By Jessie Male
Through special arrangement, what follows is an excerpt of a current cover story from Grocery Headquarters magazine, presented here for discussion.
If a consumer lives in Arizona, she can go to her local Food City for groceries, but she may find plenty to distract her on the way to the front door.
Pulling into the parking lot, she might come face to face with a mariachi band. Or she might get there on a Sunday and find a fiesta, complete with games, clowns. On another day there might be A Su Salud (To Your Health), a fair where medical practitioners offer services like pregnancy tests, mammograms, free child immunizations and advice on low-cost health care.
Operated by Bashas', Food City's 63 stores are representative of the boom in supermarket chains oriented around ethnic foods. For these stores, the mission is not only to provide diverse products, but also become immersed in the communities they serve.
The key, said Thom Blischok, president, retail solutions, strategic consulting and integrated solutions at Information Resources, Inc. (IRI), is to convey the message, "your store, your way, your culture."
The question many retailers are facing is when is it appropriate to open an ethnic supermarket.
When executives at Minyard Food Stores were planning the chain's new flagship Carnival Super Market, they began six months of extensive research into the local Hispanic market. "The thing that was important was to go out and make sure we knew what our customers' needs were," said president/chief executive officer Mike Byars.
Many ethnic communities put a tremendous focus on fresh produce. In Caribbean markets, large breadfruits tumble over grapefruits and cherimoyas lie next to mangos. In Chinese-oriented stores, bok choy, a vegetable which has been appropriated into American cuisine, can be found near durian, a round, spiked fruit with a distinctly unpleasant smell.
Jim Hertel, senior vice president at Willard Bishop Consulting, notes that whereas traditional supermarkets generally have a 50/50 mix in sales between center store and produce, successful ethnic supermarkets may have 70 percent fresh.
An ethnic supermarket is still, at its core, a store providing food for its community. The diversity of its offerings, however, is imperative to success. "Go through the trouble of ordering brands from the country of origin in order to make sure people are seeing things they would characterize as familiar," he said.
He adds a significant factor in growing share is to understand what food to promote at what price. In Chicago, he said, mainstream retailers treat mangos as a specialty item, whereas in many cultures they are a staple. "Mainstream stores might price them at $1.79, but they will be $1.19 every day in an ethnic grocery."
Ethnic food has the capability to evoke powerful reactions from consumers. For some, a bite can bring about unusual textures and flavors and the sensations of being transported to exotic lands. For others, it can resonate the familiar, the feeling of coming home. The possibility of expanding a chain to include ethnic stores should not be discounted.
"It is not much of a risk at all," Mr. Hertel said. "In some ways it is only an extension of what you should do all the time in the sense of knowing who your shopper is and how you identify their needs. That is probably the single biggest trick that most retailers miss."
Discussion Questions: Which grocery stores serving specific ethnic populations would you say are doing the best job? Is there a commonality among these companies? Which broad ethnic groupings, aside from various Latino segments, do you think offer the greatest opportunity for grocery store growth?