Minyard bets on upscale Carnival stores for growth
Dallas Business Journal - 12:04 PM CDTThursdayby Sandra Zaragoza Staff Writer
Coppell-based Minyard Food Stores Inc. is making a statement as loud as a mariachi band with the grand opening of its Carnival Super Market Wednesday in South Dallas.
The new Carnival store is an upscale Hispanic-oriented grocery store with a fresh focus -- from fruits and veggies to a prepared foods counter featuring rotisserie chicken and authentic Mexican recipes. The store, which is located in southwest Oak Cliff at Illinois Avenue and Westmoreland Road, is replacing an older Carnival store a few miles away.
Minyard Food Stores CEO Michael D. Byars says that the low-cost Carnival format will be the Coppell-based grocer's primary growth vehicle moving forward.
With the new store, Carnival -- the No. 2 grocer in the Hispanic market in North Texas behind Fiesta Mart Inc. -- is demonstrating that it is serious about attracting Latino shoppers. The grocer, which owns Minyard and Sack'n Save stores, has plans to open two more new Carnival stores in south Fort Worth within the next 18 months.
Byars would not disclose how much the company spent on the new store. However, starting a new grocery store can cost $10 million to $15 million, according to industry experts.
The grocer has also remodeled four of its 24 existing Carnival stores and plans to remodel or convert all of its older Carnival stores to the new format.
"The real estate that we have out there now is a significant opportunity for growth," Byars said.
Deep research
For the new format, Byars says that Carnival spent months researching the Hispanic consumer, which included visits to Mexico and customer surveys. The store has worked to integrate product brands that appeal to Latino tastes and buying habits, whether that is candy or laundry detergent, said Zaragoza Ramos, senior vice president of retail operations for Carnival.
For example, Ramos said, Hispanic candies will get top billing in Carnival's grocery aisle but customers can still get an American-style Hershey's bar. Beyond groceries, Carnival is also the launching pad for MedXpress Clinic, a walk-in medical facility. The store will also host vendors that sell jewelry, clothing and furniture; At least one vendor will allow for delivery to Mexico.
A competitive segment
Carnival management says that the store's merchandise mix and service is what will set the new Carnival format apart from the competition, from mom and pops to Wal-Mart. In Carnival's customer surveys, Byars says, the store has fared better than Fiesta in areas such as meat and seafood.
Fiesta is seen as one of the leading chains in the upscale Hispanic market, said John Loeb, principal of Chicago-based JH Chapman Group L.L.C., a food investment banking firm. Houston-based Fiesta Mart, with 14 stores in the Dallas-Fort Worth area, took the largest chunk of the local Hispanic grocery dollar with 20.3 percent in 2005.
Carnival's stores picked up 15.4 percent of the market in 2005, according to research by Hispanic marketing firm Rincón and Associates.
Meantime, Wal-Mart gained significant ground with Latino shoppers in North Texas. The world's largest retailer's market share spiked to 14.6 percent last year, up from 8.8 percent in 2004. Popular independent chain La Michoacana captured less than 1 percent of total Hispanic grocery dollars in 2005.
But unlike most mom-and-pop stores, upscale Hispanic chains are "focusing on providing all the services and quality that a customer can expect in the best super market chains," Loeb said. From the standpoint of size, Carnival is well positioned to serve the growing Latino population, he added. "An experienced market operator like Minyard can better handle the market better than someone like a Wal-Mart because of their depth of knowledge, and they can also do it better than independent," Loeb said.