Appealing To New Palates, Ethnic Grocers Expand Into New SoCal Territory

On the hunt for the freshest sushi-grade fish, the puffiest pita or the spiciest Thai peppers, a growing group of authenticity-seeking home cooks is driving demand for ethnic grocers to expand into parts of Southern California where they have never been before.

And in some cases, they’re taking up big-box space vacated by legacy grocers as the industry’s major players shrink through mergers and acquisitions that can result in higher prices and less variety for consumers.

“The general population is more diverse and open-minded in their thinking,” JLL Senior Vice President Ken Shishido said. “There are some areas where your normal English-speaking population wouldn't think about going into a Hispanic market or an Asian market. And now, we're all looking for the best food.”

Retail experts, landlords and brokers who work closely with some of these tenants told Bisnow that their customer bases are evolving. As customers of once-niche ethnic markets grow to include immigrants, their children and additional generations of their families, consumers who aren't members of these ethnic groups are also becoming customers. 

Home cooking skyrocketed in the early days of the pandemic as lockdown orders kept people at home and out of their favorite restaurants. After vaccines made their way into the arms of Americans, they began dining out more again, exercising pent-up desire to get out of the house. But as inflation climbed beginning in 2022, the more affordable at-home meal once again gained traction.

This generation of home cooks often isn’t satisfied with making mom’s roast chicken or even a simple standby like spaghetti or burgers. Millennials have shown in surveys to be more adventurous cooks, a trend that has accelerated with the advent of cooking-specific social media channels that bring chefs of all backgrounds into anyone's kitchen.

Larger ethnic chains are expanding to reach a larger radius of shoppers and, anecdotally, are generating more dollars per square foot than more traditional operators. Data on the performance of ethnic grocers is difficult to obtain, as most brokerages and research firms don't break down their data by the kinds of products offered at a store.

When Buena Park-based Asian grocery chain 99 Ranch Market signed a 15-year lease to open a new store in a former Vons in Tustin, the landlord anticipated the store would perform better than previous tenants, Value Rock Realty Partners Senior Vice President Dennis Vaccaro told the Orange County Business Journal. 

These grocers can also have a knock-on effect: Managers and owners of the spaces rented to specialty grocers told Bisnow that when one of these stores becomes a tenant, they make a shopping center attractive to a host of other tenants who want to tap into that same customer base.

It is also easier to find a vacant grocery store following years of consolidation in the industry. Most recently, the pending merger of Kroger and Albertsons will put a reported 400 stores on the market as the companies seek Federal Trade Commission approval for their deal.

Regional chains like Vons and Ralphs are shrinking their footprints as well, opening an avenue for ethnic grocers to expand.

Last year, H Mart leased a 69K SF former Vons in Westminster, and in 2021, two “underperforming” Albertsons stores in Irvine were closed and both were replaced by H Mart locations. 

Not all grocers take over space inhabited by former rivals. The much-anticipated 99 Ranch in Westwood is moving into a space vacated by a Ross Dress for Less. That store is part of a growth spurt for 99 Ranch. The chain has opened seven stores since 2020, giving it 58 stores across 11 states, according to the Los Angeles Times. 

JLL’s Shishido, who worked on the deal to get 99 Ranch into Westwood, said the grocer had been looking for space for a long time on the Westside of Los Angeles. The area around the 99 Ranch and the Westside in general has long had smaller Japanese markets. But until the Westwood deal, the chain had been unable to find a suitable space that ticked all the boxes, including adequate parking. 

But the stores can also represent movement into new territory. Aliso Viejo and Tustin “are markets that 15 years ago, [ethnic grocers] would have never gone into,” Coreland Cos. principal Matt Hammond said. 

Coreland leases and manages over 130 shopping centers in Southern California with a focus on grocery-anchored shopping centers, and its tenants include Latino and Asian markets as well as legacy grocery chains. 

“These operators are incredibly sophisticated,” Primestor Development co-founder and CEO Arturo Sneider said, referring to the larger chain ethnic markets. “They themselves are being run by second-, third-, fourth-generation family members, and in the case of Latino grocers and even in Asian grocers, they're evolving and adapting to the new consumer that is really an American Latino or American Asian customer.”

These chains are still looking for expansion areas where there are substantial populations of the ethnic groups that their products cater to. Experts also said that these stores are attracting increasingly diverse shoppers. 

Their expansion could breed more expansion.

As these markets add locations in new areas that were occupied by more traditional legacy tenants, more potential shoppers are beginning to see them as less like a market that is “for” a certain group and more like just a market, Hammond said. 

Hammond said he has seen a shift over the last 10 years among mainstream consumers toward both value and authenticity. At Vons or Ralphs, the offerings are very general, Hammond said. In other words, these markets have to offer a wide selection of goods, but that often means not specializing in anything. 

They will offer tortilla chips and salsa, for example, but they will “typically [be] priced on the higher side” and may not have the authentic feel that shoppers want. But customers at Northgate Market or other markets targeting the Latino population “can get, in their mind, better-quality tortilla chips and salsa at a better price,” Hammond said.