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Untapped Potential

There's a war on for the stomachs of Gwinnett County. In this fast-growing residential area northeast of Atlanta, which is home to Georgia's biggest Latino population, grocers are battling for a heaping helping of the melting pot. Three full-size supermarkets have opened so far, all with extensive Hispanic food offerings.

In these stores, such as the Gwinnett International Farmer's Market or the Mercado del Pueblo, the butcher counters, are larger and they serve up oxtail, tripe, pigs feet, rabbit, and other specialty meats and cuts. The spice selection is bigger and so are the product sizes: 64-ounce bottles of canola oil sell better with families than quart-sized bottles. And while Coca-Cola and Pepsi shoulder each other in the soda aisles, coconut water, pineapple soda, and other Latino and Caribbean varieties claim the prime shelf space.

And more Latino-centric stores are on the way. Rhee Brothers Inc., a Maryland-based firm with 20 specialty supermarkets nationwide, had such success with its 65,000-square-foot Assi Plaza International Food, a store in Suwanee, Ga., that sells both Asian and Hispanic foods, that it's currently converting a vacant 145,000-square-foot Wal-Mart in nearby Duluth, Ga., into an Assi Plaza that's set to open with an all-Latino focus in 2007.

Retailers around the nation are more aggressively courting Hispanic consumers, a market whose buying power is estimated at $750 billion, according to the University of Georgia's Selig Center for Economic Growth. So far they've focused on well-established communities in Florida, California and Texas. But that's about to change, especially in the Southeast where there has been a massive flowering of the Latino population.

In Georgia, for example, native-born and recently immigrated Hispanics comprise more than 7 percent of the population, according to the U.S. Census Bureau's 2005 American Communities Survey, landing it among the top 10 states with sizeable Hispanic populations. This number has grown substantially: up from 5 percent in 2000 and just 1.6 percent in 1990. And in North Carolina, the growth is even more rapid: Hispanics now constitute more than 6 percent of the population, up from barely a percent in 1990.

Jeff Passel, a senior research associate and demographer at the Pew Hispanic Center, says the population will keep growing. The region began drawing immigrants — mainly from Mexico — when its economy boomed in the 1990s, he says, at the same time that California and Texas experienced an economic slowdown. The first wave of immigrants established social networks, attracting subsequent newcomers and started families. Births now account for most population growth in the region.

Economists agree there's plenty of economic opportunity in the Southeast. The Selig Center estimates that Hispanics wield $10.6 billion of buying power in Georgia, nearly 5 percent of the overall market, earning it a spot among the top 10 Latino markets nationwide. In North Carolina, Hispanics represent $8.3 billion in buying power, nearly 4 percent of the market. Despite these numbers, though, national retailers have waited to enter the Southeast. They've been watching smaller chains, such as Rhee Brothers, as well as mom-and-pop stores for clues on how to succeed in the market.

“Everyone knows the size of market, but no one has been able to dissect it and say, ‘What does that mean for me?’ Once we have a few success stories in Hispanic communities, that will be the tipping point,” says Andres Friedman, vice president of commercial development for Forest City Enterprises Inc.'s Western Division and director of its Hispanic Retail Group, which develops Latino-oriented properties in the Southwest.

But other observers feel that misconceptions about Latinos are leading mainstream retailers to avoid this population. “While it's true that a lot of recent arrivals lack education and speak little English, they work long hours to make their families happy and provide the daily essentials for their kids,” says Antonio Flores, president of Flores Consulting, a Georgia-based firm. “Most Hispanics are not on welfare, like a lot of politicians claim. People in these communities are eager to make it and they're making it on their own strength.”

Recent immigrants, in particular, have difficulty securing credit because banks largely avoid this market, Flores continues, and this in turn makes many retailers reluctant, too. (Things are slowly changing. United Americas Bank NA and El Banco de Nuestra Comunidad, an erstwhile division of SunTrust Banks Inc., both operate a handful of branches in Hispanic neighborhoods around Atlanta.) There's also a tendency to paint all Hispanic people with the same brush — failing to understand or appreciate the differences among people who hail from countries throughout Central and South America and the Caribbean.

That's left the Southeast's Latino retail scene to be dominated by local players and small chains. But their efforts are not going unnoticed. For instance, Publix Super Markets Inc. has increased its Latino offerings in its Gwinnett County stores. It's also weighing whether or not to expand its Sabor franchise — a Hispanic-geared concept it is testing in Florida — into the region.

Publix has no immediate plans for a Sabor-branded store there (sabor means “taste” in Spanish) but it is opening two new Sabor markets in Miami next year. This is an indication that a Georgia location may not be too far behind. “We're pleased with the results from our first two stores and expanding in Florida is a good sign,” observes Maria Brous, a company spokesperson.

Like the Florida-based Publix, other large retailers and property developers with Latino concepts are opting to test them close to home offices. Forest City's Western Division office, for instance, teamed with Los Angeles-based The Legaspi Co. to develop four Hispanic-oriented shopping centers in California and Arizona.

The venture's properties resemble ordinary shopping centers, except its tenant roster contains more specialty stores, such as the Mexico-based department store La Curacao, and the centers' programming — everything from holiday decorations to background music — recognizes diversity within the Hispanic community.

Pushing outward

Forest City is continuing to pursue new opportunities in the Southwest, but is still perfecting its model before going nationwide. One change so far: it's dropping the Hispanic Retail Group name. Friedman explains that even though Hispanics are extremely brand-loyal, which lead to the creation of a special concept, Forest City found that its own name held more sway with municipal planners.

“You really need to do your homework if you want to be successful in this strategy,” Friedman explains. “There's not a cookie-cutter with one tenant mix or one approach for how to tackle the consumer. You really need to dissect a community, talk to the community, go to Sunday church to see the people who go there, to have a more clear understanding of their needs.

“This is Marketing 101: going to the streets and learning what communities have to offer and you're not going to find this in the Census data,” he adds.

Another Los Angeles-based developer, Primestor Development Inc., has done its homework and is close to beginning a national push. “We did quite a bit of research in North Carolina and also spent some time in South Carolina,” says Arturo Sneider, one of Primestor's founding partners. “What first caught our attention was the population growth there, which has been tremendous.”

While Primestor eventually decided that Chicago offered more sites that meet its selection criteria — intersections with 100,000 cars per day in neighborhoods that boast 1 million people within a five-mile radius and a median income of $40,000 — Sneider says that Charlotte and Atlanta are next on the list of cities where it will expand. “We'd like to do something there in the near future.”

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