Innovation Key to Meeting Needs of Hispanic Shoppers

LAS VEGAS (By Don Longo, CSNews) August 13, 2009 — The 5th annual Hispanic Retail 360 Summit concluded here on Tuesday with a dynamic panel of retailers discussing best practices and innovation in addressing the needs of Hispanic shoppers.

Led by business strategist Art Turock, the panel included representatives from three major regional grocery chains, an award-winning independent and the largest electronics superstore chain in the nation.

First, Turock got the audience thinking by pointing out how difficult economic times are the best times for innovation to flourish, citing numerous examples from the creation of King Kullen supermarkets to Starbucks.

Daniel Herrera, marketing manager for North Carolina-based regional grocer Food Lion, spoke about the retailer’s five-year planning process that resulted in undertaking a major remerchandising program turning 59 of Food Lion’s 1,200 supermarkets into Hispanic stores. For something of this magnitude, "it has to be a corporate initiative," said Herrera. The company also visited Hispanic supermarkets in several markets, including Houston, Atlanta, Raleigh-Durham, N.C., Richmond, Va. among others.

But a real key to rolling out the program was conducting both qualitative and quantitative customer research. "As valuable as focus groups are, you can’t make decisions just on the basis of 12 people," said Herrera. "You have to do the quantitative research as well."

Marco Orozco, Best Buy’s territory Hispanic market manger for Southwest U.S. and Hawaii, pointed out that it’s "all about foundation and fundamentals." And those fundamentals start at the store level, he noted, referencing the idea to create an experience for Hispanic mothers around a cultural relevant holiday like Mother’s Day. "That was an initiative that was instigated by employees," said Orozco.

Among Best Buy’s many innovations is offering the language tutorial, Rosetta Stone, for free to those who wish to learn any language relevant to their store’s market—from Spanish to Armenian.

However, Orozco also warned the audience of 350 retailers and marketers that "innovation has to be measured and provide a return on investment." As an example, he recalled how Best Buy had much less success with a program designed to help its customers learn English. "We tested some language software programs, but we found the community didn’t look to us to do that so we stopped it because there was no ROI."

Jose Amaya, director of diversity at Midwest-based Hy-Vee supermarkets, observed that he was the only academic on the panel. "I was told to go out and get the best and the brightest to work for Hy-Vee," said the former Ohio State professor.

Amaya acknowledged that like Food Lion, Hy-Vee is a late entry into Hispanic retailing. But he said the Midwest grocer found itself in the "eye of a perfect storm" between the growth of the Hispanic population and the company’s ability to address the health and wellness concerns of the Hispanic community.

Knowing that Hispanics index higher than the general population on a variety of health issues, such as obesity, lactose intolerance and heart disease, Hy-Vee launched an extensive health and wellness program. The grocer now has a dietitian working in 173 of its 225 stores—with plans to place one in every store. "We also know that this community is not just un-banked or under-banked," said Amaya. "We know they are also in need of sound medical advice."

The company’s pharmacists work extensively with these dieticians in every store to advise Hispanic customers on how to eat healthier, he said. He also noted that local and organically grown produce is selling "quite well" in stores where this is happening.

Tracy Krogstie, marketing and promotions manager for Jewel/Osco, spoke about four ways the Chicago-area grocer brings its "Cosa Buenas a la Vuelta de la Esquina" ("Good Things are Just Around the Corner") campaign to life. The first is through direct mail.

"Hispanics actually respond well to direct mail about grand openings," said Krogstie, who noted that coupon redemption rates are much higher when the offers are positioned as a "gift" rather than a discount. Buy-one, get-one-free; 10 for $10, or 99 cents promotions are also very effective.

She also said partnering with key vendors on in-store events is important. Jewel has done in-store demonstrations with Unilever, and autograph signings with Hispanic sports and Telenovela stars with both Anheuser-Busch and General Mills.

Working with non-traditional partners has also been effective for Jewel. Examples include programs with Mexicana Airlines (discounts) and Dodge Chrysler (coupon for oil change). Krogstie also noted eight of Jewel’s top Redbox DVD rental kiosks are in Hispanic markets.

Finally, she pointed out ethnic and special integration is extremely important. Because few stores represent a monolithic customer base, Jewel found success integrating Kosher, Polish and other ethnic and specialty items into its Hispanic ads.

Juvenal Chavez, founder and president of San Jose, Calif.-based Mi Pueblo Food Centers, showed a video of his stores, after which Turock asked audience members to describe what they saw. Responses included "authentic," "relevant," "spacious," "friendly," "home," "colorful" and "clean."

Chavez, who earlier in the conference accepted a 2009 Hispanic Retail Excellence Award, said, "At Mi Pueblo, we make you feel at home."

However, he cautioned general market retailers trying to cash in on the Hispanic market "the easy thing to do is to cut your prices, paint the store bold colors and say you’re doing business with Hispanics. It’s not so easy. It is very challenging."

Chavez, who arrived in the U.S. on Independence Day in 1984, opened his first 4,000-square-foot Hispanic grocery store in 1990 and now has 10 full-size stores in northern California, said he is still learning. "There is a wisdom in knowing you don’t know all the answers," he said. "You must never stop learning."

The 2009 Hispanic Retail 360 Summit attracted more than 350 leading retailers and marketers interested in growing their business with Hispanic consumers. The Summit was hosted by Convenience Store News, Progressive Grocer and Nielsen Business Media. Presenting sponsor Coca-Cola was joined by other sponsors including Geoscape, Café Bustelo, Anheuser-Busch and Western Union. For more on the Hispanic Retail 360 Summit, watch for the Sept. 28 issue of Convenience Store News.