CHANDLER, Ariz. -- Arizona Hispanics may have never felt as loved as when Bashas' Markets turned up the expansion flame on its Food City format.
The hometown chain acquired the Food City independent a decade ago -- when it was said to be the top-performing Hispanic supermarket in the state -- and rolled out the concept to 59 sites.
By being close to Hispanics in so many communities surrounding its stores statewide, Food City has distinguished itself from large chains Safeway, Kroger-owned Fry's, Wal-Mart Stores and Albertsons. There's no mistaking the focus of this Bashas' division: Just three of its stores appeal to the general market and 56 to Hispanics, said Robert Ortiz, vice president of sales and merchandising, Food City. "It would have been easy for us to say with the first store, 'Here's another Bashas.' Instead, we left the Food City name on it and started going into neighborhoods that called for a Food City. Our customer bases for some stores are between 50% and 90% Hispanic."
The decision to keep a separate name on these stores was pivotal to gain the freedom necessary to energetically pursue the ethnic market without suffering a backlash from other shoppers, according to industry experts.
"Ethnic customers are receptive to something more personalized and tailored. Chains haven't generally been aggressive to meet their individual requirements because they always wonder what the traditional population will say. They more deliberately balance their customer populations. They don't want to be accused of walking away from customers or catering too much to any segment. There's a real negative energy around this in some people's worlds. So these represent unique opportunities for independents [and regional chains]," stated Bill Bishop, principal, Willard Bishop Consulting, Barrington, Ill.
"There's a lot of debate over how ethnic or traditional a store has to be," he added. "This is one of a relatively few places where an independent has a fair shot at starting and being successful without having a huge capitalization. Independents that target ethnic communities are ahead of the game because they do store-by-store merchandising and can execute well."
Ortiz, who has seen this market develop since working in the first Food City store, managing the second, and supervising other early ones before moving into corporate, agreed: "With the separate banner, we can commit ourselves to Hispanic customers. If I don't carry T-bones and porterhouse in the mix, it doesn't matter because we have a lot of chuck steaks our customers look for."
The intensity of Bashas' focus poses a formidable challenge to a different icon of ethnic outreach, Los-Angeles-based Ranch Markets, whose stores are set up primarily for Mexican customers.
Bashas' is also prepared to stem any challenge by Fry's, which Ortiz believes is remerchandising 20 stores to appeal to Hispanics. "If they stay under the Fry's banner, they can't go too far," he stated. "We have everything they have, plus more variety, and we reach out to everyone."
Ortiz understands that many Food City customers are first-generation immigrants who especially crave familiarity from their homeland. "They may not know a domestic brand, but they're very comfortable with the brands they know."
Fry's and other Hispanic suitors will have to compete against the tactile, hands-on approach of Ortiz and his management peers, who take the pulse of stores regularly, face to face. "I personally visit our tortillerias to talk with our [staff] and customers. The people at the stores live in the culture. They know what people want and what we should do."
Food City hones in on its customers -- 83% Mexican, 13% Central American, and the rest Cuban and Puerto Rican -- with brand assortments and package types refined to their preferences in particular stores. Food City keeps an estimated 80% of the mix the same in every store, regardless of location, then tailors the rest according to Spectra neighborhood data and reviews point-of-sale data to confirm those decisions.
As a general rule, Food City concentrates on imported brands from Mexico. "If they're No. 1 there, there's a good chance they're No. 1 here," said Ortiz.
Targeted Outreach
Food City has taken steps to be credible within the Hispanic community. Among them:
Close to 90% of media is in Spanish language.
It hires store staff from the neighborhoods it serves.
Virtually all in-store signs are bilingual.
All human resources memos to workers are bilingual.
It offers educational scholarships through a program with Arizona State University.
It supports Tapes For Education, a program that provides computers and sports equipment for local schools.
It sells tickets to NASCAR events, soccer matches and Mexican concerts.
It supports community social events, such as a Tamale Festival and Cinco de Mayo celebrations.
It volunteered to post anti-drug signs in the streets of certain neighborhoods.
Five of its stores with pharmacies operate under a banner, A Su Salud (To Your Health). Since many of its shoppers are low-income and don't see doctors as often as they should, these stores run periodic health screenings either for free or for nominal fees.
