Tuesday, May 6, 2008

Ethnic Retailing Memo: Wal-Mart to Open the First Store of its 'Hispanic Community' Store Ethnic Retailing Format Tomorrow Morning in Garland, Texas

Wal-Mart, the world's largest corporation and retailer--and an increasingly multi-format and niche merchandising-oriented one--will open the first store in its new "Hispanic Community" store format tomorrow morning in Garland, Texas.

The store, a 100,000 square foot-plus market dedicated 100% to Hispanic shoppers (others are welcome of course), is not only a first in terms of being the mega-retailer's pioneer "Hispanic Community" store ethnic retailing format, it's also is housed in a historic building.

The Garland, Texas Wal-Mart "Hispanic Community" store is located in what was the retailer's first Hypermart USA, the prototype of which eventually became today's combination food, grocery and general merchandise Supercenter. Wal-Mart later changed the Garland store's name to Supercenter, like its other mega stores of that format and name.

Legend has it that on the first day the Garland, Texas Hypermart USA opened in 1987, 40,000 people shopped what was then one of the biggest stores ever built in the United States.

The store has been open all this time since 1987 (as a Supercenter), and is only closing because Wal-Mart decided to convert the store into its first combination food and general merchandise "Hispanic Community" store.

One of the reasons Wal-Mart chose the former Hypermart USA on Garland Avenue to be its prototype "Hispanic Community" store, is because a full 50% of the store's shoppers are of Hispanic ethnicity, Daniel Morales, Wal-Mart's Texas regional spokesman told Natural~Specialty Foods Memo.

The brawny big-box retailer from Bentonville says 14% of all of its shoppers in the U.S. are Latino, according to its research. (14% is about the overall percentage of Hispanics living in the U.S.) Further, Wal-Mart says 1,000 of its U.S. Supercenters are located in predominately Hispanic neighborhoods.

The retailer has niche marketed to Latinos in these stores increasingly over the last few years, adding authentic Mexican, Latin and Central American food and grocery items, fresh produce and cuts of meat.

Wal-Mart also has introduced fresh baked Mexican breads and pastries in its in-store bakeries in Latino neighborhoods where it has stores, brought in Hispanic non-foods' items across all categories, ranging from toys to clothing, and printed all of its in-store point-of-purchase signs in Spanish as well as in English, among other Hispanic marketing and merchandising practices its initiated.

Wal-Mart is now the number one food and grocery retailer in Mexico with its Wal-Mart-Mexico Supercenter division. As a result, it's gained lots of knowledge about Hispanic consumers and authentic Mexican cuisine, food and grocery brands, and non-foods items.

Further, because of its size in Mexico, Wal-Mart also has lots of leverage and buying power in terms of importing food, grocery and non-foods products from Mexico, Latin and Central America to its stores in the U.S. There's an excellent synergy between what Wal-Mart does in its Wal-Mart-Mexico Supercenters and what it does at its U.S. Supercenters--and now will be able to do in its "Hispanic Community" stores--which have high percentages of Hispanic shoppers.

However, the Garland, Texas "Hispanic Community" store is the very first Wal-Mart completely created for Hispanic shoppers, Morales says.

Among the store's features which shoppers will see tomorrow morning include:

>An in-store bakery where fresh tortillas and corn chips are made from scratch, aisles and aisles of food and grocery products from Mexico, Latin and Central America.

>A massive produce department the size of many supermarkets, piled high with every type of Hispanic-oriented fresh fruit and vegetable item Wal-Mart could locate, along with rows and rows of dried peppers, spices and other Latino favorites.

>A meat department which features all the types and cuts of meat (think thin sliced beef), poultry, pork, fish and seafood Latino shoppers could desire; and a huge inventory of non-foods' items geared especially for Hispanic consumers.

The store also features food, grocery and general merchandise items consumers of all ethnic backgrounds are familiar with; including lots of national brands both from the U.S., Mexico, Latin and Central America.

Research shows Hispanic or Latino shoppers in the U.S. spend far more of their income on a per-capita basis on food and groceries than do consumers of all other ethnic backgrounds. Additionally, Hispanic shoppers buy more overall meat, poultry, fish and dairy products than consumers of all other ethnic origins.

Some special in-store features in the "Hispanic Community" store include Wal-Mart's first kids' furniture department, and the chain's first drive-through garden department.

There's a huge juice bar named Flor De Michoacan in the front of the store, with an ice cream shop right next to it. Both in-store shops sell dozens of the ice cream and juice varieties and flavors popular among Latinoconsumers.

Because Hispanic families tend to be larger than other ethnic groups in the U.S., as well as being very close knit, the theme throughout the store--as evidenced by the kids' furniture shop garden center, ice cream shop and juice bar for example--is family-oriented.

Wal-Mart will deck the store out for every Hispanic holiday, according to Morales, including having in-store fiestas on special days like Mexican Independence Day in September.

But it isn't just the holidays the store will being celebrating.

Basically, the merchandising philosophy will be to have excitement happening all the time in the store, Morales says. Multiple food tastings, live music, events for the kids, special days for senior citizens, will be just a sampling of the in-store activities the retailer has planned for the 100,000-plus square foot Wal-Mart "Hispanic Community" store.

