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RETAIL VIEW: Growing chain targets Hispanic shoppers

When Juvenal Chavez immigrated to the United States in 1984 from his native Mexico, he naturally looked for food products that were familiar to him.

"My wife and I usually had to go to three different places to get what we needed," he said. “We went to one place for the groceries, another place for the meat and a third place for produce. It became my dream and vision to open up a store that carried all the products that the Latino shopper would want.”

It took awhile for Mr. Chavez to reach his dream, but now he is the proud owner of Mi Pueblo Food Center, a growing chain in Northern California that caters to the needs of the Hispanic shopper.

When Mr. Chavez came to the United States, he worked at a retail operation in San Jose, CA, to begin his new life in the United States. But he said it was much more his shopping experience rather than his work experience that led him to pursue his dream.

In 1991, he opened his first store in San Jose, which measured about 6,000 square feet. Initially, he said, it was mostly a meat market.

“About 70 percent of my sales were meat, and the other 30 percent were produce and groceries. I had less than 24 feet of wet rack space and mostly sold the regular items, such as cilantro, carrots, tomatoes, lettuce and avocados — the things that Hispanics wanted. At the time, I did not realize I could make money on produce.”

Over the next several years, he expanded the space of the original store, eventually moved to a larger location and then opened up a second location. “I learned a great deal about the grocery store business,” he said. “I have come to believe that while meat is the soul of my business, produce is the heart of my business.”

Mi Pueblo has opened about three new stores per year for the last few years and will soon open its 18th location. The newer stores are in the 50,000- square-foot range and focus on the heart and soul of the business.

“In the center of the store, the only difference is in the price,” said Mr. Chavez. “The meat and produce departments give you a tremendous opportunity to fill the needs of your customers. That is where we try to provide an experience.”

Though Mi Pueblo has many Anglos that shop its stores, it has not lost sight of the fact that Latino customers are its target, said Perla Rodriguez, vice president of public affairs for Mi Pueblo.

“Clearly, we are a Hispanic store,” she said.

Mr. Chavez concurred, but he proudly added that the store appeals to almost any customer looking for the best quality in meat and produce. He admitted that Hispanic shoppers make up the bulk of his customers, but said that he also has many loyal followers from the Asian, African-American and Anglo communities.

In fact, the chain's newest location is in upscale Marin County, long noted for its hot tubs and its cheese-and-chardonnay consumers.

Ms. Rodriguez said that the San Francisco Bay area is noted for its very diverse, multi-cultural communities, so any successful store has to appeal to more than just one ethnic group.

Just the same, Mi Pueblo stores have been designed to recreate the shopping experience that one might encounter in Mexico or another Latino country. The store has a wide open feel with huge produce displays on one end and large meat and seafood counters along the back and up the other side. The stores also feature a large take-out department with many Mexican specialty dishes, as well as in-store dining in the newer operations. Colorful piñatas adorn the top of the produce section wet rack, while a tortilla stand with fresh-made tortillas in many flavors is adjacent to the produce department.

The produce department features most mainstream items as well as many Latino-focused products, such as a large array of chili peppers and raw beans. There are plantains and tomatillos as well as Mexican fruit unfamiliar to most non-Latinos.

But the produce department also has a sizable rack of bagged salads and other value-added items that are equally comfortable in any conventional U.S. supermarket.

The wide open feel of the stores with their high ceilings features décor and vibrant colors that one might expect to see in an open-air market in Mexico City. While the pricing on many items is very aggressive (for example, most of the peppers and basic tomatoes were around $1 per pound), there were also many very high-end items with equally impressive displays, indicating that movement is brisk.

For many years, Mr. Chavez enjoyed being part of the action and being one of the chain’s top buyers, but he said that he is no longer involved in the transaction end of the business.

“I empower my people to make decisions and to execute the plan we have in place,” he said. “I have no problem with people making mistakes as long as they own the mistakes. It is the only way to grow.”

He said that the company is very loyal to its vendors, but it is also very selective. “We have a very good relationship with many different growers and packers, but not everyone can do business with us. In the past, we have had situations where we ordered 10 truckloads of produce and rejected eight of them. We are looking for that top 20 percent of the product. Our vendors understand that and give us what we need.”

Mr. Chavez said that even in these difficult economic times, his firm would not compromise on the quality it offers its customers.

“Our commitment to quality has not changed,” he said. “Quality is what we sell.”

He said that conventional U.S. supermarket chains often miss the mark when marketing to Hispanics because “their only answer is to negotiate price.” On the other hand, he said that Mi Pueblo has a huge advantage. “We don’t have to go to school to know who our customer is and to understand them,” he said. “I am a student of my competition and they don’t understand the mindset of the Latino customer. We do.”

When speaking of produce, Mr. Chavez became very animated and almost mystical.

“Produce has two faces,” he said. “One side faced the sun [while it was growing] and the other did not. When we are displaying the produce in our stores, we train our people to make sure the produce is facing in the right direction for the customer. We train them to treat the fruits and vegetables like your wife and daughter.”