6 reasons why small Hispanic grocers are poised to break out nationally
Many of today’s Hispanic grocers have decades of experience as small, family-owned markets; convenience stores; and bodegas. But they’re now starting to couple this background with fresh and aggressive expansion plans, creating tremendous opportunity to develop new retail concepts and ignite local economies.
Some of these grocers are Kimco retailers. We have a strong focus on growing our shopping centers in Hispanic communities and working with grocers, both large and small, to cater to their communities’ needs. To date, we own 11 properties with Hispanic grocer tenants, totaling approximately 394,000 square feet throughout our portfolio.
While the Hispanic grocer category has been growing and gaining strength for decades, there is now new room for competition. Here are six market factors and trends that are converging today to create major new opportunities for these grocers around the country.
The Hispanic population is expanding
The 50.5 million Hispanics in the U.S. now make up 16 percent of the total population, according to t
he 2010 U.S. Census. That’s a 43 percent increase from 2000 to 2010, making Hispanics the #1 ethnic minority in the U.S. and the biggest driver of the nation’s population growth during the decade.
Most Hispanics live in Arizona, Colorado, Florida, Illinois, New Mexico, New Jersey, New York, and Texas. All of these states have long-established Hispanic communities, either because they are close to Latin America, were once themselves part of Mexico, or have strong economic bases that are attractive to immigrants.
However, several other states are also becoming attractive to immigrants, with the last census showing strong population growth in Alabama, Arkansas, Kentucky, Mississippi, North Carolina, Tennessee, and South Carolina. The Hispanic population nearly doubled in Maryland and South Dakota.
These areas put Hispanic grocers in close proximity to their target customer. As the local Hispanic populations expand, so does the demand for this type of grocery concept. In many new markets, there is a lack of an established Hispanic grocer, allowing Kimco to supply an underserved market.
Hispanic families are growing
While population growth is partly being driven by immigration, it’s also being driven by a surge in births. In fact, from 2000 to 2010, the Mexican-American population grew by 7.2 million as a result of births and 4.2 million as a result of new immigrant arrivals, according to the U.S. Census Bureau.
As a strong sense of community is a Hispanic cultural value, populations can grow quickly as families expand. They attract other family and friends to the area who in turn grow and raise their families, and so on. These large families create opportunity for Hispanic grocers to provide shopping to meet their essential daily needs.
Hispanic spending power is increasing
In 2006, U.S. Hispanic purchasing power exceeded $700 billion and is expected to reach $1.3 trillion by 2015, according to Packaged Facts, one of the nation’s leading marketing research companies. This shows that these consumers are optimistic about their fiscal situation and the state of the economy. This consumer confidence indicates a willingness to spend, which bodes well for Hispanic grocers.
In addition, younger Hispanics control a greater share of the household income and purchasing power. Those ages 15 to 34 earn 37 percent of the total Hispanic/Latino income, versus 21 percent of non-Hispanic/Latino whites, according to the U.S. Hispanic Chamber of Commerce.
This is an opportunity for Hispanic grocers to market to up-and-coming generations that wield spending power within their households.
Shopping is a family affair
As I mentioned earlier, the Hispanic culture has a strong sense of community. They are often very close to their family, including their extended family. They tend to keep in touch and get together more often than many American families for dinners, holidays, events, and shopping.
Many Hispanics seek grocery stores where they can shop as a family, and feel a sense of community and be immersed in their culture during their shopping experience. This creates an opportunity for Hispanic grocers to build their stores as hubs of the community — a place where families get together to buy the foods they’ll cook together later that night.
Grocery stores are also a place many Hispanics go to experience their traditional culture. Grocers can cater to this need by providing markets that are warm and festive, for instance, with Latin music playing.
Many Hispanic grocery stores also have panaderias (bakeries), carnecerias (meat counters) with a greater selection of meats and cuts not typically found in Anglo supermarkets, and produce sections stacked high with fresh fruits and vegetables — all traditional aspects of Hispanic groceries.
The Hispanic grocery market is young
The Hispanic grocery market is a young and growing sector, and doesn’t have a national player yet. This is creating the opportunity for regional grocers to carve their place in the market and set competitive standards.
What’s more, this opportunity is open to grocers of all ethnicities. There are many entrepreneurs — Hispanic and non-Hispanic — in the Hispanic grocer sector. In fact, one of the fastest growing retailers that produces Hispanic grocers is run by Europeans.
That said, national grocery chains also have the opportunity to enter this grocery arena. Some are starting to change their product mix to cater more to the Hispanic demographic. However, it’s conceivable that a national grocer could acquire a Hispanic grocer brand or launch a Hispanic grocery concept in target markets.
(This has implications for smaller Hispanic grocers in those areas, as well as speaks to grocery market competition overall, which is a topic I plan to delve into more in a future post.)
America has an affinity for Hispanic food
America’s affinity for Hispanic and Mexican food has increased the demand for this type of retail space. Salsa alone has exploded in popularity over the past 20 years. Today, you can easily find vegetables used in traditional Hispanic cooking — such as poblano peppers, jícama, and chayote — in the produce aisles of many supermarkets.
However, many Americans are now seeking more unusual ingredients to add to their cuisine — foods that they can’t find at their local grocer. They’re getting recipe ideas from the abundance of cooking shows on TV, which are starting to call for very traditional items to give new flavor to meals. Hispanic grocers are ideally suited to meet this need and provide authentic Mexican and Latino foods to local residents.
As these trends continue to take hold and grow over the coming months and years, so will the Hispanic grocer shopping base. Hispanic grocers who closely align their stores to their local demographic will have the ability to take the greatest advantage of this market environment — and win a seat at the national retail table.
If you’re a Hispanic grocer, what factors and trends do you see impacting your business and sector, in the short term and long term?