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One-Stop Shopping

Puerto Rico supermarkets have evolved from corner colmados to one-stop shopping convenience centers to keep up with the fast pace of consumer lifestyles

by Lucienne Gigante

April 27, 2000
Copyright © 2000 CARIBBEAN BUSINESS. All Rights Reserved.

It’s Thursday, April 27, 1955 and Maria wakes up. Kisses her husband good-by as he leaves for work. Wakes up the kids. Cooks breakfast. Takes them to school. Stops at the supermarket for groceries. Stops at the pharmacy to buy miracle anti-wrinkle cream and school supplies. Quickly goes to the post-office to send a package. Picks up the kids at school. Remembers her sister’s birthday. Stops to pick up a card and some flowers. Goes to the bank. Gets home. Checks mail. Starts cooking dinner at 5 p.m. The pasta sauce will do. Two hours later, her husband arrives. The food is ready. They all sit down to dinner together. Wash the dishes. Sleep.

It’s Thursday, April 27, 2000 and Maria wakes up. Wakes up the kids. No time for breakfast, she’s already late for work. Picks up breakfast at a fast food drive-thru. Lunch with clients at 1:00 p.m. (Thank god she doesn’t have to drive the afternoon car-pool this week!) Gets out of the office at 7:00 p.m. Nothing to eat. Goes to the supermarket. Buys groceries, school supplies, ready-to-eat dinner, and anti-wrinkle cream. Remembers her sister’s birthday. Picks up a flower arrangement and buys a greeting card. Sends a package. Makes a deposit at the bank. Leaves supermarket. Gets home. Puts the dinner in the oven. Checks e-mail. Twenty minutes and food is ready. Eats with her kids. Dishes in the dishwasher, please. Sleep.

It would have taken Maria of 1955 a minimum of six stops in different retailers to do what Maria of 2000 did with only one stop at a supermarket. Consumer habits have changed. And so have supermarkets.

It’s called one-stop-shopping. Supermarkets are transforming themselves into multi-service entities, offering everything and anything consumers may need at one place.

Of course not all women are mothers, married, divorced, or have careers, but things have indeed changed. A lot.

For every 100 couples getting married, 42 couples are getting divorced, according to 1995 statistics. There are more women working, many of them in powerful and/or time-consuming positions.

According to Puerto Rico’s Department of Labor, 239,000 women were part of the local workforce in 1970 compared to 533,000 women in 1998, which represents a 123% increase. As of December 1999, women represented 34% of the local labor force, according to the Employment status of Labor Force statistics.

Although the number of men that visit the supermarkets to do primary shopping has grown in the past decade, the ones going shopping remain mostly women. About 85% of customers in supermarkets are women, according to supermarket owners.

But nowadays, these women just don’t have enough time. And when they do have the time, they won’t spend it driving around in traffic jams doing errands.

"Consumers have new needs. Housewives twenty years ago are not the same housewives of today. Consumers are more educated and professional, especially women, who are supermarket’s most important clients," says Atilano Cordero Badillo, president of Empresas Cordero Badillo and Supermercados Grande. "Women have different roles and have had to adapt to these transformations."

Meanwhile, globalization and technology have also changed the industry. Bigger, stronger players offering better prices have now entered the market with new concepts.

No more ay benditos. Local supermarkets are now competing with world-class players. And there is no real loyalty when another establishment offers the same product for a dollar less.

In addition, pantry departments are popping up in department stores, discount stores, and even drugstores. Some of them, specifically the hypermarkets (not yet in Puerto Rico), carry a full-line supermarket with a full-line department store.

Fast-food establishments have also become a huge threat to supermarkets sales. "In our modern society, where both men and women are working professionals, fast-foods solve the time problem," says Johnny Barreto, chairman of the board of Supermercados Econo. "Fast-foods are our No. 1 competitor," added Cordero Badillo.

Competition is brutal.


No more traffic jams.

"The supermarket industry, wich started transforming in the 1960’s has experienced vertiginous and very accelerated changes in the last ten years," says Cordero Badillo."The idea is for women to visit one place to do all their shopping. For instance, before there were butcher’s shops all over the island, now the concept has been integrated in the supermarket chain, with a special emphasis on service at the counter."

Health food sections are fatter than ever. People are paying attention to their health and eating accordingly. For instance, the Amigo store in Plaza Guaynabo has its own health food-shop with a full-time nutritionist to help customers.

Produce departments–fruits and vegetables–have grown in sales and variety in the past years. "The percentage of total business in produce has grown 20% in the past three years, said Chuck Newsom, vice-president of merchandising for Pueblo International, Puerto Rico division, adding that soy products are an "exploding" segment of the market.

Product variety is key. An average supermarket would carry some 10,000 stock keeping units (sku) in the past, now they carry an average of 30,000 sku, many of them carrying up to 70,000 sku.

In the last ten years, supermarkets have also adopted products and created sections that were sold only at drugstores such as over-the-counter medicines, baby products, and health and beauty products.

In order to compete with fast foods, supermarkets have been adding delis and meal-replacement products, which were previously non-existent. "When consumers don’t have time to visit supermarkets, they tend to buy more at fast-foods. This is a direct result of a reduction in the consumption of our products," says Barreto, adding that supermarkets are carrying more prepared foods.

"Most of our stores have a full-service restaurant that provides consumers with ‘criollo’ cuisine for low prices. It’s a growing part of our business," says Newsom.

In Supermercados Grande, meal-replacement sales have increased from zero to between 3% and 5% of its revenue.


