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Latino grocer is swallowed up by rival

RETAIL

The seven-store Gigante chain closes Monday and reopens Tuesday as El Super.

August 23, 2008|Conor L. Sanchez | Times Staff Writer

Two small ethnic grocery-store chains are combining in a bid to grab a greater share of the Latino market in Southern California.

On Monday evening, the Gigante chain of seven stores will close its doors, reopening Tuesday morning as part of its competitor, the El Super chain. In all, there will be 15 El Super markets in Southern California.

The name change follows the May purchase of all seven Gigante stores by City of Commerce-based Bodega Latina Corp., which operates El Super.

"This is a time of growth," said Carlos Smith, chief executive of Bodega Latina. "We believe that bringing the Gigante stores into the El Super family will provide synergies that will benefit both the company and the consumers in Southern California."

El Super is one of a growing number of supermarket chains in Southern California targeting Latinos by seeking to offer unique blends of food, store designs and locations that set them apart from mainstream supermarkets such as Ralphs and Vons.

The wave of Latino supermarkets has grown steadily since the mid-1990s, according to Carlos Garcia, president of Garcia Research Associates, a Burbank marketing research firm.

"Everything is built around Latino strategies for survival and food preferences, and these stores are fulfilling that," Garcia said. "When you're buying for a family of five or six, a major expenditure of the week goes there, so a place that feels familiar, is clean and has good bargains -- it just works for them."

Latino-oriented stores often feature Mexican pastries and tortillas made fresh and expanded offerings of fruits, vegetables, herbs and condiments. "These aren't going away," Garcia said. "I'd be worried about the relevance of Vons and Albertsons."

The typical market is "not an American store trying to attract Latino customers," he said. "It's a Latino store for Latinos. That's why it works."

El Super operates nine stores in the United States, including eight in Southern California and one in Phoenix. With the acquisition, it will have 16 stores in all.

The Latino food and beverage market in the U.S. will grow to an estimated $8.4 billion in 2011 from $5.7 billion in 2006, according to a food industry research group. Among the larger chains in Southern California are Northgate Gonzalez, based in Anaheim, with 30 stores in the region, and Vallarta Supermarkets, based in Sylmar, with 25 stores.

Gigante stores will remain open during the conversion to El Super, Bodega Latina spokeswoman Stacia Levenfeld said. The stores are in Arleta, Anaheim, Covina, Inglewood, Santa Fe Springs and Los Angeles.

Levenfeld said the conversion process would not affect Gigante employees, who would be hired as El Super workers. Still, Gigante customers worry that the change might take away some of their favorite amenities.

"I just hope the quality stays the same," said Angela Velasquez, 41, as she shopped at a Gigante store in Inglewood on Friday. "I've always liked this place -- great prices. And I like the fresh bakery."

The deal follows a restructuring of Mexican supermarkets. At the end of last year, Grupo Gigante sold 206 supermarkets in Mexico and its seven stores in the U.S. to Organizacion Soriana, Mexico's second-largest retailer. And in May, those seven U.S. stores were sold to Bodega Latina to become El Super.

Sergio Montero, director of corporate affairs at Grupo Gigante, said the company had downsized significantly in the last year after selling off its retail food stores.

"For strategic financial reasons we chose to sell these stores," Montero said. "We're not as big as we used to be, so we're trying to promote in Mexico with partnerships like the one we have with Radio Shack."

Steven Soto, president of the Los Angeles-based Mexican American Grocers Assn., a national trade group, believes that Gigante may have underestimated the competitiveness among ethnic grocery-store chains in Southern California.

"They underestimated the other independent retailers that were here already and the relationships they have with the community," Soto said. "It's a dogfight out there. They could have been more aggressive."

Independent California grocery chains such as Gigante and El Super that cater to a growing ethnic population have expanded significantly in the last 10 years, particularly in predominantly Latino communities.

"They're growing as the Hispanic population grows," Soto said. "They're getting more stores and, plus, when they go into the neighborhoods, they provide a lot for economic stability."

--

conor.sanchez@latimes.com

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