News Column

Coachella, Calif., Grocery Chain Targets Hispanics

September 14, 2004

Jonathan Shikes

You can't buy frozen pizzas or T-bone steaks at Coachella's only grocery. The store doesn't offer a club card either, and it doesn't have wide aisles. But customers aren't complaining, says Abby Halum, the 40-year-old owner of the Coachella Ranch Market and five smaller Toro Loco stores in the desert.

In fact, while the city's single mainstream grocery, a Vons two blocks away, will close its doors today because of poor sales, the Ranch Market is busy all the time -- so busy that Halum is considering an offer to lease the bigger Vons space.

"Business has always been good for us," said Halum, whose family moved to the desert from the Los Angeles area in 1988. "You find a niche that meets the needs of the community and provide good service, and they will come."

Halum and his wife preside over a small but growing grocery empire that caters to a large Latino and immigrant population in the eastern Coachella Valley.

The couple have already leased space for their sixth Toro Loco in Cathedral City -- their first on the west end of the valley -- and have plans to build a shopping center, anchored by a seventh Toro Loco, in the rural farming town of Thermal.

As Southern California's Hispanic population has grown over the last decade, Coachella Ranch Market, Ontario-based Cardenas Markets, Maxi-Foods in Riverside and similar chains have found themselves in a stronger competitive position, said George Whalin, president of Retail Management Consultants in San Marcos.

"Traditional supermarkets are not terribly relevant in many communities in California, particularly in some desert areas," he said by phone.

Between 1990 and 2000, the percentage of those of Hispanic descent in Riverside County grew from 26.3 percent to 36.2 percent. In San Bernardino County, the percentage leaped from 26.7 percent to 39.2 percent. In Coachella, 97 percent of the population is Hispanic.

Vons spokesman Daymond Rice didn't want to comment on why the company is closing its Coachella store, except to say "the influx of nonunion, low-cost operators has certainly made an impact on our ability to compete in that area."

Vons, Ralphs and Albertsons are also still fighting for their old customers, who got to know the independent and ethnic markets during the 4 1/2-month supermarket strike and lockout, which ended in early March, Whalin said.

But the big chains aren't giving up.

Earlier this year, Kroger, which owns Ralphs and Food 4 Less, announced that it would open a Food 4 Less in Coachella in 2005. And last month, a San Diego developer filed plans for a 54,000-square-foot Albertsons a few blocks away.

Together, those stores will give Halum a run for his customers' money.

From his second floor office in Coachella Ranch Market, Halum can look down through arched indoor windows directly at what he calls his Mexican food aisle.

"If we don't have it, probably no one in the valley has it," he said about the store's selection of products that are familiar to Mexican immigrants.

Besides a massive array of canned chilies and salsas, stacked tortillas and boxed juices, milk and cream, jars of nopalitos (cactus leaves) fill the aisle, alongside canned abalone, and dessert mixes for flan and churros.

"Vons is laid out in a corporate way. They have two or three times more items than we do, but for a Hispanic family, we have everything they want," he said.

Halum was born in Nicaragua, where his parents immigrated to in 1952 from what is now the Palestinian-controlled part of the West Bank. In the late 1960s, the family moved to Florida, where Halum's father owned several clothing stores.

In 1985, they moved to California, trying their hand in the grocery business, first in South Central Los Angeles, then in Oxnard, before settling in the desert.

Halum and three partners took over the 23,000-square-foot store in 1988 from Alpha Beta, which had closed.

"We adjusted the store to their needs," he said, getting rid of the frozen foods aisle and adding a tortillarilla, a jewelry store and a notary.

He also changed the meat counter, adding pigs feet, tripe, beef tendons, goat meat, smelts, octopus, and other cuts not found in mainstream markets.

This was an advantage for Halum. Although the chains vary their product offerings a little depending on their location, "they are not terribly different from each other," Whalin said. "I would say it's probably less than 15 percent of their merchandise."

Representatives from Albertsons and Vons wouldn't comment on their strategies except to say that they do adjust their stores depending on what customers want.

"We don't change it a lot," added Food 4 Less spokesman Terry O'Neil. "If a store is in a predominantly Hispanic neighborhood, it's likely that we will have an above-average selection of products that would appeal to that consumer."

The big grocery chains usually don't have stores in the same neighborhoods where ethnic markets are located, said Efrain Romo, an account representative with La Agencia de Orci & Asociados, a Hispanic marketing agency in Los Angeles.

"Independents find an opportunity that way," Romo said by phone. "They can also order things that cater to their customer base, as opposed to the chains, who have to order from the company warehouse."

There are also several chains, such as Gigante, Superior, Fiesta and Vallarta that have the same products as small Latino markets, but with layouts and atmospheres like Vons, Ralphs and Albertsons.

"You can't tell the difference," Romo said.

The Toro Loco concept began in 1998 after Halum bought out his partners and decided to expand. The stores -- in Indio, Mecca, North Shore and Coachella -- are like large convenience stores but with produce and vast meat counters.

"Hispanic clientele like the smaller, family atmosphere and the butcher shops," Halum said. But he knows his stores don't cater to everyone.

"For second- or third-generation Hispanics, this is not what they want," he said, adding that non-Hispanic customers also prefer chain groceries.

Jeffrey Hays, executive director of the Coachella-based Desert Communities Empowerment Zone, said the city needs mainstream grocery stores.

"The demand is going to be here, and Food 4 Less or an Albertsons will draw people in from the outside area as well," he said by phone. "The fact is you have third- and fourth-generation people here who need that."

He added that the city's housing boom in this once rural town means there are a lot of freezers and refrigerators to be filled.

"They have the things I buy," shopper Veronica Nunez, 34, said about Vons before the store closed. "I go to Ranch Market sometimes. I guess I'll shop there more now." Nunez, of Coachella, said she is looking forward to the Food 4 Less.

O'Neil, of Food 4 Less, said the company expects to do well in Coachella.

"There are several Latino markets that do quite a good job there, but our stores out in the valley attract a sizable percentage of Hispanic consumers," he said. "We would never open a store where we didn't think we could make it a success."

Halum isn't afraid of the competition, but he is still eyeing the soon-to-be vacant Vons, where he said he would consider opening a store with a different format.

"When Food 4 Less opens, it will affect us initially, because people like to try something new," he said. "But the same thing happened after the Food 4 Less opened in Indio, and we got our customers there back in six weeks."

ON THE GROW: Coachella had 26,700 people in 2003. It is expected to grow to more than 40,000 people by 2008.

Source: The City of Coachella

SHOPPING EN ESPAÑOL: Some other Latino markets in the Inland Empire:

--Cardenas Markets with 10 stores

--Fiesta Americana with 2 stores

--Maxi-Foods with 3 stores

--Liborios with 2 stores

--El Tapatio with 1 store



Source: (c) 2004, The Press-Enterprise, Riverside, Calif. Distributed by Knight Ridder/Tribune Business News.


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