Mexico’s Grupo Gigante SA de CV continues to open Hispanic supermarkets in the Southland,just not in its U.S. base of Orange County.
Gigante later this month plans to open its ninth U.S. store,a 50,000-square-foot market in Inglewood. To date, Gigante only has opened one OC store, in Anaheim up the road from the headquarters of Gigante USA Inc. in Santa Ana.
“The right opportunity hasn’t presented itself yet” in OC, said Justo Frias, president of Gigante USA.
“It’s not that Gigante isn’t interested in expanding, it’s just that nothing new here has materialized.”
Steven Soto, president of the Los Angeles-based Mexican American Grocers Association, said he’s surprised Gigante hasn’t expanded more quickly.
“I thought they would probably have a few more stores open by now,it seems they’re not exploding as fast as we thought they were going to,” Soto said. “Eventually I see them opening between 50 and 100 stores in California,Justo wasn’t brought here to open up only a dozen stores.”
The hangup could be that the Southern California retail market is even more competitive than Gigante expected, according to Soto.
“This is probably the most competitive state as far as retail stores are concerned,it’s unbelievable,” he said. “It’s hard getting space in a good location. It’s not a question of getting customers. It’s a question of figuring out what other retailers are doing. And you have to deal with municipal planning commissions.”
Still, Soto said “eventually Gigante will become the predominant player in the region. I don’t believe they’re going to stop or curtail their long-term vision here.”
Gigante already has experience in dealing with city officials, particularly its 2002 spat with the city of Anaheim.
Anaheim Planning Commission officials at first rejected Gigante’s application for a liquor license for its store on Euclid Avenue and the Santa Ana (I-5) Freeway. Eventually the City Council voted to grant the license amid media attention and public pressure.
Gigante opened its first U.S. store in Pico Rivera in 1999. A couple of its stores are in South Los Angeles, where competition isn’t as fierce.
The company expanded north of the border in a bid to lure the legions of Hispanic shoppers in this region, many of whom are familiar with Gigante in Mexico. The Anaheim store is doing business on par with a Ralphs or Vons, according to Soto.
Gigante has been looking to open stores in Hispanic-dominated Santa Ana, as well as Stanton, elsewhere in North County and possibly even South County.
Part of the problem is size. Gigante stores typically are around 50,000 square feet. Gigante’s Frias said the company has no plans to alter that.
“It’s my job to get a site that will provide a certain return on investment, and I just haven’t found such a site yet in OC,” he said. “There are small stores available here, there and everywhere. But we’re going to stay with our format.”
Gigante’s U.S. operation could be taking on added importance. It’s still small compared to Mexico, where Gigante has some 500 stores and about $5.5 billion in yearly sales.
But Gigante is losing market share in Mexico to Wal-Mart Stores Inc.’s Wal-Mart de M & #233;xico SA de CV and Organizaci & #243;n Soriana SA de CV, a fast-growing retailer.
The retail battle back home isn’t slowing Gigante’s U.S. expansion plans, according to Frias.
“It has nothing to do with increased competition in Mexico,” he said. “We are the same as Vons or Kroger. There is a budget and I have to convince the board why the dollars should be spent here instead of Monterrey, Mexico.”
Anaheim-based Northgate Gonzalez Supermarkets, the county’s largest Hispanic supermarket operator with an estimated $325 million in yearly sales, dominates Gigante’s market here.
The long-term stakes are sizable: OC counts nearly a million Hispanic residents, who are seen becoming the majority here sometime after 2010.
