Changing Emphasis : L.A. Grocers Cultivate Latin Buyers
“This is a basket of wishes,” said Jerry Parker, 23, as he paused over his shopping cart.
In the basket were a pound of pinones (light brown pine nuts), a quart of fresh-squeezed carrot juice, tortillas straight from the oven and a bag of fist-sized sugar-coated rolls known as pan dulce.
Sondra Parker, a first-generation Mexican-American like her husband, said the traditional Mexican foods remind her of her childhood. “My mother served all those things. . . . We still enjoy them.”
Until recently, Jerry Parker said, the couple had to go to swap meets or tiny East Los Angeles markets to find pinones and other Mexican specialties. Now Southern California’s major grocery chains are opening stores with enormous amounts and kinds of Mexican food in an all-out effort to entice Latino shoppers.
Rethinking the Market
Safeway is using computer-generated demographics to pinpoint likely markets. Ralphs has stuffed four of its new Giant stores with large amounts of Mexican food, and Lucky Stores has charged a special task-force with finding ways to reach Latino shoppers. Just this month Vons opened Tianguis, a Latino-oriented supermarket in Montebello, where the Parkers recently shopped.
This pursuit of Latino consumers represents a rethinking, of sorts, by supermarket chains. Until recently, chains with stores in Latino neighborhoods usually devoted no more than an aisle to Mexican food. The Latino consumer usually found specialty foods at neighborhood grocers, which also offered check-cashing and credit. “It’s a market . . . we really haven’t served very well,” acknowledged Roger Stangeland, chairman of Vons.
A landslide shift in demographics is making the Latino market too important to ignore. There are 2.9 million Latinos in the six-county Southern California region and, by 2010, that number will leap to 7.3 million, or 40% of the population, according to a recent estimate by the Southern California Assn. of Governments.
Lesson in the Numbers
“If you look at the numbers, there is no question that the Hispanic market is very, very important,” said Al Marasca, marketing vice president for Ralphs.
Success in the intensely competitive Southern California market may to a large degree depend on who serves the Latino market best, said Kenneth Johnson a supermarket consultant with Price Waterhouse in Los Angeles. Johnson foresees a scramble among the state’s largest grocers “to lock up the Latino market.”
The chains are making every effort to make sure Latinos are well served. Safeway has hired an ethnic food buyer. Vons has formed an importing venture with Central de Abastos Internacional, Mexico’s largest food wholesaler. Most of the chains have stores with signs in both English and Spanish and are hiring bilingual employees.
“It is just like a market in Mexico,” said Guadelupe Nazario, 29, shopping at Tianguis. A Mexican immigrant, she said Tianguis reminds her of the vast markets in Mexico where she shopped as a girl. “It’s so big and has so many different things in one place,” she said, adding that the crowded atmosphere is the same, with “carts crashing into each other. . . . That’s how we shop.”
Grocers say the Latino market is attractive for reasons other than its size and growth: Latinos are good consumers as well. A Vons survey shows that Southern California’s Latino families spend $20 more on food weekly than other shoppers. Moreover, the Latino population in Los Angeles is fairly homogenous; about 80% of the region’s Latinos trace their ethnic roots to Mexico, making it easier for grocery stores here to buy ethnic foods with broad appeal.
The chains’ strategy is not without risk because not all Mexican-Americans crave Mexican food. John Rogers, a Safeway marketing executive, said he has noticed a difference in buying habits across the generations. Safeway has reduced the amount of Mexican foods in some of its stores after discovering that most of the customers were second-generation Mexicans and less interested in a steady diet of ethnic foods. “It’s something we monitor very carefully,” he said.
Shoppers like Martha Canales pose a special problem to grocers who have turned over their stores to a Latino theme. Canales, 35, moved to Southern California from Mexico 15 years ago and said she rarely eats Mexican foods. Last week, for example, she served her family chicken breasts one night and hamburger another. Asked his favorite food, her son, James, said, “Pizza.”
Canales, who explored Tianguis out of curiosity last week, said she found the store’s tortilla factory interesting but did not buy tortillas. “I never make tortillas. We don’t eat much Mexican food,” she said. She said that an Albertson’s near her home is her favorite store.
Albertson’s is one of the few chains not courting Latino consumers. “We design stores that we think will fit anywhere,” said Gary Michaels, a vice president with the Boise (Ida.)-based chain that operates 75 stores in Southern California. Michaels said he thinks chains that target Latino customers risk turning off non-Latinos.
“Suppose you build a store for Spanish-speaking people, and someone who doesn’t speak Spanish wants to go there?” he asked.
Stangeland said Vons considered these issues when it planned Tianguis. He said that although the store strives to resemble a Mexican market, he believes “it is a store everyone can enjoy.” The store sells corn flakes as well as pig snouts, and fresh produce should appeal to most shoppers, he reasons.
Marketing experts say it is too soon to say whether Latino-oriented markets will spread much beyond Southern California. Johnson, the Price Waterhouse supermarket consultant, said it would be more difficult to operate a Latino supermarket in a city where the Latino population may also have large numbers of Cubans, Puerto Ricans or South Americans, because each Latin country has its own native menu.
