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DEVELOPER CREATES MERCADOS FOR U.S. HISPANICS

By María Bird Picó

The two Rancho Liborio supermarkets in the Denver area cater to Hispanics, no question. To be sure, 80 percent of the clientele is Hispanic. And yet these brightly lit, 49,000-square-foot stores, with their wide aisles, juice bars and large meat and produce departments, are a jolting contrast with the small, dingy bodegas that typically serve Hispanics in many other neighborhoods across the United States. And this could leave an observer with the impression that these stores must serve affluent Hispanics.

But Rancho Liborio executives take exception to any suggestion of upscale leanings. No, they insist, Rancho Liborio is exactly what a Hispanic supermarket should look like, without forcing consumers to pay a premium. “On the surface, Rancho Liborio appears to be aimed at a more affluent Hispanic, but our whole intent was to make the customer feel at home,” said Anthony Trujillo, a Colorado-based developer and a co-owner of Rancho Liborio. Trujillo’s business partner is Liborio Markets, a 41-year-old, Pasadena, Calif.-based supermarket chain with five stores in Southern California and one in Las Vegas.

“For our design, we studied the mercados from Latin America to see how they look like in terms of colors, individual space, etcetera. We then came up with a design idea that makes people feel comfortable.” Indeed, any effort to make the Hispanic customer feel at home would appear to be a wise business decision. The group, which is the country’s fastest-growing, comprises 13 percent of the U.S. population. Its purchasing power is projected to reach $1 trillion by 2010. Despite a lower per capita income than the U.S. per capita Hispanics spend relatively more than the rest of the population on food, because they like to cook from scratch and favor dining at home with the entire family.

U.S. grocers are paying attention, taking bolder steps than merely reserving one aisle for Hispanic brands, jalapeños and black beans. In Florida, for instance, Publix Super Markets launched a Hispanic-themed supermarket chain called Publix Sabor that has two stores operating and two more in the pipeline. Minneapolis-based Nash Finch Co. operates two Avanza supermarkets, and the Hispanic offspring of Texas-based Minyard Food Stores is the 24-store Carnival Supermarkets chain, in the Dallas-Fort Worth area. Wal-Mart and Winn-Dixie have Hispanic merchandising programs at some of their stores too.

Rancho Liborio is proud of its authentic food. But the company’s plans for preparing its chickens were a little too authentic for some in the Denver community. Right before the summer 2006 opening of its first store, in Commerce City, a Denver suburb (the other is in Aurora), the proposed in-store chicken-slaughtering facility ruffled feathers, and the plans were dropped. Other components of the company’s business plan are still very much alive, though. These include a fish tank containing tilapia; tortillas made at the store; a bakery; and a deli serving hot food. One popular staple at the deli is the pupusa, a dish of El Salvador consisting of a thick corn tortilla stuffed with cheese, sausage, refried beans and pork rinds. “It’s what Liborio’s founder Enrique J. Alejo had always envisioned as the perfect store,” said John Fellers, the vice president of purchasing. “If he could have done that in 1966, he would have done it.”

The Colorado stores look very different from the company’s Liborio Markets in California, but the company is remodeling four of its California stores and expanding a fifth one. These stores, being smaller, will not look exactly like the Colorado units, though they will feature some of the design elements.

The company’s expansion beyond California came about when a Liborio executive approached Trujillo at a 2000 conference in Washington where the latter, then a consultant on Latin American issues to the U.S. State Department, had spoken. The two decided to open Liborio stores outside California under the Rancho Liborio name.

Trujillo will not disclose sales figures, but he says rival supermarkets nearby have reportedly lost 15 percent of their sales to his stores. “Our slogan is our mission statement, and we are known for carrying everything,” said David Díaz, manager of the Aurora store. “Some customers come in looking for specific specialty items.”

The company plans to open six Rancho Liborio stores over the next two years in the Denver area and is scouting markets in the Midwest and the Northeast, says Trujillo. But competition from other supermarkets could stiffen. The 50-store, Houston-based Fiesta Mart will open two stores in Texas this year. The chain operates not only in Houston but also in Austin, Dallas and Fort Worth. Over half of its shoppers are Hispanic.

“Everybody is getting in on the action as the population of Hispanics increases,” said Bernie Murphy, Fiesta Mart’s director of public affairs. “You must give them what they want and treat them how they want to be treated.”

In 2002 Nash Finch rolled out two Hispanic-themed supermarkets in Denver under the Avanza name, a “custom-tailored, authentic and focused Hispanic store concept,” according to Dennis Hanley, vice president of retail formats.

“We are currently exploring opportunities for expanding the concept, although it is too early to discuss specifics,” Hanley said. “Our new Nash Finch strategy, Operation Fresh Start, focuses on delighting consumers by providing retail shopping experiences tailored to specific consumer needs. One of our concepts is multicultural, of which Avanza is the focal point at this time.”

To avoid the failures of previous initiatives to sell to Hispanics, supermarkets must deliver the right assortment of products, emphasize service and feature bilingual store signage and staff, says Terry Soto, president of About Marketing Solutions and author of a book on marketing to Hispanics. Stores need to hire employees “customers can relate to and who are knowledgeable about the products these customers buy and look for.”