FOREIGN SEGMENT IN USA MARKET

Through its whole sale food outlet (WFO) located in Omaha, Nash Finch” is seeking to
appeal to the recent Mexican arrivals in the Upper Midwest. In recent years, the Hispanic
population-which has always been an important market segment in the Southwest, Florida,
and the Northeast-has expanded into the Midwest. For example, the Hispanic population in
Omaha has doubled in the past 10 years. Nash Finch views the Omaha store as a laboratory
for developing a competitive strategy with the greatest appeal to the growing target market.
The firm’s work on this store has been far from easy. According to Art Keeney, vice
president of corporate retail stores at Nash Finch. “In our Omaha store we have already
reset some sections two or three times – like cooking oil.”

Among the store’s strategies in attracting Hispanics are the emphasis on imported groceries
from Mexico, warehouse club multipacks, Hispanic oriented perishables, and bilingual
signage and check cashing services. Although WFO stocks about 40% less merchandise
than a traditional Nash Finch supermarket, a much larger percentage of its goods consists of
Hispanic specialties like canned hominy, jalapeno peppers, plantains, and pickled cactus. A
basic merchandising feature of the WFO store is its Wall of Values, which stresses such
staples as corn meal, shortening, and Ramen noodles. The items featured on the Wall of
Values changes weekly, based on seasonality, but more Hispanic oriented items are stocked
during the beginning of the month when Hispanic tend to do their heaviest grocery shopping.

As a customer enters the store, large signs in both English and Spanish promote WFO’s low
prices. The further stress the low prices, all items are sold at cost. At the register, an
additional 10% is added to cover WFO’s expenses and profits. And to improve customer
service, WFO utilizes postage-paid mail in comment cards that are available in English,
Spanish, and bilingual versions.

Other parts of WFO’s strategy represent a radical departure from that in Nash Finch’s
traditional stores. The store has a thriving food stamp business, with food stamps
representing as much as one-third of the store’s total business during the first two weeks of
a month. This drops to 20% of the store’s total business during the last two weeks of the
month. The Hispanic-American business is also much more cash-driven than a traditional
store, where much of sales are completed by credit card. And while larger packs of meat are
offered at the start of the month, these are much less frequent during the end of the month.

As Art Keeney notes, “Hispanics have not been served as well as they should have in the
Upper Midwest. This is a heck of an opportunity for us. These are very loyal shoppers who
are big on cooking from scratch, and not as restaurant-driven as the general population.
They are like the typical supermarket customer 20 years ago.

As evidence of the success of the store in attracting its clientele, the WFO store was
formerly part of the Hinky Dinky chain. As a Hinky Dinky unit, the store had a weekly sales
volume of $70,000. Now, in the slowest week of the month, WFO does double that volume.

Nash Finch is seeking to open additional WFO stores in cities with an extensive Hispanic
population nearby. At the Omaha store, more than 60% of its shoppers are Hispanic and
90% of them live within a mile and a half of the store.
QUESTIONS

1. From a market segmentation perspective, comment on Nash Finch’s development of

WFO as a prototype store.

2. What are the pros and cons of Nash Finch’s choice of the Hispanic market as a target
market?

3. What other target marketing opportunities should Nash Finch investigate?

4. How could Nash Finch prepare a five years sales forecast for its WFO stores?