores. By the time Vons confirmed last month it would shut down the Tianguis operation, the count had dwindled to three. In a series of conversions that were completed late last year, five of the Tianguis stores were shifted to conventional Vons units, and one to an Expo store. Vons' Expo format combines conventional grocery offerings with discount drugs and an expanded club-pack section. Vons continues to operate the other three Tianguis units, although they are expected to be converted to other banners later this year.

Stangeland said in his talk here that retailers must be willing to abandon concepts that no

longer meet their needs, just the strategy Vons is following when it comes to Tianguis.

"Without the discipline to abandon what is no longer useful in terms of meeting the needs and wants of large consumer segments, it becomes impossible to properly target our marketing programs," he said.

"Given the changing nature of the Tianguis format's consumer segment universe, the concept of abandonment stands us well.

"We will not squander resources attempting to hang on to a promising new concept because circumstances have rendered it obsolete at a young age. Abandonment was the only way to deal with this changed consumer behavior."

Stangeland went on to elaborate on the factors that brought Vons to the point of abandoning a once-promising format after just eight years of existence: "We are in the final phases of at least temporarily abandoning this format. Why? What did we fail to see?

"First, and probably of secondary importance, was our inability to understand how rapidly the immigrant Hispanic segment of the market acculturates, thus changing their needs and preferences as they become Americanized.

"Many customers from this market segment preferred to shop at a regular supermarket format. Tianguis might have adjusted and survived this unexpected change, but could not and did not survive the second and more important one."

A more important factor, he said, was the UFW's actions in recent years. The union pursued a secondary boycott against some supermarkets, including Tianguis, for 10 years as part of an effort to pressure growers into allowing the union to organize their workers. In the last few weeks the union has shifted its efforts to target growers directly. Said Stangeland: "When the United Farm Workers spotted an exclusively Hispanic-focused supermarket, they saw their opportunity to exert political and social force by waging their totally self-serving war with the California table grape growers on our parking lots with an absolutely illegal secondary boycott.

"Supported by the church and with insulation from timely governmental legal remedies, they waged their war, scaring away massive numbers of alien [noncitizen] customers while winning passive support for their boycott from ill-informed leaders of government and church."

Volume at Tianguis slipped, Stangeland said, "and within eight short years a promising enterprise for growth was obsoleted by driving forces over which we had little influence and no control."

Vons' experiences with Tianguis are indicative of the way external forces drive the food industry today, Stangeland said.

"Over its first 60 years, change in the supermarket industry has been driven primarily by internal forces. Now we see dramatic new challenges driven by external forces -- including alternative format competitors and leveraged takeovers -- that represent true threats to the whole industry as we have traditionally known it."

One factor driving change, Stangeland said, is consumer expectations. Those expectations have become more modest as a result of fundamental shifts in the economic climate.

Moreover, he said, the end of the recession "will require that we slug our way through a period of slow growth, a time when many customer segments are apt to be more penurious because they do not necessarily expect steady increases in real income."