October 21, 2016
By Maria Halkias
For decades, Houston-based Fiesta Mart was the innovator and the top store for new Hispanic immigrants in Texas, but its market share has been declining in recent years.
There is a new battle for Hispanic shoppers, both immigrants and native born, heating up with Wal-Mart and other stores adding options to appeal to consumers who want the fresh ingredients, flavors and brands they grew up with.
And here’s why:
Dallas-Fort Worth’s Hispanic population of about 2.2 million has a total household income of $29 billion. The group’s average monthly grocery spending of $582 per household is actively being courted.
Competitors such as El Rio Grande, El Rancho Supermercado and La Michoacana Meat Market have been opening stores in more neighborhoods. According to data from Metro Market Studies, Fiesta’s local market share has declined in each of the last five years to 3.6 percent at the start of this year from 4.9 percent in 2012.
At the same time, Wal-Mart, H-E-B, Kroger and WinCo Foods have sharpened their focus on Hispanic shopper’s preferences.
“Fiesta is losing market share among the native-born Latinos,” said Edward T. Rincón, president of Dallas-based research firm Rincón & Associates.
Hispanics born in the U.S., particularly the higher income and college-educated, are not necessarily shopping where Hispanic immigrants shop in the Dallas area.
Still, Wal-Mart was No. 1 choice for both immigrant and U.S.-born Hispanic grocery shoppers, according to Rincón’s recently completed survey of D-FW Hispanic shoppers done every five years.
In 2016, the foreign-born D-FW Hispanic shopper has shifted preferences from Fiesta Mart, which was the No. 1 choice in 2011, to Wal-Mart and other chains including Garland-based El Rancho. Fiesta Mart was mentioned by less than 10 percent of shoppers, according to Rincón’s survey.
Bernarda Ortiz, 54, of Dallas said she shops at Fiesta some and at El Rio Grande, but the Wal-Mart at 8410 Webb Chapel Road is her "favorite store."
The native of Mexico said she can buy clothes and Mexican-branded snacks her family prefers and pick up some Nido for her grandson.
Wal-Mart places cans of Nido in a large center-aisle display in the children’s department. It’s a nutritional drink mixed with water for children ages 1-and-up and is popular with immigrants.
The 3.52-pound can of the powdered drink at $16.88 is the No. 2 selling grocery item in the store.
At this Wal-Mart in northwest Dallas, coconut water is the No. 1 selling grocery item. Cans of it share a large display with Takis salty snacks where Cokes and Fritos appear in a regular Wal-Mart. Another display of maseca and oil are where another store would have spaghetti sauce and pasta.
But this isn’t a regular Wal-Mart, said store manager Robert Rhoden, who says he listens to shoppers and adds items they request.
“We still sell Cokes and the traditional branded snacks in our grocery aisles, but those items aren’t featured,” he said.
Where Halloween merchandise has taken over the entrance displays at most Wal-Marts, Rhoden has Jarritos and Tampico soft drinks and vegetables used for making salsa up front. Tropical fruits continue to be offered in October. Piñatas decorate the top bakery area shelves, and bolillo rolls are a bakery staple item. Bolillo rolls and flan were added to stores across the chain in August.
Wal-Mart bakeries in some D-FW stores are adding Cortadillo cakes and pastries such as conchas pan dulce and empanadas. The chain has been trying to localize its stores for a long time and may be hitting a stride.
Rincón said now and then he and his wife want that taste and experience from a Hispanic grocery store, but they were recently surprised to find what he said were “not only fresh, but delicious empanadas” at a Wal-Mart in Garland.
The immigrant shopper is not only after specific ingredients and brands but is also price sensitive.
Perla Caro, 37, of Wilmer said she drives to the El Rancho in Oak Cliff’s Wynnewood Village for Mexican products such as tamale plantain leaves, corn flour and cinnamon.
She takes the weekly sale circular home so she can get some of El Rancho’s lower prices matched at Wal-Mart. Caro, who is originally from Monterrey and been in the U.S. for 18 years, said she cooks a lot for a family of seven. She sometimes shops at Fiesta, but not at the traditional American grocery chains, with the exception of Wal-Mart, where she said she can also get paper products and other household goods.
