Sep. 29, 2008
BY ELAINE WALKER
Hector Hernandez doesn't usually shop at Sedano's, but he was impressed when he brought his parents last week to the grand opening of the Hispanic supermarket chain's newest location in West Miami-Dade.
''This is actually pretty nice,'' Hernandez said. ``It seems a little more organized. It's cleaner. There are more choices.''
Hernandez usually does his shopping at Publix or Winn-Dixie, but if the Sedano's near his house in Homestead looked more like this, he says there's no doubt he would visit more often.
The brand new store has high ceilings, wide aisles and a vibrant color scheme featuring earth and jewel tones. Plus, there's an expanded selection of everything from prepared Hispanic foods to wines and traditional American grocery staples.
This is definitely not your mother or grandmother's bodega.
The prototype store is just one part of a new strategy by Sedano's management to grow the family-owned company by attracting younger customers who have grown up in the United States. The new focus corresponds with the second generation of the Herrán and Guerra families taking over the day-to-day operations of the chain their fathers founded in 1962 in Hialeah.
''We've got to start targeting ourselves,'' said Javier Herrán, 32, director of marketing. ``We need to attract that second generation, while not losing the first generation. They know our stores, but we need to focus on making that store attractive for them.''
With the latest store opening, Sedano's Supermarkets has 30 stores in the tri-county area and markets itself as the largest independently-owned Hispanic supermarket chain. Five existing stores are scheduled to be remodeled over the next year. Another new store is expected to open within 18 months at Bird Road and 87th Avenue.
The company is looking for additional sites in South Florida, particularly in markets like Miami Beach, Weston, Hollywood and Homestead.
The three cousins also hope to grow the Sedano's brand outside South Florida and eventually outside the state, potentially through acquisitions.
''We want to be a leader in the Hispanic niche market,'' said Agustin Herrán, 39, president and chief executive. ``We're the best organized Hispanic supermarket chain out there. Our product selection is better than all the other guys. That's what's going to give us a leg up.''
Taking over the helm is something the three cousins feel they have been groomed for since they were kids, growing up stocking shelves, bagging groceries or playing hide-and-seek in the stock room. As they got older, they worked as store managers.
Chairman Manuel Herrán said he and his brothers decided to step back from the operations because their sons are ``hungry to grow the business.''
''I have all the confidence that the new generation will take the business beyond my expectations,'' Manuel Herrán said in a response to written questions. ``It is now their decisions to make.''
Along with the new store look, Sedano's also developed a marketing campaign designed to reach out to a potential new consumer base. Television and radio commercials launched last month let Sedano's real customers be the stars, explaining in their own words why they shop at the retailer.
The Herráns say business is benefiting as budget-strapped consumers are eating out less and cooking at home more. Last year the chain rang up $400 million in sales. For the first quarter of this year, same-store sales, considered the best measure of a retailer's health, were up 5 percent. August same-store sales were up 14 percent.
The first four days of the new store opening in West Miami-Dade set business records, ringing up up 35 percent more sales than the previous opening. Many of the shoppers were drawn by the large number of grand opening specials, like buy one get one free on 10-pound bags of rice and 96-ounce jugs of vegetable oil or meat specials like top round for $1.49 per pound.
Mario Miron had been trying to shop at the new store for several days. But he couldn't find a parking spot and he didn't want to spend hours waiting in line. Ultimately, he felt it was well worth the wait as he stocked up on all the grand-opening specials.
''I've been dying for this store to open,'' said Miron, who lives down the street in West Miami-Dade. ``It's beautiful. As long as the prices stay competitive, I'll be here all the time.''
The Herráns say the next step in growing the Sedano's brand would likely be an expansion into Central Florida, opening a minimum of three stores along the Interstate 4 corridor from Tampa to Orlando. That's something that the team hopes to accomplish within the next three to five years, but it all depends on finding the right available real estate.
''I would love to tell you we're going to open 10 stores next year,'' said Jose Herrán Jr., 39, chief operating officer and vice president of operations. ``But we're not like Starbucks that opens 100 stores and then comes back and closes 50 of them. It's a conservative growth plan. Not every location is correct for our format.''
The cousins are also looking at other Hispanic grocery chains that they could acquire as a way to expand outside of Florida into markets like Texas, California or New York and New Jersey. They see acquisitions as a strategy to grow because it would give them an existing management structure.
Industry experts say Sedano's may have difficulty growing outside of Florida, where its brand doesn't have any name recognition and it will have to understand a completely different market.
''Not everything is transplantable,'' said Terry Soto, president and chief executive of About Marketing Solutions, a California consulting firm specializing in Hispanic marketing strategies. ``That's where a lot of companies get into trouble. They think they can take a model that works in one Hispanic area and take it another area. You've got to be smart.''
As it grows, Sedano's also has to compete against traditional supermarket chains that are increasingly trying to cater to the Hispanic customer. Publix Sabor has tried to take on the market directly, while Publix and Winn-Dixie have both customized their product offerings in select stores based on the market needs.
Neil Stern, senior partner with McMillan Doolittle, a Chicago retail consulting firm, believes Sedano's challenge is attracting second-generation customers who are already going to be used to shopping at mainstream grocers.
''That tailored, niche store for a first-generation consumer is compelling,'' Stern said. ``As you try to reach the broader customer base, it's more difficult to maintain that advantage.''
The Sedano's team argues that they have an advantage over their traditional grocery store competitors because they understand the different product needs of the various Hispanic cultures, like the fact that Cubans prefer short-grain rice and Puerto Ricans want medium-grain rice. Plus, they carry a wide range of specialty products, including date palm in brine or pacaya, a Mexican product, and potatoes in brine or papa criolla, a Colombian favorite.
''You can't paint all Hispanics with one broad brush,'' Agustin Herrán said. ``There's a learning curve that takes years to figure out. What they're trying to learn now we've been doing it for 40 some years.''
Source: Miami Herald