Multicultural Grocers Drive Sales by Catering to Increasingly Diverse America

If you walk into the Fiesta Mart grocery store just north of the main campus of the University of Texas in Austin, you might just see a Vietnamese man shopping for a piñata. Or a Filipina picking up a package of freshly diced Mexican cactus (nopales) for her stir-fry recipe. Or a Thai restaurant owner looking for a deal on fresh cilantro (in July, three bunches were selling for a mere 88 cents).

Now more than ever, Houston-based Fiesta Mart, one of the largest Hispanic-focused U.S. supermarket chains, with 63 locations, is attracting not just Latino shoppers, but also many customers with non-Hispanic backgrounds looking for the freshest produce and meats at a good value during a historic inflationary period. In addition to offering great buys on fresh herbs, many multicultural grocery stores are also thriving as the United States grows significantly more diverse. 

The U.S. Census Bureau reported last year that the populations of people identifying as Hispanic and Asian have surged. People who identify as white now make up just 58% of the population, down from 64% in 2010 and 69% in 2000. The Census Bureau estimates that the United States will be a multicultural-majority nation by 2044. 

Capitalizing on the multicultural opportunity are pure-play grocers such as Fiesta Mart, H Mart, 99 Ranch Market, Northgate Gonzalez Market and many others, all of which offer many items central to cultural cuisine that aren’t found in a lot of traditional grocery or natural food stores. 

These food retailers are growing revenue and footprints as demographic changes and younger consumers’ interest in global cuisines drive multicultural grocery shopping. The multicultural grocery market is estimated at $50 billion and growing by nearly 2% a year, positioning these retailers to be a major area of growth in the supermarket industry for years to come. However, for Northgate Market, which spoke exclusively to Progressive Grocer, being a great merchant for the multicultural consumer is more about traditions and trends than it is about cheap cilantro.

“Northgate Market has always strived to deliver several specific experiences for our customers — hometown assortment and quality,” said Mike Hendry, head of marketing and sales at Anaheim, Calif.-based Northgate Market. “Being a great merchant for us is about understanding what our target customer is looking for — a combination of trends and traditions — what is important to them and delivering it with the highest quality.”

A Changing Shopper

The Northgate target customer Hendry mentions is more than likely young and multicultural, with $3.9 trillion in buying power, according to a 2021 shopper insights report from sales and marketing agency Acosta.

“Multicultural households continue to be a driving force of purchasing power and will account for half of the U.S. population in less than 25 years,” observes Colin Stewart, EVP, business intelligence at Jacksonville, Fla.-based Acosta. “This means understanding multicultural consumers and their shopping habits is key for grocery retailers to connect with an emerging group and provide a more personalized customer experience.”

When it asked consumers about their levels of enjoyment while shopping for groceries, Acosta found that multicultural households were far more likely to enjoy the experience than white shoppers. Now that the pandemic peak has subsided and shoppers are back to crowding physical stores, this presents an opportunity for all food retailers to attract more of these consumers.

While the majority of Black, Hispanic and white shoppers consider low prices to be the most important grocery store attribute, Asian shoppers are more interested in convenience, according to the Acosta report. Forty percent of Asian shoppers most highly value grocery stores that are close to home. Thirty-six percent of Black shoppers and 29% of Hispanic shoppers most highly value grocery stores with the best prices, versus 43% of white shoppers.

In the area of brand preferences, 51% of Black shoppers told Acosta that they most highly value food brands offering good quality for the price. Trustworthy brands were also a priority (38%).

Forty-six percent of Asian shoppers most highly value food brands offering good quality for the price. Fair everyday prices are also a priority (34%). Meanwhile, 39% of Hispanic shoppers most highly value food brands offering good quality for the price, with fair everyday prices also a priority (32%).

Another study, this one conducted by Sparkle Insights and TFC in 2022, found that the COVID-19 pandemic has created an inflection point in multicultural consumer behaviors in the United States that offers traditional grocery chains, mass retail and discounters an opportunity to better understand and cater to this growing segment.

More than 80% of consumers reported shopping for groceries at mass-merchandise stores, according to the Sparkle Insights/TFC study. African Americans and Hispanics are over-indexing on dollar stores and convenience stores, while Asians are over-indexing on multicultural grocery stores and pharmacy stores. 

The pandemic has also shifted a lot of multicultural shopping online. Close to half of multicultural consumers shop for groceries online, the Sparkle Insights/TFC report found. Hispanic and Black consumers are most likely to shop for groceries online, while Asians are most likely to shop for personal care items online. 

Multicultural grocers are winning these shoppers by appealing to specific cultural differentiators such as top-notch perimeter merchandising and service departments that focus on quality at a good value. However, multicultural grocers, especially after the pandemic, are also playing an increasingly important role for communities as gathering places that provide a sense of culture and connection. 

Vibrant Mercado Experience

For instance, Northgate Market is a family-owned Hispanic grocery chain with 42 stores in California, focused on playing an important role for communities as an authentic market that provides a sense of heritage and family, Hendry notes.

“Our stated purpose at Northgate Market is to enrich the lives of those around us through our faith in God and our deep passion for authentic Mexican food and a vibrant mercado [market] experience,” he explains. “It gives us purpose and is key to our past and future successes. We strive to bring this alive in every interaction we have with our associates, communities and customers. We aim to reward hard work, assume positive intent and give back to the communities that graciously welcomed us.”

