Wal-Mart May Face Tough Going with Hispanic Concepts

(MoneyWatch)  The growing range of formats Wal-Mart operates is gaining two additions both dedicated to Hispanic consumers, a group many mainstream retailers have had a hard time winning over.

The Financial Times first reported that Wal-Mart and Sam's Club would develop their own Hispanic store variations. The Wal-Mart version will debut in converted Neighborhood Market locations, one in Houston and one in Phoenix, that will be renamed Supermercado de Walmart. The Sam's, in Houston, will remain a warehouse club but with the name Mas Club and a retooled mix of products, the newspaper reported.

Wal-Mart hasn't spent a lot of time developing brands dedicated to Latinos or establishing sub-departments specifically for Hispanic consumers, approaches that some supermarkets and general merchandise retailers including Kohl's and Kmart have taken. Rather, Wal-Mart has been developing services that, while useful to many of its customers, are particularly valuable to Latino consumers, including wire transfers and, most recently, a lower cost prepaid Visa debit card.

Through the services it can offer customers and, in the Sam's variation, services it can offer Hispanic businesses, Wal-Mart has the ability to address pressing concerns and integrate itself into the community. Of course, it will offer a range of products that have proven popular with Latino communities and shopping features that are preferred by the groups it wants to reach. Wal-Mart spokesperson Amy Wyatt-Moore was vague on just what will constitute Supermercado de Walmart, but she did say that the stores would "feature a new layout, signing and product assortment designed to make them even more relevant to local Hispanic customers."

Sam's provided a little more on Mas Club. Spokesperson Kristy Reed allowed that it will target both Hispanic families and businesses that serve them, will have a heavy emphasis on fresh food including an butcher shop where customers can confer with personnel, store-made tortillas, and a produce department that will be "running over with fruits and vegetables." It also will feature a unique menu in a café that has both indoor and outdoor seating as well as a money center that includes wire transfer, debit card and phone card services, she said.

Services on top of Wal-Mart's low prices and top executives with Latin American experience should stand the retailer in good stead as it tests its Hispanic formats. Yet, Wal-Mart's approach to Hispanic consumers calls to mind Carnival Foods, a supermarket concept operated by Minyard Food Stores that the company revisited, retooled and tried to turn into a growth vehicle in it's Dallas/Fort Worth operating area. Carnival not only offered an assortment of food and consumables for the local Hispanic community - including a fresh tortilla department - but expanded services to include health and even dental clinics staffed by Spanish speakers as it made its growth bid.

In the Minyard case, despite operating close to home and having history in the Hispanic community, the company decided to refocus on its mainstream supermarkets last year, selling Carnival to a group lead by the established Hispanic-oriented supermarket operator Fiesta Mart.

While that's not to say Wal-Mart won't succeed with its Hispanic formats, experience does demonstrate success may require a lot of time and effort.