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Independent retailers and small chains still doing well in Southern California

by Rand Green | July 16, 2009
LOS ANGELES -- Independent retailers and small retail chains, particularly those that cater to specific ethnic demographics such as Hispanics or Asians, have managed to compete effectively against major retail chains in Southern California over the last several years and, as a whole, have been gaining market share. Several of the smaller chains have experienced impressive growth, adding several new stores each year.

With the current state of the economy, the rate of growth seems to have slowed down. They are still expanding, but not as rapidly as in the past, according to Raul Ramirez Jr., a salesman and warehouse manger for Ramirez Bros. in Los Angeles. "They are thinking more about it" and looking carefully at the demographics of a neighborhood before they expand, he said.

The major chains do well with certain demographics, according to Mr. Ramirez. But "what we have seen is the independents and the smaller chain stores are actually more flexible on their business plan as far as how the market, who they market to," and when they run ads. "We talk to the owner" who can make a decision and doesn't have to answer to shareholders, he said. If an opportunity for a good buy comes along, the independents are able to react quickly, "and that is the main reason why, in Southern California, the independents are growing" at a rapid rate.

If, for example, pepper prices have been holding at $1 and then, suddenly, the market gets flooded with product and the price goes down to 80 cents, "the independents will jump on it," while it will take them major chainstores about a week to react, Mr. Ramirez said.

Asian markets in Southern California are "much stronger than they once were" as Asian consumers are "starting to be a huge demographic." Some smaller Asian retail chains have grown dramatically, Mr. Ramirez continued.

But they are now approaching their growth more cautiously than in the past. "With the way the economy is, it is forcing wholesalers and retailers" to look closely at the population to which they are catering, he said.

Working with a customer base that includes a good number of independent and ethnic retailers has been "the saving grace for us" in the down economy, said Junior Salinas, a salesman at Go-Fresh Produce Inc. Many of them "go toe-to-toe with a major chain" with great success.

Some of the independents are "real good at picking up, say, field boxes" of products that haven't been sorted and sized, he said. Rather than looking for perfect presentation, "they'll go for the taste" and the cheaper price. The owners are "hands-on" and "check everything that comes in. they want to make sure it's right."

Retailers in general are faring better in the current economic slump than foodservice operations, according to the observation of the produce marketers The Produce News talked to in the Los Angeles area who cater to both categories of customers.

"Retailers are still doing pretty well as far as I can tell," said Paul villa, president of Great West Produce Inc. "I don't see them getting hurt as much as foodservice."

He estimated that restaurant business in the Los Angeles area may be off by "at least 15 to 20 percent" compared to last year.

Some retailers are changing their buying patterns, however. Several suppliers say they have seen strong demand for staple items, potatoes and onions being the most often mentioned, from retail buyers, but a softening of demand for higher-priced products such as specialties and value-added items. The exception, however, seems to be upscale retailers whose affluent clientele apparently can still afford to continue buying the same kinds of products as they always have.

(For more on the L.A. scene, see the Los Angeles Marketrack in the July 13 issue of The Produce News.)