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Giovanni Palavicini: Supermercados are the Future
Giovanni Palavicini - dmagazine.com
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August 25, 2011
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Giovanni Palavicini: Supermercados are the Future
With the release of the latest Texas census numbers, many real estate developers and investors have come to see opportunity in the underserved Hispanic community. Texas is home to more than 9 million Hispanics, accounting for 38 percent of the total population. They have accounted for 65 percent of U.S. growth since the 2000 census.

Hispanics have an estimated spending power of $175 billion. The Dallas-Fort Worth Metropolitan Statistical Area has more than 1.8 million Hispanics—representing 28 percent of the MSA population. These numbers have captured the attention of real estate developers and investors, as well as that of retailers who realize they are missing out on sales to this demographic group.

The first thing I learned when I started my career in real estate was that retail is dictated by people and neighborhoods. Grocery-anchored shopping centers are among the most sought-after developments and retailer locations, because of the daily traffic generated by these anchors. With the proven and anticipated growth of the Hispanic population, developers have turned their attention to potential developments and redevelopments catering to this segment. In addition, retailers are attempting to claim a piece of this purchasing power.

As I have previously written, there are many things for retailers to understand in order to cater to the Hispanic consumer. Some supermarket chains have already recognized the need to address the demographic shift and open in this specialized segment, known in Spanish as a “supermercado.” These national and regional retailers include:

• Save-a-lot, which has partnered up with La Michoacana spinoff El Ahorro (translated to “savings” in Spanish) to create El Ahorro by Save-a-lot in Houston. Save-a-lot has done some new deals in the DFW market to penetrate this segment, but not yet as El Ahorro.

• Wal-Mart has opened two Supermercado de Wal-Mart stores in Houston and Phoenix. The company also will be opening up new locations in Hispanic submarkets of Dallas. These include Wal-Mart Supercenter, Sam’s, and the smaller Wal-Mart Neighborhood brand (although I am not sure what banner will be flown on this smaller neighborhood brand).

• H-E-B has one Mi Tienda open in Houston with another one under construction. It also has an H-E-B Supermercado in San Antonio. H-E-B also has a newer concept in Houston with two locations known as Joe V’s Smart Shop. Joe V’s is more of a warehouse-type concept. H-E-B has hired a real estate manager to help penetrate the DFW market with its mainstream H-E-B concept; it has considered Joe V’s locations, but as I understand the chain is going to wait to rollout the warehouse concept here.

• Lubbock-based United Markets has three supermercado concepts known as Amigos United, all located in West Texas (Lubbock, Amarillo, and Planview). United has toured DFW, but has not made the decision to enter this market.

• Pro’s Ranch Market out of Arizona has nine locations in Texas, Arizona, and New Mexico. It has an existing store in El Paso and another that’s scheduled to open there this fall. The chain has also toured DFW, but has decided to wait to come in as well.

These retailers are all dabbling and trying to perfect their supermercado concepts, but there are two that have set themselves ahead of the rest: Fiesta Mart and Supermercado El Rancho.

Fiesta Mart, also doing business as Carnival, has a strong presence in Hispanic submarkets in DFW, but its locations in Houston are more mainstream-type stores. The locations are not only found in Hispanic areas, but also Asian, African-American and Causcasian submarkets.

Supermercado El Rancho has set itself as the leading supermercado chain with eight stores in North Texas, and two in Austin. It currently has two locations under construction (in Odessa and Fort Worth) and slated to open this fall.
El Rancho hopes to have 30 stores within the next eight to 10 years. It attributes its success to its family environment and a desire to give back to the community. The chain’s slogan, “Donde compra nuestra gente” translates to “where our people buy,” and it’s what the company executives and 1,200 employees strive to accomplish daily.

+ Wexico http://news.wexico.com/real-estate/25aug2011/giovanni-palavicini-supermercados-are-the-future.htm

Real estate developers/investors and retailers who want to tap into this growing demographic needs to focus on the Hispanic consumer’s culture and their needs and desires.
Giovanni Palavicini, a native of Mexico City, is founder of Fronteras, a Dallas real estate firm that specializes in the Latino market. Contact him at gp@fronterasre.com.

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