MISSOURI GROCERS ASSOCIATION ANNUAL CONVENTION

DON YAEGER / Additional reporting by Christina Veiders

OSAGE BEACH, Mo. -- Associated Wholesale Grocers, Kansas City, Kan., has implemented an "Authentic Hispanic" product program for some of its 850 independents as one way that independents can distinguish themselves and combat the onslaught of supercenters in the 10-state area that AWG services.

AWG executives told members attending the annual convention of the Missouri Grocers Association here that supercenters have come on strong, especially in southern Missouri, northern Arkansas and Oklahoma.

Rudy Rodriguez, category manager of Authentic Hispanics, told SN that he has heard that in Oklahoma alone, Wal-Mart has 50 square feet of space for everyone in the state.

With such a heavy concentration of space from the discounter and the overall proliferation of supercenters, it's important for independents to have a competitive edge, such as catering to Hispanic households in areas with a large Hispanic population, said the executives.

AWG's ethnic program began rolling out to 200 stores this spring. Nearly 500 stores were identified as prospects on the basis of Spectra market data and the retailer's knowledge of the local market, said Rodriguez.

According to Steve Dillard, AWG's vice president of training, the program is "growing every day," and involves stores in all 10 states.

"For the independent, it's a great tool to compete with Wal-Mart Supercenters," he said. "The independent operator can excel in this because of better knowledge of the [local] trade area."

Dillard noted that compared with Old El Paso and a few basic salsas at Wal-Mart, AWG's "Authentic" assortment includes about 300 dry grocery, frozen and dairy stockkeeping units available through the warehouse -- plus a number of direct-store-delivery items. The "Authentic" label is used for the program and its products because the latter are well known mainly to Hispanics, noted Dillard. They include labels such as Ariel, Cacique, Charras, De Mi Tierra, Dona Maria, Embasa, Fabuloso, Foca, Gamesa, Herdez, Juanitas, Jumex, La Costena, La Moderna, Maribel, Nescafe, Roma, San Marcos and Valentina.

"There are no rules in marketing to Hispanics," noted Rodriguez. "Every store is different."

Rodriguez has devised a number of planograms to fit individual retailers' needs in supplying this segment. Sets range from a virtual store-within-a-store to international sets placed in a well-blended market.

"It depends upon the concentration of Hispanics and where they are coming from -- whether it's Mexico, South American or the Caribbean," said Rodriguez. "We look at it on a neighborhood basis.

"Supercenters don't offer a good mix of authentic products. We can set ourselves apart by offering authentic labels and a good variety of authentic products. But we have to learn to create the excitement and the experience these customers are looking for to fulfill their shopping trip. That's what this segment really thrives and looks for in their shopping experience," Rodriguez said.

One way to create in-store excitement is through demos, said Rodriguez. "Hispanics love demos," he said. "Since they largely are on limited budgets, they want to be sure that the food tastes good and is quality."

AWG has so far concentrated on reaching Hispanics through radio remote. "Whether at home or at a job site, the radio is always turned on," noted Rodriguez. For the upcoming holidays, AWG will use Spanish bilingual newspapers to get the message out that AWG retailers are servicing Hispanic neighborhoods.

Key Hispanic holidays also provide an aggressive independent with an opportunity to throw big promotions, such as the cake and floral sales associated with Mother's Day.

Other key events are Cinco de Mayo, Mexican Independence Day, Day of the Dead, Feast of Our Lady of Guadalupe, Los Pasadas, Lent, Holy Week and Easter.

Rodriguez said that AWG's sourcing of product has grown from the one-stop distributor to buying more items direct for lower costs.

He expects the program to eventually include all 500 targeted stores. "The Midwest is virgin territory. It's totally new, and we are early in the program. I'll get 500 stores whether it's a small set that is 'best of best' that attracts the crossover customer who wants to cook with authentic ingredients, or a store that is nearly totally Hispanic."

Early in the program, AWG, as part of a "Grocer Getaway," sent 42 retailers and company officials to Los Angeles to view successful operations of Hispanic marketing in that area. Independents were told that Hispanic business should be even more lucrative by 2005 as that population exceeds 36 million, or 13% of the total population. The current count is 30 million, or 11% of the total.