In addition to serving as a gathering place for the community, the company has also elevated its omnichannel game by boosting its e-commerce capabilities. With help from Atlanta-based NCR’s Freshop solution, Northgate has been able to implement its own online ordering and curbside pickup services. The retailer previously introduced NCR’s point-of-sale solution that unifies technologies used to run the stores.

“Northgate Market currently partners with several third-party providers to satisfy the home delivery needs of customers,” Hendry adds. “We also have deployed our own curbside service — Northgate Pronto — that provides the convenience of curbside service, handpicked by our own specially trained associates.”

The grocer is also embracing technology by digitizing its stores’ advertisements on its website and offering virtual cooking classes. 

“We continue to learn about our e-commerce customers’ ever-changing behaviors and needs, and adjust our offerings,” Hendry observes. “Ultimately, our goal is not to replace a store visit but to augment our in-store experience with a digital extension of our in-store experience through our omnichannel offerings.”

According to the Acosta study cited earlier, 54% of Hispanic consumers shop for groceries online, and these shoppers spend 42% of their monthly grocery dollars online; 41% of Black consumers shop for groceries online, and these shoppers spend 39% of their monthly grocery dollars online; 41% of white consumers shop for groceries online, and these shoppers spend 38% of their monthly grocery dollars online; and 41% of Asian consumers shop for groceries online, and these shoppers spend 39% of their monthly grocery dollars online.

While all online shopper segments spent about 40% of their grocery dollars online, Acosta’s data shows that multicultural shoppers are most likely to increase their spending in the future, which makes Northgate’s focus on e-commerce all the more prescient.

When it comes to merchandising, however, authenticity drives much of the strategy at Northgate, regardless of the way its customers shop.

“Since we opened our first store, we have focused on carrying the authentic foods important to our Mexican heritage and our customers’ culture and family,” Hendry says. “We will always strive to deliver the highest, freshest quality. We train our associates by saying, ‘If we would not serve it in our own homes, we will not sell it in our stores.’ We have never wavered from this and feel that today is no different from the past.’

The company has the tradition part of serving customers down pat, but according to Hendry, the company keeps pace with trends by hyper-localizing assortments.

“We stay on top of merchandising trends by staying close to our customers’ traditions and to any Mexican-related food trends,” he notes. “Most of our stores are composed of 80%-plus of the same assortments. However, by the size of the store and regionality, we change the assortment to match the community — which part of Mexico families are from — and to maximize the best fresh and authentic offerings for the customer, given any space restrictions.”

Northgate has a distribution center in Anaheim that services all of its stores, as well as a network of distribution partners and vendors that it leverages.

“Combining this and the growth of our customer demographics in California, we believe we are poised for future growth,” Hendry says. “We are committed to continual and responsible growth that will serve our communities well.”

Part of serving the community means making sure there’s a way for local residents to take advantage of the company’s talent development and training programs centered on Northgate’s core values.

“Leadership Rise is our program that allows our leaders to be the best they can be while maximizing their strengths for success,” Hendry notes. “In this program, we focus on the people side of leadership and techniques to help leaders create an engaging environment for our associates to thrive. Our Immersive Leadership program allows leaders to advance their understanding of each area of the operation, furthering their growth and development through hands-on immersion.”

Kimchi and Congee

Of course, it’s not just the Hispanic-focused chains that are poised for big growth. Asian food-centered grocers are also booming. 

With locations in California, Washington, Nevada, Texas and now New York, Buena Park, Calif.-based 99 Ranch Market has expanded rapidly because of its popularity within the Asian community and is currently one of the largest Asian grocery chains in the country. Its stores offer a mix of Korean, Vietnamese, Chinese, Japanese, Thai and other Asian foods. The company was founded in California’s Orange County by Taiwanese immigrant Roger Chen in 1984.

The store in Houston has a huge bakery with seating, a produce department stocked with every vegetable one might need for an Asian recipe, and an enormous seafood selection, including many things still swimming. Shoppers can expect to find not only Hong Kong-style barbecue, noodles and congee, and dim sum, but also French pastries, Snake River Farms steaks, Berkshire pork and Caribbean-style papaya shakes. The market also has an in-store mini-mall that carries a selection of Asian cosmetics, toiletries and jewelry, as well as a pho bar.

Meanwhile, H Mart, founded in 1982 in the New York City borough of Queens, now has nearly 100 stores across the United States, Canada and the United Kingdom. It has such a cult following that it even gets name-checked by a New York Times best-selling book: “Crying in H Mart,” a memoir about growing up Korean American by Michelle Zauner. The Lyndhurst, N.J.-based grocery chain has set its sights next on opening stores in Hawaii, Massachusetts and Florida.

All of these strong offerings from multicultural grocers are pushing some traditional grocers to increase their offerings in this space. Some food retailers are placing a greater emphasis on multicultural through more shelf space, broader assortments and digital recipe inspiration. While Walmart, Target, Kroger and other big chains expand their multicultural assortments, Southeastern Grocers has recently expended its Fresco Y Más branded stores in South Florida, which cater to Hispanic communities. 

Traditional supermarkets may not be able to offer the expansive assortment seen in multicultural stores, but one of the ways that all retailers can stay relevant amid this massive cultural shift in the United States is by tailoring their product mix to their customer demographics. Traditional food retailers should take a page from the multicultural grocer handbook as they look to leverage the potential of a trend that’s only intensifying.