It’s not just about food anymore; the trend is towards services.

"Who would imagine fifteen years ago that supermarkets would have banks, bakeries, and flower shops?" Cordero Badillo asks.

"Having the ability to go into one facility that is secure, clean, and well lit to do your banking, have film developed, buy pre-paid telephone cards, conduct Western Union money transfers, buy money orders, key replacement, cellular telephone transactions, buy household items, groceries, flowers, get videos, and gift wrap is certainly a convenience," Newsom said.

Supermarkets are featuring banks, film developing, cafeterias, gift-wrapping, magazine, book, and sections, greeting card sections. People can shop for wines from a wide selection in supermarkets. Some even have chilled wine and beer.

Supermarkets have extended their operating hours. Most supermarkets now open until 10:00 p.m., some 24-hours a day.

Baggers are coming back. "With the introduction of the Xtra [warehouse type] concept all those services disappeared. Now that we’ve have been remodeling and converting supermarkets into combo stores and eliminating the warehouse supermarket concept, we are reintroducing baggers and other personalized services," says Fernando Bonilla, vice-president of Pueblo. Amigo averages 1.5 baggers per cash register during busy hours.

Even further, Amigo Supermarket in Plaza Guaynabo has its own child-care facility to let adults conduct shopping with ease. Television monitors around the store constantly transmit what is happening at the child-care center so parents can know. "Its been an incredible success," according to store manager Julio Batiz.

The store also features sort of a food-court that houses four locales including a sushi-bar, fried-chicken stand, a pasta-stand, and Cinn-a-bon franchise.

Johnny Luna, president of Ponce Cash and Carry, has sub-contracted space and established two pharmacies inside the supermarkets. "We conduct checkups in our facilities and keep in touch with the patients," says Luna. And Cordero Badillo will be opening a pharmacy inside his San Lorenzo supermarket.

Million $ investments

Serious money is needed to modernize operations.

The three major supermarket chains in Puerto Rico are investing $115 million in remodeling, upgrading technology, and expanding operations.

"We as retailers, really have to recognize that we are in a world market and for us to survive long term, we have to be able to compete in that arena," says Newsom. "A world-class player may or may not decide that Puerto Rico is the right market for them. If they do, and we are not operating in such a manner that we can compete with those world-market players, then we are not going to exist long term. We as retailers have to be prepared because if we are not, there might not be the time or capital available to prepare yourself."

Pueblo Supermarkets is spending some $50 million in remodeling its stores to convert them into one-stop-shops. Pueblo has already upgraded 26 supermarkets of its 44-store chain. Four more are scheduled to be ready in the summer and the company plans to remodel ten more before year’s end.

Supermercados Amigo is also in the growing mode. The supermarket chain is investing about $35 million as part of their aggressive expansion plans. "We are expanding in regions. This year we are concentrating in the south and next year we will move toward the western side of the island" says Jose Marti Costa, director of operations at Amigo, adding that they will open four more stores by year’s end. "We are trying new concepts. Its all about service, variety, and convenience, about offering an alternative to consumers."

Supermercados Grande is also investing $30 million as it adds seven stores. This year, the supermarket chain is opening four more stores in Yauco, Coamo, San Lorenzo, and Toa Alta.

Supermercados Econo, which has been very successful organizing independent owners into buying groups, is also opening four to six stores during the next 18 months, noted Barreto, who says "good personalized service, variety, and good prices are its winning strategy. Last year, the company opened four stores.

Sam’s Club, which will soon receive head-to-head competition from Costco, has six stores on the island with immediate plans to open one more in Bayamon’s Rexville area. According to Federico Gonzalez Denton, director of public relations for Sam’s Club, the company is still considering opening a Wal-Mart hypermarket, which includes a supermarket and a discount store.

Sam’s wakeup call

Although supermarkets started modernizing operations before Sam’s Club entered the local market in the early 1990’s, their entrance is referred to as a turning point, or rather, the wakeup call for local operators.

Was the supermarket industry prepared when Wal-Mart and Sam’s entered the market in the early 1990’s?

"No," Newsom from Pueblo said. "It was a wakeup call. Sam’s really brought to local attention the need to be ready to compete with someone that has the logistics network and the bank-power of Sam’s. Let’s face it, no one on this island was prepared for that."

Sam’s Club is a membership-warehouse club aimed to bring the lowest prices on brand-name merchandise. "Club-style operations offer significantly less variety than supermarkets and bulk-type availability of merchandise," says Newsom.

But Puerto Rico is becoming the exception to the rule. Unlike the States, the local Sam’s club concept is evolving towards one-stop-shop.

"The Sam’s Club concept in Puerto Rico has been a phenomenon," says Gonzalez Denton. "However, Sam’s stores in Puerto Rico have unique characteristics that respond to local necessities as consumers here classify us as a supermarket."

Local Sam’s Club stores are currently adding bakeries, delis, film developing, and more fresh and refrigerated products. The retailer is also contemplating entering in the meal-replacement segment.

"To compete with a Sam’s one has to do what they do–lower prices–very well. But you need to give the consumer a reason to come to you. Not just because you offer staple items such as rice and beans for a low price. But for high quality, tremendous variety, and selection, offering a true one-stop-shopping experience."

As local and global competition gets stiffer, supermarkets will keep getting creative in order to survive. "In the competitive retail business we believe we need to operate on two planes," says Newsom," You need to satisfy customers while getting ready to compete with world-class operators. That’s the way we see our business."

This Caribbean Business article appears courtesy of Casiano Communications.
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