When the first-of-its-format store opens tomorrow morning, the entire interior will be merchandised around a family-oriented picnic theme. Everything one could imagine they would need for a family picnic will be available in the store, according to Morales: foods, drinks, paper plates and serving ware, deserts, picnic tables, backyard grills, clothes, flip flops for the kids and much more.

In fact, Wal-Mart has created what it calls an "events" department in the front of the Garland "Hispanic Community" store. The events department will have rotating displays and other activities based on seasonal themes, with something always going on, Morales says.

The origin of the Garland Hypermart USA, which tomorrow morning officially becomes store number one of the new "Hispanic Community " store format, is an interesting one.

In 1986, Wal-Mart, which only operated its discount store and Sam's Club formats at that time, created a joint venture with Dallas, Texas-based Cullum, Cos., which operated the Tom Thumb supermarket chain at the time, which has since been sold to Safeway Stores, Inc. Cullum Cos. and Wal-Mart opened the Garland Hypermart USA in 1987, and then a second one in Arlington, Texas in 1988.

Later in 1988, Wal-Mart opened a similar store on its own in Washington, Missouri. However, since the Hypermarket USA name was restricted only to stores the two companies opened together as joint-venture partners, Wal-Mart needed to come up with a different name for the Missouri big box store. That's when the name Wal-Mart Supercenter was born, in 1988 for the Missouri store. As they say--the rest is history.

Wal-Mart and Cullum Cos. never did open any additional Hypermarket USA's together after the two in Texas. Later, Wal-Mart bought Cullum Cos.'s interest in the two stores--the one in Arlington and the Garland, Texas store--and re-branded them as Wal-Mart Supercenters.

We don't think Sam Walton ever intended to open more than the two Hypermart USA stores with Cullum Cos. Rather, since prior to opening the two joint-venture Hypermart stores, Wal-Mart had basically zero food and grocery expertise, we think savvy Sam Walton was going to school on the Cullum brothers, who had decades of experience in the supermarket industry.

When it comes to food and grocery industry experience, Wal-Mart has certainly come a long way in just a shade over 20 years, when that first Hypermart USA opened. It's now the leading food and grocery market share retailer in the U.S.

Tomorrow, Wal-Mart begins another chapter in its increasingly multi-format and niche retailing empire--the opening of its first-of-the-format "Hispanic Community" store in the old Hypermart USA building in Garland.

Related Reading:

Wal-Mart 2.0: The emerging multi-format retailer

As we reported in Natural~Specialty Foods Memo on April 25, Wal-Mart has created two new Supercenter hybrid formats in California. One is a smaller-size Supercenter (about 100,000 square feet rather than the traditional average 185,000 square feet) that it's put into two old big box stores it acquired; one in Sanger, California that's open, and the other in Modesto, California, which will open soon.

The second Supercenter hybrid format has been developed for some of the retailer's discount stores in Southern California. Wal-Mart will add additional square feet on those stores, creating a hybrid Supercenter.

Wal-Mart also has developed a new, small-format grocery store concept called Marketside. The grocery stores, the first four of which are set to start opening this summer in the Phoenix, Arizona Metropolitan region, will be about 15,000 -to- 25,000 square feet. The small-format markets will feature a selection of basic food and grocery items, including fresh meats and produce. The Marketside stores also will feature fresh, prepared foods, wines and items in other food and non-food categories.

Wal-Mart 2.0: The emerging niche-merchandiser

In addition to expanding its retail format portfolio with the Supercenter hybrids, the small-format Marketside grocery stores soon to open in Arizona, and its new "Hispanic Community" store ethnic format, Wal-Mart also has taken a Supercenter and niched-merchandised it out so it targets and caters to Arab American consumers. The store is believed to be the only chain outlet in the U.S. with an ethnic merchandising focus centered around Arab Americans.

That store, a 200,000 square foot Supercenter, is located in Dearborn, Michigan. The Dearborn region has the highest per-capita concentration of Arab Americans in the U.S.

Read about the Dearborn, Michigan "Arab American" Wal-Mart store here and here.

Other merchandising niches Wal-Mart is mining in it's stores include:

> "localism:" In parts of the U.S. like the Colorado Rocky Mountain region, the retailer has built Supercenters which look more like rustic lodges than the typical Wal-Mart Supercenter. Wal-Mart also put its first in-store complete bicycle shop in one of those Colorado stores last year. The retailer created miles of bike trails around the store. It also built rest areas off the trails near the store where cyclists can stop to filled their bike tires with air fro free and get a drink of water.

>"environmentalism:" Wal-Mart continues to rollout its "green" or "eco-Supercenters" selectively in the U.S. The retailer has promised it will built more of these stores, which not only are designed to very high "green" standards, but also carry an expanded variety of eco-oriented food and general merchandise prodcuts across the entire store.

>"Asian foods:" Wal-Mart is increasingly niche-merchandising its Supercenters located in neighborhoods where ther is a high percentage of Asian consumers. It's learned much about Asian category merchadising from its Sam's Club stores, which tensdto get a high-porportion of Asian shoppers. Look for the retailer to get much deeper into Asian category food and non-food niche merchandising in the near future.

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