Founded in 1980 by a Mexican immigrant looking to make his American dream come true, family-owned Northgate González Market operates 41 Hispanic-focused grocery stores across Southern California. Later this month, the Anaheim-based chain will open its 42nd supermarket in South Gate at the site of a former Lucky’s.
Best known for its fresh offerings as well as a sizable assortment of domestic and imported Latin American grocery goods, the company is sharpening its focus on frozen foods, which are more popular among younger, more-acculturated Hispanic consumers. To find out what’s happening, we sat down for a chat with Tom Finn, vp of center store, and Mike Hendry, executive vp of marketing and merchandising.
Who is Northgate González Market’s core consumer? Hendry: We cater to Hispanic consumers — first, second, third generation and beyond — and our goal is to get them the products they’re looking for. But in Southern California, everyone enjoys great Hispanic food and flavors, no matter what their cultural background…. However, especially at the height of the pandemic when consumers were challenged to find what they needed at their usual grocery store, a lot of new shoppers discovered or rediscovered Northgate Market. And they weren’t necessarily Hispanic. But they liked our fresh food, our authenticity, the in-store experience — and they found that our center store assortment fulfills a lot of their requirements. So we saw a lot of fresh faces, and that’s been sustained.
Finn: We learned a lot during that period and really refined the mix. So we’re able to satisfy shoppers with the most authentic products and at the same time give them a more “complete” shop by offering some of the more everyday products they may not have expected to find at Northgate Market.
Particularly as immigration has slowed, how has your target customer changed?
Hendry: We realized several years ago that we needed to take a closer look at [our customers’ increasing] acculturation and how they’re cooking differently. They still want authenticity and foods they grew up with, but maybe they don’t have the time or the cooking skills that their mothers and grandmothers had. So we needed to change up our game and expand on what we were doing in fresh foods. For instance, seven or eight years ago, you’d have been harder pressed to find the kinds of grab-and-go and heat-and-eat foods that we offer in our stores today. But we found that we can bridge that gap by providing foods that are still highly culturally relevant but in a different state of readiness.
Does that include frozen?
Finn: Yes. So although frozen space is some of the most difficult to add, we are very methodically and strategically expanding frozen space [in remodeled and new stores] so we can give customers what they expect from us…. But even in a remodeled Northgate Market store, frozen is still very underspaced versus a “mainstream” supermarket. It’s much more relevant than it was, but it’s one of the sections that we recognize has much more potential to grow. We’re focused on doing that but not at the expense of authenticity. We want to make sure we protect our most authentic offerings and also add the innovation our customer is looking for from leading frozen food companies. However, it’s not as much about adding more products as it is executing good in-stock positions throughout the day.
‘If you walk into a mainstream retailer, you might see 20 doors of frozen pizza. You won’t see that at Northgate Market nor do our customers expect it.’
How do your shoppers buy and use frozen foods differently than other shoppers?
Hendry: Our Hispanic consumers are traditionally more fresh-oriented. Basket sizes are a bit smaller, but they shop more frequently during the week, restocking fresh products like meat, produce, tortillas, baked goods, etc…. During the pandemic, however, sometimes people gravitated to whatever they could get, including frozen items, while some were looking specifically for frozen alternatives so they could decrease the frequency of visits to the grocery store. So we hope that customers discovered or rediscovered frozen foods that they enjoy. Certainly the quality of frozen has changed over the years, and I think people are discovering that as well. And we’ve been updating our assortment there, too.
What frozen products resonate most and least with your shoppers versus the “average” U.S. shopper?
Finn: Some of our best-selling frozen foods coincide with what you see in mainstream. For example, ice cream and frozen novelties are among our most popular categories and also experienced some of the most growth during COVID. We offer a deeper, more authentic assortment than what you’d find at a mainstream supermarket, including labels that are probably more recognized by the Hispanic consumer, which really drives sales. Other popular categories include frozen vegetables, frozen potatoes, even elements of frozen breakfast such as waffles and pancakes as well as some products with protein.
