A Latino Mecca Versus Middle America

PANORAMA CITY —  This is no ordinary department store.

Stylized Mayan pillars and Aztec pyramids adorn the exterior. Inside, merengue and banda music alternate on the loudspeakers and gold-lame Bulova watches emblazoned with the image of the Virgin of Guadalupe fill the jewelry display.

Named after a Caribbean island, La Curacao has carved out a loyal niche for itself among the Mexican and Salvadoran immigrants who populate this blue-collar community in the east San Fernando Valley.

With the motto un poco de su pais, or “a bit of your country,” La Curacao capitalizes on its Latin American roots. Part of a renowned franchise with outlets in all five Central American countries and Mexico, the discount retailer is kind of a south-of-the-border Wal-Mart.

But next spring, Wal-Mart--the real deal--is slated to open its first urban Los Angeles store in the closed Broadway department store building directly across from La Curacao in the Panorama Mall, and with 250% more floor space to boot.

So what will happen when the world’s largest retailer and this proudly ethnic emporium face off at opposite ends of the mall in March?

“It’s going to be a very interesting contest between this very standardized operation and this unique retailer,” said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp.

Wal-Mart, long superstore to Middle America, is one of several mainstream retailers, including Sears, J.C. Penney and Home Depot, that are jumping into Southern California’s minority markets. By adjusting their merchandise to reflect ethnic differences in size, color and selection, they are making money hand over fist, Kyser said.

Indeed, Wal-Mart has customized its stock to meet local demands in other urban areas.

A store in south San Diego, for example, just minutes from the U.S.-Mexico border, now sells Spanish-language greeting cards and music, religious candles and tortillas that appeal to a clientele that is 80% Latino, according to store manager John Sablan.

Additionally, Wal-Mart launched an advertising campaign on Spanish-language television networks in an effort to recruit more Latino customers, said spokeswoman Cynthia Lin.

The advertisements feature a Spanish version of Wal-Mart’s catch phrase “Always” or Siempre, as well as a new refrain--De Todo Corazon or “From the Heart.”

But Jorge Ortiz, La Curacao’s advertising supervisor, isn’t worried about the retailing behemoth’s incursion into his territory and even welcomes its arrival.

“They concentrate on the Anglo market and we on the Latino,” he shrugged. “It is going to attract a lot of people to the mall to our benefit.”

The chain’s two Los Angeles stores--the other one is downtown--cater exclusively to Latinos, and Ortiz believes its Latin American roots will keep it strong.

“When somebody comes from El Salvador, they can relate to the name,” he said.

Indeed, at La Curacao’s heavily advertised grand opening in 1995, more than 40,000 people clogged the mall and spilled out into parking lots and streets. Traffic snarled and the Fire Department was forced to call off the festivities for safety’s sake.

The store still attracts a crowd. On weekends, the showroom’s atmosphere turns carnivalesque when employees mount a stage in the middle of the electronics department and sing Mexican ballads or dance to salsa music, inviting customers to join in. Televisions and microwaves are raffled off, door prizes handed out and foot traffic jumps to an average of 2,800 each weekend day, according to operations manager Jorge Ventura.

Apart from nostalgia and a free fiesta, the store offers shoppers two amenities that Wal-Mart doesn’t: easy credit and international transactions.

“Ninety percent of our business is done on credit,” said Ventura.

La Curacao issues a store credit card through Adir Financial Services, also owned by the U.S. franchise’s owners, brothers Ron and Jerry Azarkman.

A boon for recent immigrants with a short or nonexistent credit history, the only requirement for an initial $350 credit line--with the first four months interest-free--is stable employment for the prior 12 months.

Customers are also able to purchase merchandise locally for relatives to receive through one of the store’s franchises south of the border. Such transactions account for 7% of the store’s business, said Ventura.

Although Wal-Mart has several stores in Mexico, (but none in Central America), it does not offer that service, said spokeswoman Lin.

But Wal-Mart has something else to offer--its size.

With everything from dog food to diamonds and sales of more than $104 billion in fiscal 1997, Wal-Mart is the king of volume pricing.

La Curacao does have some departments that are better stocked than Wal-Mart’s, such as its electronics division--which represents 30% of the store’s business. But when it comes to items that the two discounters have in common, advertising supervisor Ortiz acknowledges that La Curacao can’t compete with Wal-Mart’s prices.

To survive, the store will have to emphasize other strengths, said economist Kyser.

“People like good prices, but also the service level is very important,” said Kyser. “I think with their service level, they will be able to survive.”

Penelope Wong of Wong* Wong* Boyack, a San Francisco-based firm that specializes in ethnic marketing, said that although La Curacao may lose some customers to Wal-Mart’s volume pricing, being the first kid on the block is an advantage.

“It all depends on the position of the business, how well they know their customers,” said Wong. “It really becomes a neighborhood issue. They can’t pretend to be a Wal-Mart.”