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Ethnic Grocery Stores Coming out of their Niche

Posted by Nick Bravo on 1/19/17 10:53 AM
Nick Bravo
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Over a decade ago, private investors started pouring money into organic and natural stores, sparking a mainstream revolution that led to Sprouts and other mainstays on today’s grocery landscape. Now, according to Supermarket News, ethnic grocery stores, particularly those catering to Hispanic Americans, are getting the same kind of attention.

Already a $31 billion industry in 2015, ethnic grocery stores are poised to explode over the next several years thanks to changing demographics and evolving mainstream tastes.

They Built it Because They Came

These locations are more than just stores—for first- and second-generation immigrants, they provide important cultural connections to their homeland and also serve as community hubs with ethnic newspapers, community advertisements, and cultural events. And in a world where 40% of millennials identify as Hispanic, Black, or Asian American and 25% of millennials are first- or second- generation immigrants, the popularity of these stores is only poised to grow.

And grow they shall. According to Scott Moses, Managing Director and Head of Food Retail and Restaurant investment banking for Peter J. Solomon, New York, “There are already hundreds of Latino-focused specialty grocery stores in the U.S., but there should be many more over time as population dynamics continue to change across the country.”

While Latinos are certainly the largest, these same dynamics hold true for many other immigrant and ethnic communities. Consider Ianiah Hussein, an Iraqi mother who told the Arab American News that she would “never” go to a mainstream grocery store, explaining, “Arabic stores know what the Arabic mother needs, what her cooking is like and the role that a meal plays in a household. Even if I had to travel a long distance, I prefer to go somewhere where I can get everything I need.”

As demographics shift, the quantity of ethnic grocery stores will increase to serve the needs of burgeoning ethnic and immigrant communities.

Ethnic Grocery

From Margins to Mainstream

But of course these are not the stores’ only patrons. With mainstream food culture increasingly exploring and borrowing from ethnic cuisine, and millennials exploring and expressing their individuality through their unique culinary tastes, ethnic grocery’s customer base is also broadening. As one professor of Food Science noted, “We are a continual melting pot, and the pot now includes spices, herbs, meats, delicacies from many different cultures that our taste buds get a hold of. And it is so unique and different that we want more.”

Indeed, according to the manager of one Asian-American grocery store, “We’ve had people come into our store with photos of a product they saw on the Food Network. Or they are really interested in how to cook pad thai or pho.”

Experiences and Identities

So what is a grocer to do? Obviously Kroger can’t reinvent itself as an ethnic grocery chain overnight, nor should it want to. But there are steps that can be taken. Indeed, Scott Moses also has some advice for traditional grocers who should “better serve their evolving local customer base with truly authentic Latino destination experience and merchandise that Latino-focused grocers offer their customers.”

What is a “truly authentic ethnic destination experience” and how can grocers fit it into their brand identity? These are the questions no doubt being asked in focus groups and corporate boardrooms across the country.

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Topics: Market Research, Grocery

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