However, frozen pizza, frozen entrees and frozen breads are some of the weakest parts of our category compared to the general market. If you walk into a mainstream retailer, you might see 20 doors of frozen pizza. You won’t see that at Northgate Market nor is it an expectation of our customer. Same thing in frozen entrees. Our customers want to partake in the best of what Mexico and South America have to offer when it comes to flavors. Frozen pizza and frozen entrees really don’t hit that mark. We have them and we make them convenient for our customers, but they probably won’t ever be the cornerstone of our sets like they are at other retailers.
Does the mix vary from store to store? And how do you balance Hispanic and mainstream brands?
Finn: We’re 41 stores, so decisions are all made centrally — but with a lot of input from individual stores. And we do have different sets in different stores. A lot of that is due to variations in store size, but we also [consider] what regions of Mexico and/or Central America that store customer comes from. To lump everyone together as “Hispanic” won’t get you very far. The more you understand what makes each one unique and special the more successful you’ll be…. We get a lot of information from the financial services side of our business, which handles money transfers. So we can see to which parts of the country and the world the money goes. We’re able to use that data on top of other demographic data to help inform us as far as what the population looks like. And we’ll add and subtract sets based on that.
‘To lump everyone together as ‘Hispanic’ won’t get you very far. The more you understand what makes each country or region unique and special, the more successful you’ll be.’
As far as the mix between Hispanic brands and mainstream (U.S.) national brands, finding the right balance requires a good bit of understanding. In general, we believe we should be deeper with Hispanic brands. So if there’s a category that’s really exploding, we would want to be sure we’re carrying the No. 1 and probably the No. 2 U.S. brands that are making the category happen. But we would probably view a secondary brand, even if it’s growing, as a tertiary brand because we wouldn’t want to lose the variety of [Hispanic brands] our customers want to see.
Where does private label fit in?
Finn: Like any mainstream grocery store, we have opening price point and national brand equivalent store brands [That’s Smart and Food Club supplied by Topco]. Those are obvious. But at 41 stores large, we know we have a bigger private label opportunity because our customer recognizes us as a brand in the marketplace. When we asked what customers really expect from Northgate Market, we realized they are looking for the most unique, authentic and highest quality Hispanic products available in the marketplace. So we developed the González Supremo label for exclusive, proprietary products that we can really hang our hat on. These are products consumers won’t find anywhere else — that they’re willing to drive a little further for.
With fewer than 100 items right now, we’ve only just started on this journey (the line debuted last year). Nothing in frozen yet, but we have some drinkable yogurt products that are unique and different and authentic in the sense that they’re Mexican recipes. And there are a few cheese products as well. But there’s a vision and a list and an agreed-upon strategy with the company to pursue this with a lot of energy.
What’s driving the shift from high-low pricing to EDLP?
Finn: Southern California is extremely competitive but customers don’t want to work so hard to get the best price. We believe that if you give them a price that’s fair on an everyday basis, you can establish trust. And that’s really our aim. So instead of being so high-low, promotion-oriented, we want to make sure our customers are good with us today, next week and next month.
Without a loyalty program, how do you communicate with customers?
Finn: Hispanic shoppers are definitely very engaged with their mobile phones. So last week, we began offering customers the opportunity to receive our weekly ad in a digital format via their phones. It allows them to have that information in their hands as opposed to going home and seeing it in their mailbox and perhaps forgetting about it later on. So we can communicate with our customers as quickly and easily as they would like. We see it as a game-changer and we’re looking forward to doing a lot with it.
What about e-commerce?
Finn: We offer same-day delivery with Instacart and Shipt and we also continue to develop our curbside pickup program (Northgate Pronto). It’s an important part of our strategy going forward, but it’s not as fully developed as other retailers’ online programs. Because fresh food is such a key element, our customers like to do their shopping in person. They like to see, touch, taste and choose their own fresh products. And then there’s the experience itself. The average consumer sees shopping as a chore. But when a customer walks into a Northgate Market, it’s an experience they look forward to. There are lights and colors and all kinds of other things happening in store to capture their attention and imagination.
A CLOSER LOOK AT TODAY’S HISPANIC CONSUMERS
Twenty years ago, frozen food was a no-go with Latina moms. But times are changing.
