June 11, 2012
By Yesenia Robles
Three grocery chains catering to Latino customers in the metro area have faced challenges — including bankruptcy — in recent years as large supermarkets have muscled into their business.
In the most glaring example, Rancho Liborio — a California-based grocer that opened its fifth Colorado store in Colorado Springs in 2008 — shut down the last of its stores in the state in May. One of its competitors, Azteca Ranch Market, filed for bankruptcy last August, and another, Avanza Supermarkets, has been sold in the past year.
Today, stores such as King Soopers are carrying products aimed at the customers who a few years ago had to rely on specialty stores for many of their needs.
The changes are the result of a predictable pattern: As shoppers become diverse and price-conscious, more shops open and competition increases. But as the big chains flex their muscles after recognizing new profit possibilities, midsize chain stores targeting niche markets suffer, while the smallest and most specialized stores find ways to hang on.
Grocery-industry professionals in the Denver area have seen the changes for almost five years.
"What we're seeing is sophisticated consumers that say, I can make a stop at Walmart, for instance, and can get most everything my family needs and save some money," said Laura Sonderup, managing director for Hispanidad, a Latino marketing firm. "But when it comes to those specialty items, those indigenous items, although some stores are starting to offer them, this is when you see consumers making those stops at the small bodega or tienda to pick up truly unique products for which they are not nearly as price-sensitive."
Eduardo Villegas shops for his produce at such stores as Azteca Ranch Market but said he and his family frequent other businesses as well.
"We're always going from store to store," Villegas said. "The cheaper things we can find at Walmart, but there's good vegetables and fruits other places."
Catering to customers
In trying to keep more shoppers from going from store to store, big chain grocery stores are finding ways of researching neighborhoods to cater to customers and in turn are putting specialized midsize chains in peril.
Grocery-store executives would not pinpoint a specific point at which the philosophy changed but said it is part of a larger goal to personalize shopping experiences.
"It's about making sure we're relevant to every neighborhood," said Kelli McGannon, a King Soopers spokeswoman. "It's always been a priority. What has changed is our ability to do it more effectively. It's a continual change."
That newfound ability to research and track neighborhood interests is what some experts see as the main challenge for a relatively newer set of smaller grocery-store chains catering to Latinos.
The most glaring example is Rancho Liborio. California rec-ords show the company filed for bankruptcy in April. Rancho Liborio executives have not returned multiple messages requesting comment.
The chain's two largest Colorado competitors have also faced challenges. Avanza Supermarkets officials sold their local stores in the past year, and Azteca Ranch Market filed for bankruptcy in August.
Local Avanza stores, now Lowe's Supermarkets, remain visually unchanged.
Executives for Lowe's refused to comment, while Avanza owners did not return requests for comment.
Rancho Liborio opened its doors in Thornton on 88th Avenue at Washington Street in 2009.
The site had been newly redeveloped — customized for the grocery chain — and named Plaza Las Americas.
It had brought with it high expectations for revitalization, but just about three years later, Rancho Liborio vacated the 51,000-square-foot leased facility in January.
"I don't think there was any sign that the company was in trouble. I think there was a great deal of excitement at the start," said Thornton spokesman Todd Barnes. "It was particularly disappointing to see a business leave in that part of town."
United Properties, the current owners of the plaza, sold the space to Walmart. The company plans to open a new neighborhood market in the same location late this summer.
"We're confident we have a market to serve there and that we will be able to meet a need that isn't already served there," said Walmart spokesman Josh Phair.
Small grocers survive
Still, for Latinos and other niche shoppers, a second stop at a small, local grocer is not going away, said Ryan Joy, chief brand officer with DW Green Co., an Arizona-based marketing company that has previously worked with Lowe's Foods.
"Ultimately, these big-box stores have a different philosophy for product selection. They still, of course, have to serve customers, but if there's a product they can only order a small quantity of, it's much harder to mobilize — and also profit margins might not be as big there," Joy said. "Niche movements will continue to grow. There's always going to be a place for an authentic shopping experience like those."
Beto Weber, owner of La Carniceria del Norte in Thornton, weathered a drop in clients when Rancho Liborio first opened a few blocks from his small shop, but he has seen customers return.
"For us, people never stopped coming for the meat," Weber said. "We still had better quality, service and some more cuts."
Weber said his shop has been open for 12 years. Even in rough times, things have never been bad enough to consider closing.
In Lafayette, Jimmy Armijo, owner of another local market for 15 years, also said it's his service and ability to cater to customers that keeps his business, El Mercado de Lafayette, steady.
"Those big stores don't bother me," Armijo said. "They're far, and I already have my clients established. They tell me what they want, and I bring it in for them. I treat them how I would want to be treated."
Source: The Denver Post