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Frias claims not to be too concerned. "To reach the Latino market, you have to have an entire infrastructure designed to understand the customer's specific needs," he says. "And we're way ahead on that." Frias has the gregarious demeanor of a born salesman and is a proven manager as well, with deep experience in the grocery business. And he's used to marketing to disparate clienteles. Born in Spain, he moved to Washington as a teenager. He got his first job as a bagger at Safeway in 1967 and eventually rose to the position of country-operations manager, a job that sent him to the Middle East in 1984 to open and manage Safeway's stores in Jordan and Saudi Arabia. Eight years later, he returned to the U.S. to open his own supermarket franchises in Oregon and Washington State. He was recruited by Gigante in 1994 to run the company's operations on the Mexican Baja California peninsula, which include licensed RadioShack and Office Depot stores. "The name recognition of Gigante was just awesome," Frias says. "But many of the middle-and low-income Mexicans who shopped at our stores were crossing the border into the U.S. and staying there." In 1998 Gigante asked Frias to devise a U.S. strategy.
Gigante's presence in Mexico gives it instant credibility with Latinos. Frias says when the company first surveyed potential customers in California, 70% recognized the Gigante name. Besides a wider and more authentic selection of Mexican products, Gigante also boasts prices that are on average 15% lower than those at traditional supermarkets. Gigante can afford to charge less, thanks in part to lower labor costs. Under its union contract signed last year, check-out clerks make $10.29 an hour, compared with $17.90 at major California chains; Gigante's meatcutters make $7 an hour less than their counterparts at other union markets. These concessions from the United Food and Commercial Workers--with 165,000 members, the largest private union in California--were intended to help Gigante gain a foothold but are sure to be temporary, the union says.
Some of Gigante's behind-the-scenes workers (in the stockroom, on the loading dock) have only very basic skills in English, meaning they would be unemployable at the big chains. And working at Gigante affords them union protection and health benefits not available at most California Latino markets.
Gigante's ethnic flavor isn't welcomed by all. Last year the Anaheim planning commission tried to block a store proposed for the site of an abandoned shopping mall, in part because it would cater, as the head of the agency put it, "primarily to the Hispanic market." And what, you might wonder, is wrong with that? Non-Hispanic whites make up just 36% of the city's population, down from 56% in 1990, while the Latino share of residents has risen from 31% in 1990 to 47% today. But many of the Latinos can't or don't vote, and the city government is still made up almost entirely of Anglos. And, as Frias explains, "a lot of people still have a perception of Gigante as a little, dirty mom-and-pop Mexican market." After a fierce dispute between Gigante and Anaheim officials, the city council reversed the planning commission's ruling, and the Anaheim store is set to open in May.