César M. Melgoza

Over the last few years, several local grocery chains have achieved remarkable success with Hispanic-themed stores. Supermarket chains such as Fiesta Mart and La Michoacána in Texas; Ranch and Vallarta markets in Arizona and California; and for decades, Sedanos in Miami have become formidable players in capturing avid unacculturated grocery buyers in some of the nation's most significant Hispanic market areas.

At the same time, some experimentation has been attempted by more established, larger chains with mixed success at best — Publix and Walmart are examples. What is somewhat surprising is that the smaller, more nimble, culturally-immersed chains seem to have "the pulse" of Latino customers' needs and preferences in terms of product mix and in-store experience, while far larger enterprises have not quite gotten it right despite their huge research and resource capabilities. Furthermore, this begs the question of whether or not other types of retailers can achieve the same level of success in categories such as apparel and home wares.

The in-store experience and product mix are certainly key differentiators for these Hispanic-themed stores. However, one must also understand the extent to which other important components also factor prominently into their success. Among these factors are: site selection and store footprint, branding, staffing and customer service. Let's take a look at some of these elements to explore their potential importance to the store's overall success.

There are many examples of stores with the right location, but with huge disparities of Hispanic consumer traffic.

It's certainly instrumental to locate a store in a neighborhood with a sufficient density of the target consumer to support sales volumes that can sustain a property of a given size. However, the location itself will not draw the target consumer. There are many examples of stores with the right location, but with huge disparities of Hispanic consumer traffic.

Take a look at Albertsons and Vallarta stores in the data map below. Although two of the Albertsons locations have superb Latino coverage, one would be curious to see if their sales are commensurate. For anyone interested in a stimulating field trip, I would suggest visiting both stores in person during peak shopping hours and see the difference in in-store traffic.

I can tell you, based on experience, that some of the Hispanic-themed stores are so successful that their huge store traffic might hinder their future success. Some of these retailers should perhaps consider a larger footprint.

Part of the cultural parlance of Latinos (and Mexicans in particular) is the concept of "Mi casa es su casa." Although this is generally known and sometimes referred to in jest by Americans, it is an extremely powerful and important concept that retailers must embrace if they intend to successfully attract and retain the loyalty of Latino consumers.

The key to welcoming Latinos into one's "casa" is the "Triple S" of staffing, signage and simpatico. In addition to having plenty of bilingual staff and providing signage that is relevant and prominent, the customer service attitude of the store staff is of critical importance. Too often, non-Latinos assume that because Latinos in general have a lower income, they apparently are not deserving of first-class treatment. Those of you who have traveled to nicer quality resorts in Mexico will recall that the service personnel are extremely courteous and polite. This is part of Mexico's tourist-friendly culture, as well as a general attitude of friendliness and generosity.

When Latinos shop in America, they often are welcomed by cold and rude in-store personnel. What store management should know is that their bonuses depend on increased sales and loyalty from the consumers that form the majority of growth in retail spending. I'm sure the CEO would like to know who's being kind or rude to his company's growth majority.

So, Hispanic-themed stores are an interesting case study. They have tended to work well in certain neighborhoods and in smaller formats, but those executed by larger chains have so far been lackluster. There are, no doubt, many elements that factor into this equation — not the least of which are consistency and competent store management.

Once this model matures, it will be interesting to see if Hispanic-themed stores cross over into other categories such as apparel and electronics. One personal electronics and home wares chain, in particular, that has seen considerable success is La Curacao, originally based in Central America and gaining strength in certain southwestern U.S. neighborhoods.

As the Latino population gains size and strength, and as retailers internalize the prominence of this consumer segment, the retail landscape will evolve to accommodate — and hopefully welcome — Latino consumers in a manner that resonates with their affinities driven by both language and culture. Those who recognize these important nuances will leap ahead of those that believe they can continue with business as usual. In these economically challenging times, it would be un-businesslike to underestimate such compelling buying signals.

César M. Melgoza is founder and CEO of Geoscape. He can be reached at (888) 211-9353 or cmelgoza@geoscape.com.