“The L.A. market can support a whole bunch of these stores. Other places in the country might not have the kind of demographics to support it. We may see it in other places, but I would expect it to happen here first,” Johnson said.
By most accounts, Safeway was the first of the major chains to initiate changes to attract Latinos. About four years ago, Rogers, the Safeway marketing executive, fed a lot of numbers into a computer that chewed on them a while and spat out a remarkable statistic: One-fifth of Safeway’s supermarkets were in Latino neighborhoods. Rogers said he knew he had a big job ahead. “I became very aware that this was a growing market. . . . There was a great need to do a better store,” he said.
The Latino community responded to changes at Safeway in East Los Angeles, a community that is 90% Latino.
In the late 1970s, Latinos avoided the poorly stocked store at Brooklyn and Rowan avenues. “Our experience with Safeway was they did not keep their stores up to date,” said Dan Saenz, president of United Neighborhood Organization, an East Los Angeles community group. Several years ago, the store was renovated and stocked with traditional foods. Saenz now calls the store “a showcase. . . . Their consciousness has changed.
“I’m glad to see the chains responding to the Hispanic community. . . . It gives us more choices,” said Saenz, who said that the battle for the Latino food dollar should result in low food prices and well-stocked stores. “It can only be good for the community.”
It is not good news for independent grocers who until now have had the Latino market to themselves.
“The chains are going to hurt the independents,” said Steve Soto, president of the Mexican-American Grocers Assn. and co-owner of Save-More Markets in Pico Rivera. He said independents resent the chains “who only move in after the independents successfully market an area. . . . We spent the time and money to develop this market.”
Some small grocers are moving quickly to respond. Fine’s Market in East Los Angeles has paid closer attention to service since Ralphs opened a Latino-oriented Giant store less than a mile away. Fine’s now makes it easier for customers to shop there by providing them with free transportation to and from the store.
Alan Fine said his Fine’s Market does things most chain stores do not do. Fine’s cashes checks, fills out money orders, sends telegrams and accepts utility payments--besides selling groceries. “We offer more personal services than the chains,” he said.
Other independents are fine-tuning their operations. For example, a 20-year-old JonSon’s Market half a mile from Tianguis is getting a face lift.
‘We Have to Fight’
“We’re not immune to a store like Tianguis,” said Robert J. Inadomi, president of family-owned JonSon’s Markets. “They are offering a lot of variety and doing a lot of things well, and we have to fight back as much as anybody else to keep our share of the business.”
Vons is making the boldest pitch for Latino consumer with its Tianguis supermarket. The company spent a year studying Latino tastes and buying habits before opening the store. Vons executives explored markets in Mexico and traveled to Houston and Miami to see how regional grocers cater to the large Latino market in those cities. Vons took the name Tianguis from the Aztec word for marketplace and heralded its recent opening with three days of parking-lot concerts by mariachi bands.
Tianguis does not sell everything normally found in a Vons store. Among the 400 items usually sold at Vons stores but not at Tianguis is detergent in a medium-sized box, because the company said its research showed that Latinos usually buy detergent in large or small containers. Vons also reduced the amount of frozen foods sold at Tianguis, because its research found that Latinos prefer fresh fruits and vegetables.
Vons said it plans to open two more Tianguis markets this year, one in Cudahy and another in El Monte. If all goes well, Vons plans to expand. Johnson of Price Waterhouse said that if Tianguis succeeds, “other grocery chains will have to respond with focused stores of their own.”
Ralphs is taking a different approach. Rather than start a new chain, it is gearing four of its Giant warehouse-style supermarkets to Latino shoppers. The stores, located in Latino neighborhoods, were stocked from the start with more than 500 ethnic foods and grocery items, including Ariel brand laundry detergent, Gamesa cookies and Penafiel spring water.
Marasca, Ralphs marketing vice president, said the Giant in Boyle Heights, a Los Angeles neighborhood that is more than 90% Latino, is an example of the chain’s approach to Latino marketing. The produce department contains large bins filled with seven kinds of dried chilies and such unusual spices as pasilla, or dried cactus leaves, and dried hibiscus flowers. Overhead is a banner that boasts “Boyle Heights’ largest selection of Mexican spices.”
Partly in response to the Latino-oriented Giant in Boyle Heights, Lucky formed a corporate task force on the Latino shopper. It has been tinkering with its supermarket on Brooklyn Avenue in East Los Angeles as a result; the store recently began stocking such ethnic foods as cabezas de puerco, or pig heads.
Store manager Phil Kochis, who is learning Spanish by listening to tapes as he drives to work each day, is thinking about other improvements. He said the store might begin accepting utility payments from customers--a service normally available at much smaller neighborhood markets. “It’s expensive,” Kochis said. “You have to pay a clerk $12 an hour to do nothing but process paper. But you have to do something to get traffic in.”
He plans to create a large display at the front of the store by replacing its clothing department with Mexican canned foods, vegetables, fruit and possibly Spanish-language magazines. The display will consume about 12% of the store’s floor space and, Kochis believes, make a statement that Lucky currently does not quite make. Kochis said, “We want the look to say to our shoppers, ‘This store is for you.”’