Apr 09

Why Hispanics Are A Key Market In Houston’s Grocery Wars

If Houston retailers are going to survive the grocery store wars over the next five years, they need to start marketing and catering more to the Hispanic population, says an industry expert.

In the past 14 years, Houston’s Hispanic population has grown from 1.95 million to 2.2 million, and with that growth has come an incredible amount of buying power. Those are dollars grocers need to tap into if they are going to survive one of the most competitive grocery markets in the country, said Jason Baker principal of Baker Katz, a Houston-based retail brokerage firm.

“The grocery store war is alive and well in our market, and if retailers are going to survive they are going to have to make some adjustments,” Baker said. “I’m not just talking about marketing and what merchandise is stocked. I mean taking into account every detail, such as flooring, music, shelf height and length, the number of check-out lanes. That is what makes H-E-B so unique. They hardly have two stores that are alike.”

Baker explains that Hispanics prefer a different aesthetic than other demographics.

The Houston Business Journal recently reported two new H-E-B supermarkets are on tap for the Houston suburbs, one in Cypress and the second in Lake Jackson.

Baker said he would have to give it some more thought when asked if grocers are better off building specialty stores, such as Mi Tienda or Fiesta, to target specific demographics or if it’s more profitable to augment designs to include features and merchandise that appeal to Hispanic shoppers. However, he conceded that no stores should be “cookie cutter.”

Fiesta, founded in 1972 as a grocery store that catered to Hispanic shoppers by stocking international and specialty products, launched a model called Fiesta Market Place that took a step away from its original concept. After less than a year of operation, the Fiesta Market Place in Sugar Land will close April 20.

Fiesta Market Place included unique features such as a Caribou Coffee coffee house — the first in Texas — and a Red Mango frozen yogurt shop. The store also stocked imported wines and cheeses along with organic and other health-conscious foods. All great things, but they diverged from the original concept.

“I think they had a little bit of an identity crisis,” Baker said.

Hispanics spend more per capita on food than their Anglo counterparts, said Baker, averaging about $425 a month on food, compared to Caucasians who, on average, spend about $416.

In 2014, Wal-Mart is increasing its national marketing budget focused on Hispanic customers by 100 percent, spending $66 million on marketing alone.

Baker said one marketing tool retailers should enlist is sending coupons and information via smartphone, since research shows that Hispanic shoppers, who nationally, on average are about 10 years younger than the average Anglo shopper, turn to technology to help with their spending choices.

However, retailers must be careful not to group all Hispanic shoppers together, remembering that each country has its own tastes and culture.

As a perfect example, Baker points to the fast food chain Pollo Campero, which currently has two Houston-area locations. Its cuisine, which has its roots in Central America, didn’t appeal to many of the area’s Mexican customers, which make up about 60 to 65 percent of Houston’s Hispanic population, forcing the chain to close several locations soon after they opened.

“There are many common connecting points within the Hispanic community, but probably a lot more things that are different,” Baker said.

By Jenny Aldridge