Is Niche Retailing Becoming More Proactive?

Dec 22, 2004

By Terry Soto

“Facts About Store Development 2004,” an FMI study featured in Progressive Grocer, shows that while in 2003 new store construction was slow, it was driven by target market-focused stores.

The study says that 12.6 percent of supermarket companies operate at least one target market-focused store. Of these, one-third had Hispanic-oriented formats. Projecting forward, more than one third (36.4 percent) of the stores these companies intend to open this year will be Hispanic formats.

And new independent players are coming into the mix. La Familia Distributors, Inc., a privately held company that sells Hispanic foods and consumer products, announced plans to open six “club stores” in North Texas in 2005.

Spurred by this growth in target market segments, the average size of a supermarket in the U.S. went down to 34,000 square feet in 2003, taking the size of new stores below 40,000 square feet for the first time in a decade. Yet, La Familia’s plans are much larger and they are set to open a 50,000-square-foot store Jan. 15 in La Familia’s newly expanded, primary distribution center, located in an area of Dallas that is largely populated by Hispanics.

David Cardile, regional manager for La Familia, was quoted in the Dallas Business Journal as saying the company is looking for similar-sized locations in Dallas, Fort Worth, and the close-in suburbs, where there’s a large Hispanic population, to open club stores.

Ethnic foods were among the most popular features in new stores, and of the fastest-growing features were dollar-item aisles/departments, known to be popular among Hispanics.

In keeping with demand for ethnic foods, La Familia’s product lines include dry foods, beverages, candy, fabric softeners, laundry detergent, and tobacco. The company ships throughout Texas, Oklahoma, Arkansas, Kansas, Nebraska, Iowa, North Dakota, Colorado, New Mexico, Missouri, Mississippi, and Nevada.

La Familia’s customers include direct store deliveries to convenience stores; wholesale club stores, like Wal-Mart’s Sam’s Club and Costco Wholesale Corp.; and schools, country clubs, and restaurants.

Report information was obtained through mail-in questionnaires sent to FMI member companies in the United States. Seventy-one food retail companies responded, representing 12,212 stores. Roughly half (49.3 percent) of the respondents were independents.

Moderator’s Comment: To what can we attribute this niche-focused store development trend? Will independent supermarkets continue to have an edge over
large retailers in predominantly ethnic neighborhoods?

Terry Soto – Moderator

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