Ethnic Grocery Stores Adding to Their Mix
For most supermarket operators, Lean Cuisine frozen dinners, Silk soy milk and Roman meal bread don’t exactly constitute cutting-edge fare. But these products are making their first appearances at King Ranch Market in Monrovia.
The reason: Southern California’s prolonged grocery strike has led to an influx of white shoppers, boosting sales by 25% at this historically Latino market. The wave of new customers has prompted King Ranch Market management to stock almost 100 new items and undertake a major remodeling.
Already, soft rock has replaced the Spanish pop music that used to play in the store. Even employee uniforms have changed, from red golf shirts to more formal wear that includes bow ties for checkers.
“We want to keep these new customers,” said William Miguel, vice president of E&T; Foods, which owns this and two other King Ranch stores in Victorville and Azusa, as well as four markets in Las Vegas.
E&T; is one of several Latino-oriented grocery operators that are remaking their stores to appeal to a broader customer base, as people continue to bypass pickets at Vons, Pavilions, Ralphs and Albertsons. The big chains, it’s estimated, have lost a combined $1 billion in sales since the strike and lockout began in October.
Like E&T;, Commerce-based Super A Foods, which owns 13 markets in the Southland that cater largely to Latinos, has added many new items at its stores. Seafood City Supermarkets in Pomona, which also has seen a windfall from the labor strife, says it too is trying to keep new customers happy.
“When they ask for something, we order it for them,” said Fely Laveclave, manager at Seafood City’s store in Chula Vista in San Diego County.
Typically, a store loses 5% of its customers permanently after a strike, New York retail analyst Burt Flickinger III said. But because the labor dispute at Southern and Central California’s supermarkets has dragged on for months, independent markets have had more time to try to exploit people’s changing shopping patterns.
A number of these stores have “done well crossing over from niche markets to mainstream markets,” Flickinger said. “In a lot of these stores, every day looks like a grand opening.”
Many shoppers have flocked to larger, more-familiar names such as Costco Wholesale Corp. and Trader Joe’s Co. They’ve also switched to larger regional chains such as Gelsons and Stater Bros. Holdings Inc., which are unionized but not involved in the clash between the United Food and Commercial Workers union and the giant supermarket companies.
Yet many other consumers have turned to Southern California’s thriving network of smaller ethnic markets -- and some are liking what they see.
Nancy Darling, a Monrovia florist, said she started shopping at King Ranch after the strike began. She was a regular at a local Pavilions but didn’t want to cross the line because of her friendship with a worker there.
At first, Darling said, it wasn’t easy getting used to another market. She had a hard time finding her brand of pet food and her elderly father’s favorite bread. But over the weeks, Darling noticed that the store had added these and other new products. Now she’s convinced that on many items, King Ranch offers a better price.
“They have name-brand milk that’s a dollar cheaper than Ralphs or Vons,” she said. “It fits into my budget.” Darling said she was likely to stick with King Ranch.
Sandra Calderon, a spokeswoman for Vons, which along with Pavilions is owned by Safeway Inc., wouldn’t comment on how much business had been lost during the strike. But she said she was confident that shoppers would return to their local Vons and Pavilions once a new contract had been signed.
“We apologize for the inconvenience this has caused our customers,” Calderon said. “We will work very hard to get them back.”
Albertsons Inc. and Ralphs, which is owned by Kroger Co., declined to comment for this story. The three chains are bargaining jointly with the UFCW. The conflict, over healthcare benefits and lower wages and benefits proposed for new hires, has idled about 70,000 union workers at 852 stores in Southern and Central California. The two sides are expected to resume formal talks with a federal mediator this week.
In the meantime, Lou Amen, chairman of Super A Foods, is pressing ahead with plans to “cater to everyone.”
Since the strike began, Amen said, he has gained an average of 30,000 new customers a week at six locations close to picketed supermarkets -- in Highland Park, Eagle Rock, Alhambra, Monrovia, Montebello and Fillmore. In those stores, he has stocked about 1,000 new items: health and diet foods such as low-sugar jams and jellies, more varieties of yogurt and a wider selection of household cleaning goods to appeal to convenience-driven shoppers.
Amen said he was not cutting any of his stores’ regular stock, so he was squeezing in new items as best as he could. Nor is he ready to tinker with his stores’ format or look, for fear of turning off his longtime Latino and Asian customers.
King Ranch owner E&T; has no such fears.
In its Monrovia store, the company is planning an expensive face-lift, putting in new freezer cases, a larger takeout area for Mexican food, new floors and fixtures and an expanded selection of health and beauty products. Although the changes may reduce the amount of some canned goods and bulk offerings from Mexico, all the top-selling Latin items will remain, said Bob Bressler, E&T;’s general manager.
“Just because we have gotten additional customers doesn’t mean we lose sight of our core customer,” Bressler said. Besides, he added, “it’s an eye-opening experience for many of our Anglo shoppers to see some of these other items.”
Chuck Cerankosky, a grocery industry analyst at McDonald Investments Inc. in Cleveland, believes it’s risky for smaller chains to bet too much on a permanent change in mainstream shopping habits.
He pointed out that consumers generally choose a grocery store because of its proximity to their home or workplace. Commanding about 70% of the grocery market in Southern California, the major chains have a big advantage in that they have the most -- and often best -- locations.
Cerankosky thinks the drop in the three companies’ business since the start of the strike and lockout could result in some stores closing, which would present new opportunities for independent operators.
“There will be stores that are a little marginal that will need to be reviewed,” he said.
One factor that could help Latino-focused and other independent markets keep some of their new customers is their comparatively favorable pricing, which is partly the result of lower employee wages. Checkers at King Ranch, for example, earn a maximum hourly rate of $16.50, E&T;’s Miguel said. That contrasts with a top rate of $17.90 for a checker at the major union chains involved in the dispute.
“Customers have had over 100 days to see that the [major] supermarket chains are charging the highest prices in the country,” said Flickinger, the analyst.
Some customers agree.
Roberta Nickels, a laboratory technician, went to her local Albertsons in Monrovia just after the strike began and wasn’t happy with the quality of the fruits and vegetables there. She then started shopping at a nearby Super A Foods and determined that Albertsons was more expensive.
“It will take a lot for me to go back,” Nickels said, standing in the checkout line recently at Super A Foods with her young daughter.
Amen, the chairman of Super A Foods, said the strike was a “big opportunity” for his company.
“In the last few months, we’ve made some good customers,” he said. “And if we can’t keep them, it’s our own fault.”
--- UNPUBLISHED NOTE ---
On February 12, 2004 the United Food and Commercial Workers Union, which had stated repeatedly that 70,000 workers were involved in the supermarket labor dispute in Central and Southern California, said that the number of people on strike or locked out was actually 59,000. A union spokeswoman, Barbara Maynard, said that 70,000 UFCW members were, in fact, covered by the labor contract with supermarkets that expired last year. But 11,000 of them worked for Stater Bros. Holdings Inc., Arden Group Inc.’s Gelson’s and other regional grocery companies and were still on the job. (See: “UFCW Revises Number of Workers in Labor Dispute,” Los Angeles Times, February 13, 2004, Business C-11)
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