By 2025, Hispanics are expected to represent nearly 20% of the U.S. population, making them the fastest growing ethnic group in America. But thanks to a significant decrease in migration from Mexico in the past decade, a growing number of Hispanic-Americans are U.S.-born, meaning they shop more like everyone else than their immigrant parents and grandparents, says David Morse, president and CEO of Los Angeles-based New American Dimensions. That includes how they shop for frozen foods.
“The traditional Latina mom’s identity has always been tied to nurturing her family with fresh meals made daily,” he explains. As a result, even 20 years ago, “Frozen foods were a real no-no among U.S. Hispanics.” But among more acculturated second-and third-generation Hispanics, attitudes are changing.
Most Hispanics — moms included — work or go to school, says Richard Hernandez, director of marketing and merchanding for Main Street Markets, The Woodlands, Texas. “So while they enjoy cooking for their families, mostly from scratch, they will use shortcuts like frozen fruit and veggies or rotisserie chicken to save time.” In fact, he reports, sales of frozen breakfast foods such as pancakes and waffles have jumped almost 50% among Hispanics during the past five years, highlighting the growing importance of convenience foods to this changing demographic.
A growing number of Hispanic-Americans are U.S.-born, meaning they shop more like everyone else than their immigrant parents and grandparents.
However, says Morse, even younger Millennial and Gen Z Hispanics are proud of their Latin American heritage, so it’s important to offer the authentic foods and flavors they grew up with — just in more convenient forms. It’s also worth noting that U.S. Hispanics overindex in ice cream and frozen confections, probably due at least partly to the availability of familiar flavors and products here in the states.
SHOPPING IS STILL AN EVENT
What else should retailers know about Hispanic shoppers? “Grocery shopping is a family event,” says Hernandez. “Parents, children and other relatives often shop for groceries together.” In addition, although more than 50% of Hispanic-Americans shop more than once a week, they tend to spend more time at the supermarket than non-Hispanic consumers, averaging 53 minutes per visit. One study also found that Hispanic households spend about $20 more per week on groceries than the average household, probably because their families tend to be larger.
“Hispanics shop at stores close to home where they feel more comfortable, that offer a variety of products that appeal to them (fresh, authentic, culturally relevant) and that have good pricing and promotions,” continues Hernandez. However, “Hispanics know what they want and are less likely to act as a result of an in-store promotion.” As a result, retailers may want to communicate sales before shoppers hit stores. Ninety-five percent of U.S. Hispanics own smartphones, so consider delivering offers digitally.
Hernandez says first-generation Hispanics in particular are very brand loyal. But as they become more acculturated, they’re more willing to try new products and unfamiliar brands. So it’s important for retailers to know where their customers fall on the acculturation spectrum.
“Recent immigrants tend to go to Latin-focused stores with more Latin-focused brands,” explains Morris. “but more acculturated consumers in, say, Southern California are going to Safeway or Ralphs for the majority of their groceries and then supplementing that with a visit to a Hispanic supermarket for fresh meat and a few other items.” But with approximately two-thirds of Hispanic-Americans now born in the U.S. and net negative immigration from Mexico, some Hispanic supermarkets are broadening their assortments in order to cast a wider net.
ONE SIZE DOES NOT FIT ALL
In addition to degree of acculturation, it’s also critically important for retailers to know Hispanic customers’ country or region of origin. “This is definitely not a homogeneous market,” says Morse, citing “The Puerto Rican kid living in the Bronx rapping along with Bad Bunny is very different from the ‘Texican’ listening to country music in Dallas.”
“One size does not fit all,” confirms Hernandez. “Retailers need to tailor their assortments to the demographic in their particular area.”
Even in mainstream supermarkets, “’Hispanic foods’ may be too broad a designation for today’s shoppers,” says James Tenser, president of Tucson, Ariz.-based VSN Strategies. Where he lives, for example, Mexican restaurants differentiate by regional cuisine — Sonoran, Oaxacan, Chihuahuan, even New Mexican. Retailers should do the same.