Wal-Mart woos Hispanics with new Supermercado

By David Schwartz and Nicole Maestri

PHOENIX/SAN FRANCISCO (Reuters) - Lifting her 2-year-old daughter Shayla into a shopping cart at the Supermercado de Walmart here in Phoenix, Elizabeth Hernandez searches for just the right words to describe her feelings.

But she is searching for the right words in English.

"I feel more comfortable shopping here," said Hernandez, an admittedly shy 32-year-old Phoenix homemaker who is fluent in Spanish. "I don't have to know the exact right words to get what I need. It makes me feel more at home."

That's what Wal-Mart Stores Inc is hoping to hear as it tests a new concept to add to its U.S. portfolio -- a Hispanic-oriented grocery store designed to tap into this potentially lucrative and ever-growing market segment.

Calling it Supermercado de Walmart, the world's largest retailer opened the Phoenix store last month after what it said has been a successful launch in Houston in late April.

But Wal-Mart is entering an intensely competitive marketplace. Hispanics, frequent grocery shoppers, carry with them an estimated $1 trillion in buying power, and Wal-Mart competitors have already noticed that spending power.

In Phoenix, the Supermercado is going up against 40 Food City stores operated by independent Bashas' Inc. Other Hispanic groceries like Pro's Ranch Market, with seven Phoenix area stores, are entrenched in the marketplace.

The stores are also being launched as Wal-Mart puts the brakes on Marketside, the small grocery stores it opened in the Phoenix area last year. They offer shoppers ready-to-eat meals and produce without the need to go to a full grocery store.

While the recession has hindered Wal-Mart's plans to open more Marketside stores, it said it is very pleased with the Supermercados.

"It's an evolution of what we've been doing," Wal-Mart spokeswoman Amy Wyatt-Moore said, noting that Wal-Mart already operates about 500 stores in areas with large Hispanic populations.

WOOING HISPANICS WITH JALAPENOS AND MANGOES

At the Phoenix Supermercado de Walmart, signs outside the converted Walmart Neighborhood Market advertise Hispanic staples such as jalapenos and compare prices to local competitors.

Inside the brightly colored 39,000-square-foot store, a well-stocked produce section has mangoes, limes and papayas displayed in bins. The meat market has tripe and pigs feet.

Traditional Hispanic fare can be had at a small eating area, where tacos and tortas can be bought and chicken mole is a specialty. A seating area with a salsa bar is close by.

Signs are in English and Spanish and customers shop amid a background of Hispanic music coming over the speaker system.