Dive Brief:

• The newly formed Cardenas Markets LLC hopes to become the largest Hispanic grocer and retailer in America, CEO John Gomez told Supermarket News. Currently, the 47-store company plans to open between five and 10 stores per year.
• Gomez said perimeter items like fresh meat and produce account for the majority of sales at Cardenas. He also said the company benefits from serving a “vibrant and growing” Hispanic population in California and Nevada.
• Cardenas Markets LLC currently consists of Cardenas as well as Mi Pueblo branded stores, though Gomez said the company is considering dropping the Mi Pueblo name and using Cardenas’ label and operating model throughout the chain.

Dive Insight:

Cardenas Markets LLC formed last month through the merger of 31-store Cardenas and 15-store Mi Pueblo. Both Hispanic grocers are owned by private-equity firms KKR and Victory Park Capital, which bought the chains last November. As a result of the merger, Cardenas Markets LLC now has a coverage area spanning California and into Las Vegas, as well as improved price efficiencies.

This puts the company in a solid position to continue profiting off an ever-expanding Hispanic consumer base. Today, Latin Americans comprise approximately 17% of the U.S. population, and that number is expected to rise to 33% in the next generation.

Not only are Hispanic consumers increasing in number, but they’re also incredibly valuable to retailers because of their fresh-focused purchasing habits. According to Nielsen, Hispanic consumers spend $175 more per year on fresh foods than the average shopper. And while Hispanic shoppers will visit traditional supermarkets, many are loyal to dedicated formats like Cardenas and Mi Pueblo. More than half (61%) of millennial Hispanics said they shopped at cultural supermarkets at least once over the past year.   

Along the West Coast and in the Southeast, these dedicated formats are growing and updating their stores to draw all consumers, both Hispanic and not. Cardenas recently remodeled a 52,000-square foot store in Calexico, California to include more service-focused departments like a tortilleria, juice bar and a full-service bakery. In Anaheim, a newly updated Northgate Gonzalez Market was dubbed “a Mexican-food Disneyland” by OC Weekly.

Mainstream grocers are investing in Hispanic store concepts and initiatives. Albertsons-owned United Supermarkets operates its Amigos banner, while Southeastern Grocers is rapidly growing its collection of Fresco Y Mas — mainly through conversions of struggling Winn-Dixie stores. Walmart, meanwhile, recently announced it will run a special outreach and marketing program aimed at Hispanic consumers.

Hispanic stores often thrive in areas where other grocers struggle. In Southern California, operators like Northgate Gonzalez have grown by buying up casualties of the market’s grocery wars. With sales strong and growing, some of these West Coast operators say they’re now looking to push east.