As the wider grocery sector continues to feel the impact of inflation and tighter consumer budgets, specialty grocers – and especially grocers catering to Hispanic audiences – are thriving. We dove into the data to find out what sets these chains apart.
Specialty Grocers Thriving Despite Grocery Slowdown
Many leading grocers have seen a drop in year-over-year (YoY) visits over the past twelve months, as high food prices led some consumers to cut down on non-essential grocery spending. But despite the wider economic challenges, YoY traffic to certain smaller grocery brands has increased. Between May 2022 and April 2023, monthly visits to El Super, Vallarta Supermarket, Cardenas Market, Fiesta Mart, Northgate Gonzalez Markets, and El Rancho Supermercado consistently exceeded the previous year’s monthly visit levels. During this period, YoY visits to the wider grocery category remained negative almost every month.
Catering to Your Audience Pays Off
The six brands analyzed carry a wide selection of Latin and Central American products – including, in many instances, prepared foods – that are not available in other grocery stores. And, unsurprisingly, all six chains attract visitors from trade areas with a large share of Hispanic households, which means that these chains are likely selecting sites that will be easily accessible to their target audience.
Still, the share of Hispanic households is not uniform across the six chains. Less than 50% of households in the trade areas of Fiesta Mart, Cardenas Market, and El Rancho Supermercado are Hispanic – which seems to indicate that these chains have found a way to attract non-Hispanic visitors as well without neglecting their core audience.
These non-Hispanic visitors may be looking for specific ingredients that are not available in more conventional channels, or they may be drawn to the affordable prepared foods at a time when many consumers are cutting down on restaurant visits. But these specialty grocers may also be driving visits through a more old-fashioned strategy – offering lower prices.
Affordability May Be Driving the Specialty Grocer Visit Surge
The median HHI in the census blocks making up these six chains’ trade area is lower than the nationwide median, which makes the recent success of these brands particularly impressive: Even though these chains’ visitor base may be more impacted by inflation than the visitor base of more conventional grocers, traffic to these specialty brands is still outperforming that of the wider grocery industry.
The lower HHI among these specialty grocers’ visitor base may also mean that visitors to these chains are particularly cost-conscious – and so these grocers try harder than conventional grocers to keep their prices low to accommodate their customers’ budgets. Anecdotal evidence also indicates that specialty brands tend to offer slightly lower prices when compared to the larger grocery players.
So in the current economic climate, grocery consumers looking to trade down and save on their grocery bill may be visiting specialty chains to score a bargain on pantry staples, fresh meats, and produce rather than to locate a specific hard-to-find ingredient.
Brick-and-Mortar Grocery Still Has Bright Spots
Despite the projected rise in online grocery shopping, many consumers still prefer to shop for groceries offline – and the six specialty chains featured here seem to be giving consumers plenty of reasons to visit their chain. From low prices to their niche products and freshly prepared foods, these brands are finding ways to attract visitors to their stores and proving that it is possible to operate a thriving grocery business despite the wider economic challenges.
For more data-driven retail insights, visit placer.ai/blog.
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