Older Hispanics remain the cultural stewards of the kitchen. They are cooking recipes from their native countries for multiple generations under the same roof, according to a Nielsen study, which found 73 percent of Hispanics 50 and older say they prefer to cook in rather than eat out.
Jasmine Guzman, 22, and her mother-in-law, Maria Medina, 53, of Oak Cliff said they shop at El Rancho Supermercado for specialty foods like Mexican cheeses and cremas.
Medina, who is originally from Mexico, buys beans, rice and oil at the Aldi in Oak Cliff, because she said it’s cheaper than El Rancho and Wal-Mart. On the other hand, Guzman, who was raised in the U.S., said she shops mostly at Wal-Mart.
“The foreign-born shopper is looking for a different shopping environment than the native-born shopper. They want special meat cuts and fresh produce,” Rincón said.
The El Rancho in Oak Cliff’s Wynnewood Village has an esquites/elotes vendor out front. Shoppers entering the store are immediately put in a festive mood with large display of balloons and piñatas above the checkout lanes. A well-stocked bakery with festive fruit tortes and a juice bar reminiscent of the kind found in Mexican markets leads into a colorful produce section.
In the Dallas area, Fiesta’s competition is largely coming from three Hispanic supermarkets:
Dallas-based El Rio Grande Latin Market was founded in 2005 and is about to open a store in Mesquite, the company’s ninth in the Dallas area.
Garland-based El Rancho Supermercado has been in business since 1988 and says it’s dedicated to making the Hispanics living the U.S. feel at home. El Rancho has 16 stores mostly in the Dallas area. Two are in Austin and one in Odessa.
Houston-based La Michoacana Meat Market was founded in 1986 and now operates more than 140 stores across Texas, including 31 stores in North Texas.
Alberto Rocha, a commercial real estate broker specializing in Hispanic markets, said it’s likely that one of the strong chains in the Southern California market is looking at Texas as a place to expand.
Rocha believes the existing Hispanic-focused grocers need to step up their game not only because a new competitor could jump in, but also because mainstream stores are doing a better job, he said.
“It’s time to redevelop and upgrade existing stores because the residential concentration of Hispanics hasn’t changed much,” Rocha said. “But they want something better in their neighborhoods.”
Shopping for Hispanics is a family event, Rocha said, “and they don’t want to have to go to North Dallas or Frisco to shop in better stores.”
Fiesta fights back
Fiesta is realizing the challenge it is facing from new competitors. Its stores need attention, said the chain’s CEO Michael Byars.
“We need to bring our stores up to date and make them more competitive.”
Fiesta Mart, founded in 1972, was acquired by a private equity firm Acon International in April 2015 from wholesale grocery distributor Grocers Supply. Acon hired Byars, a longtime grocery, to run the company which had sales of about $1.5 billion last year. It has 70 stores in the Houston, Austin, and Dallas-Fort Worth markets and says it serves customers from over 100 countries.
It’s trying to regain its position among immigrants and native-born Hispanic shoppers. And it bought some market share.
In July, Fiesta purchased nine Minyard stores and two Sun Fresh Market locations in North Texas. Those stores are just now starting to be converted to the Fiesta banner.
The goal is to remodel existing Fiesta stores and the Minyard stores, which were badly understaffed. Fiesta has hired 500 additional people for those stores in the last couple of months, Byars said.
Earlier this month Fiesta finished two stores in Fort Worth and Arlington. This week, three of the former Minyard stores in the Dallas area — on Lake June Road, on Martin Luther King Jr. Boulevard and on West Shady Grove in Irving — have been converted to the Fiesta banner.
"We want to be sure we've reset and retagged each store, have quality products and pricing right and hired more people before we put the Fiesta Mart banner out front," Byars said. The rebranding is taking longer than he first expected and will be done by year-end.
Byars said he knows that efforts by competitors including Wal-Mart and El Rancho have broadened those retailers' reach into the Hispanic community, but Fiesta also wants to serve a bicultural millennial household that wants to try new and unique flavors.
Fiesta entered the Dallas market in 1993 with its first store in Oak Cliff, and even then it was promoting itself as a more international store hoping to attract Asian and African-American shoppers too.
"We want to celebrate food and family, emphasize fresh product and more variety and be price competitive," he said. "Fiesta has a deep heritage with the customer in Houston and Dallas, and we think we know the customer better."
Source: The Dallas Morning News