THE MULTINATIONAL CHALLENGE

NEW YORK -- It's a melting pot that constantly bubbles with change. Supermarkets doing business in New York's five boroughs are challenged by the scope of diversity here and the sudden changes that can take place in the ethnic makeup of 59 community districts.Historically, the city has experienced a constant flow of migration -- those moving into and out of inner-city communities. New immigrants are

NEW YORK -- It's a melting pot that constantly bubbles with change. Supermarkets doing business in New York's five boroughs are challenged by the scope of diversity here and the sudden changes that can take place in the ethnic makeup of 59 community districts.

Historically, the city has experienced a constant flow of migration -- those moving into and out of inner-city communities. New immigrants are a part of that migration and help drive changes within neighborhoods. More recently, there has been an influx of people from Asia, the Caribbean and South America, some supermarket operators noted.

One example of a neighborhood in transition is the Woodhaven/Richmond Hill section of Queens. According to research from New York University, in 1990 whites in this area outnumbered Hispanics by over 2-to-1, and Asians accounted for less than 10% of the population. According to 2000 census figures, a surge in immigrants into the area turned the population mix around: Hispanics outnumbered whites and the Asian population had more than doubled.

Said Rich Savner, a spokesman for Pathmark, Carteret, N.J., "A decade ago when you referred to Hispanics in New York you were talking about Puerto Ricans and Cubans. Now you are more likely to talk about people from the Caribbean, Mexico and South America. Mexican and South Americans are growing segments, especially in Brooklyn and The Bronx."

Such demographic change brings shoppers from different cultural backgrounds, languages, income levels and education. Besides trying to decide how best to merchandise to diverse groups, New York supermarkets are limited in the number of products they can merchandise due to tight retail space and the high cost of real estate.

"New York is the most ethnically diverse region in the nation," said Paul McGlothin, president of Arts for Business, Westchester, N.Y., which produces ethnic events for businesses such as Pathmark. "One out of every three people who live in New York City was born in another country. That's 3 million people. The challenge is to make those people feel welcome, to have products in the store and have a personality that appeals to their culture and makes them identify with the store."

John Catsimatidis, chairman, president and chief executive officer of Red Apple Cos. here, which operates about 57 Gristede's stores primarily in Manhattan, says it's not always easy to determine what to stock. "We do it internally," he said, adding that some of the stores carry a large assortment of ethnic foods. Gristede's on 74th and Broadway, for example, carries a variety a kosher foods while Gristede's in Harlem on 125th Street caters to a large number of Hispanic shoppers.

The larger supermarket chains, most located in the boroughs outside of Manhattan, face competition from a wide variety of many foreign-owned food retailing establishments such as bodegas, Korean grocers and specialty retailers. Estimates put the number of food retailing stores in New York City at over 7,600. Many of these retailers speak the language of the predominant ethnic group that shops the store.

The challenge, said Savner, is to change immigrants' shopping patterns away from the foreign-owned bodegas and to the conventional supermarket. "To get them to change is a big hurdle," he said. "There are some items in those stores [bodegas] that we don't offer that is indigenous to the ethnic shoppers' countries. There may not be a big enough demand for us to sell these items." While ethnic shoppers seek advantages in the smaller ethnic grocery store, Savner points out that ethnic shoppers can realize benefits in traditional supermarkets as well.

Mitch Klein, vice president retail services, Alpha Marketing, Westchester, the marketing service subsidiary of Krasdale Foods, White Plains, N.Y., runs promotions for C-Town, Bravo and AIM supermarkets. Klein said many of these independent stores are operated by foreign-born owners. The ethnic shopper finds "a comfort factor in this retail environment" that doesn't exist in the big chains, he noted. These independents often speak the language of ethnic shoppers and employ ethnic labor. Each store is merchandised on its own whereas a chain is merchandised by district or chainwide, Klein pointed out.

There are presently 185 C-Town stores with 65% of them in inner-city locations, according to Klein. Demographic profiles are run on each store. Retailers can source products from Krasdale's direct-store-delivery vendor book that groups ethnic items into categories such as West Indian. Items are priced into four zones so the retailer can price product right and competitively, said Klein.

Savner said, "It's a challenge to try to accommodate all the different cultures because it's naive to say that all Hispanic subcultures eat the same kinds of foods and have the same dietary habits." Pathmark, known for recognizing and servicing ethnic populations, merchandises the stores by identifying residents in its primary trading area through census data and store surveys.

The chain no longer has a dedicated executive for ethnic merchandising. Instead, it relies on input from its field personnel -- the product managers responsible for specific departments -- to make decisions on procurement of products for the store's trading area. Most of Pathmark's ethnic items are merchandised in an international aisle.

Stop & Shop Cos., Quincy, Mass., an Ahold division, operates nine stores in the five boroughs. Said Rick Stockwood, spokesman for Stop & Shop, "We are aware of diversity, especially in the New York City metro area. Each of our stores is merchandised to reflect the community it is operating in. If we are in a particular neighborhood we want our shoppers to feel like it's their neighborhood store."

One of the best ways supermarkets have found to win ethnic shopper recognition is to go into communities and tap their cultural resources. Pathmark and others have been successful in winning ethnic shopper loyalty by sponsoring special events. C-Town participates in a number of ethnic-related events including Dominican Day, the Puerto Rican Street Festival and a Korean celebration in Corona Park, Queens. Pathmark has seen its annual Multicultural Arts Festival grow to attract some 300,000 people to a number of large events held over a five-month period throughout the metro area.