Mexican Supermarket Meets Obstacles in Anaheim

Gigante USA President Justo Frias envisions a day, not too far off, when the Mexican grocery chain has modern supermarkets in cities across Southern California, offering fresh tortillas, signs in Spanish and bin after bin of colorful chili peppers.

After all, he points out, Los Angeles is home to more Spanish speakers than any other city apart from Mexico City. And Latinos outnumber whites in dozens of nearby communities.

But Anaheim, where Frias wants to open Gigante’s first Orange County store, is resisting. After discouraging the company from moving into a shopping center near Knott’s Berry Farm, city officials now have pushed it away from a mall they want to rejuvenate, finding the store to be too Mexican for the surroundings.

“When I first started this, I was a little naive. I didn’t think prejudice toward Latino entities really existed,” Frias said. “Regretfully, it does. The fact that we sell tacos and bolillos [Mexican rolls] instead of chicken Kiev to go, that is the reason.”

Others are less diplomatic. “It’s the most thinly veiled act of discrimination I’ve seen in quite some time,” said Ronald Stockdale, a leasing agent for one of the sites.

City officials say discrimination has nothing to do with it.

They say the problem is the location Gigante most recently sought for a store. Anaheim Plaza, a renovated regional mall off the Santa Ana Freeway, is where city redevelopment officials hope to expand a discount retail complex that draws people from beyond the immediate neighborhood.

“We have no problem with Gigante coming into Anaheim,” redevelopment director Elisa Stipkovich said. “I think it belongs in our city.... The issue is whether that is an appropriate shopping center.”

In the Anaheim census tract where Gigante wants to open, Latinos make up 60% of the population, a powerful retail demographic. In 1990, their share was 27%.

“Obviously, they’re not reading their own demographics,” said Steve Soto, president and chief executive of the Mexican American Grocers Assn. Too many city officials are stuck with outdated images of their communities and reject the idea of specialty Latino businesses, he said.

“Cities are not keeping pace, and they’re losing business because of that,” Soto said. “There’s no such thing anymore as just East L.A. or South Gate or Pacoima. I don’t know if it’s the old-boys mentality that some of these cities have, but it doesn’t make business sense. The color of money is still green.”

Gigante has more than 200 stores in Mexico, where it is one of the country’s top retailers. In 1999, it entered the United States with three stores in Southern California. Five more are on the way. Anaheim, where nearly half the population is Latino, was considered a prime place to expand.

Gigante offers all the amenities of a mainstream grocery store but boasts an expanded produce department bursting with such items as tomatillos and cactus pears, and a bakery where Mexican pastries and tortillas are made fresh.

While it caters to Latinos, Frias said, the grocery chain also attracts people seeking Mexican items they might not find at Ralphs.

The company first sought to open a store in a shopping center on Beach Boulevard, but in 2001 acceded to a request by Anaheim Mayor Tom Daly that it look elsewhere.

The city wanted to see a store in that space that would generate sales taxes; most groceries are exempt from sales tax. “I have to respect the mayor,” Frias said.

Later he was disturbed to find that the shopping center owner is negotiating with Albertson’s--another grocery chain. Daly did not return calls seeking comment.

Next, Frias turned to Anaheim Plaza and reached a deal with its owners and the previous tenant. But Stipkovich, the city’s redevelopment director, warned the mall’s managers in a letter that Anaheim could withdraw a city subsidy because Gigante is too specialized and “does not cater to the public at large.”

She wrote that the “product selection catered primarily to the Hispanic market” and city staffers were “surprised to find that the store signage and music were predominantly in Spanish.”

Stipkovich said the city’s concern has nothing to do with ethnicity. Rather, the city simply does not want a grocery store in the mall, she said.

But mall officials say Stipkovich urged them to pursue mainstream grocery store chains as tenants. None, as it later turned out, were interested.

“On more than one occasion ... they indicated that they didn’t have a problem with a grocery store at that location,” said Bill Williams, an investment advisor to the property owners. “They just have a thing about putting a Hispanic grocery store in Anaheim Plaza.”

City officials say they tried repeatedly to help identify alternate sites.

But Frias said that effort was halfhearted. One site the city suggested was half the size of the Anaheim Plaza store. Another he described as a “little mom-and-pop, old-fashioned strip center, which did not have a view to the street.”

Eventually, despite the city’s objections, Gigante signed a lease at the Plaza, and was preparing to open this fall.

But in June, on the advice of city staff, the Anaheim Planning Commission unanimously rejected the company’s application for a liquor license, a critical item for any major supermarket chain.

Gigante appealed the decision to the City Council, which will consider the question Aug. 20.

“It should not be this difficult to open a supermarket,” Frias said.