Gigante Lures Shoppers ,From Grocery Chains
By CHRIS CZIBORR
Mexico’s Grupo Gigante SA de CV’s first Orange County supermarket in Anaheim is surpassing sales projections since opening in May by luring shoppers from other stores.
“Our sales are above projections,the store is doing as well as our other Southland stores,” said Justo Frias, president of Gigante USA Inc., the company’s Santa Ana-based U.S. arm.
Gigante also has stores in Pico Rivera, Arleta, Covina and Santa Fe Springs.
The Gigante name alone has proved a magnet for Hispanic shoppers who have flocked to the Anaheim store, despite only minimal advertising by the company.
Many Mexican-Americans know the chain from their native country, where Gigante counts yearly sales of $3 billion and some 270 stores of all types.
“Gigante’s Anaheim store is pulling in about $495,000 a week right now,and that’s with sales leveling off since the store first opened in May,” said Steven Soto, president of the Los Angeles-based Mexican American Grocers Association. “They’re pulling business from somebody.”
Gigante’s weekly sales are nearly three times what one of OC’s homegrown Hispanic supermarkets does and are on par with a Ralphs and Vons, Soto said.
Customers at Gigante’s Anaheim store are about 75% Hispanic, Frias said. Whites and Asians make up the rest, he said.
Some Gigante shoppers likely come from OC’s other Hispanic market chains, including Santa Ana-based Northgate Market and Fullerton’s La Rioja Ranch Market.
John Vallejo, Anaheim store director for La Rioja and son of owners Juan and Martha Vallejo, said sales in the month after Gigante’s OC opening dipped 5% in Anaheim. Since then, sales still are about 1% below last year’s figures, Vallejo said.
“We were worried about Gigante a little bit at first but not so much now since sales decreases are leveling off,” he said.
La Rioja’s Anaheim store is a few miles from Gigante.
La Rioja also has stores in Fullerton, Santa Ana and Buena Park. La Rioja has been in Anaheim for more than a decade. Its stores cover about 18,000 square feet each,smaller than Gigante’s typical 50,000 square feet.
Benjamin Becquer, executive vice president and chief operating officer at Anaheim-based Fiesta Mexicana Market, said sales are up from a year ago.
“We’re doing record sales,” Becquer said.
Gigante is about three miles from Fiesta Mexicana Market’s Anaheim store.
Fiesta also has a store in Los Angeles County and four in the Inland Empire. The company is building two new stores in the Inland Empire.
Gigante’s Frias said he believes another key rival,Northgate Market,hasn’t been hurt by his company’s Anaheim debut. Northgate has a store about a mile from Gigante’s Anaheim store.
“I don’t think their sales at that store are down,” he said.
Northgate has several Southland stores, including in Anaheim, Santa Ana and La Habra, as well as Pico Rivera and La Puente. A company spokesman couldn’t be reached last week.
The sheer size of the growing Hispanic population in OC and the rest of the Southland could be blunting Gigante’s effect on specialty grocers.
Many of OC’s Hispanic markets serve neighborhoods where some shoppers don’t drive or don’t always have access to a car. They get around on foot or bus or rely on delivery and shuttle services that stores such as La Rioja offer.
Gigante’s Anaheim store, in a retail center off the Santa Ana (I-5) Freeway, is geared more toward shoppers who are likely to drive.
As such, big grocery chains including Albertson’s Inc., Safeway Inc.’s, Vons Cos. and Kroger Co.’s Ralphs Grocery Co., could be feeling Gigante’s pull.
Officials at the big chains were tight-lipped about how Gigante’s new Anaheim store has affected sales at their Anaheim stores. Most declined to comment for this story.
Albertson’s spokeswoman Lilia Rodriguez did talk but couldn’t say whether Gigante has impacted sales at the company’s Anaheim stores.
“They are competition for us,there’s no question about that,” Rodriguez said. “But we deal with competition all the time.”
Soto of the Mexican American Grocers Association said he believes the bigger retail chains are wrestling with what to do about Gigante, which plans to double its Southland stores by year’s end.
“The chains are getting hurt by Gigante,they know it,” Soto said. “They see some of their customer base, mainly Hispanics, leaving and going to Gigante. I’m sure they’re going to have a plan of action. They’ve been able to adapt to changes.”
Albertson’s, for one, runs a Super Saver store geared toward Hispanics in Santa Ana. It’s one of three such stores being tested by Albertson’s. Others are in South Gate and Wilmington.
At least one chain claims to be benefiting from Gigante in Anaheim. Buena Park-based Tawa Supermarkets Inc., operator of the 99 Ranch Market chain catering to Asians, has a store across the street from Gigante in Anaheim.
Duke Change, Tawa’s chief operations officer, said his sales are up 2% to 3% since Gigante opened.
“Gigante is bringing more customers into the area, and that’s benefiting us,” Chang said. “Our stores typically have more Asian customers, so if Gigante is bringing more Hispanic shoppers into the area, some of those will end up shopping at our store.”
Gigante had to fight its way into Anaheim last year after the city’s Planning Commission voted against granting the store a liquor license. Gigante said it was being singled out as a Hispanic market and eventually won city approval.
“When we first started fighting for Gigante in Anaheim we pointed out that the store not only would create new jobs, but it would also boost the economy for that whole surrounding area,” Soto said. “A lot of people are going to ride Gigante’s coattails.”
Gigante is scouting OC for store sites. It is looking at spots in Santa Ana, Stanton and South County, Frias said.
The company plans to open two newly built stores in South-Central Los Angeles, near Compton, and one in Chino this year.
Gigante also started looking in San Jose several months ago. But for now, Gigante has decided to focus on the Southland, according to Frias.
“We’ve got enough on our plate opening up three stores between now and the end of the year,” Frias said. “Southern California,OC and L.A. County,are the priorities.”
