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KOREAN GROCERS FIND PROFITABLE NICHE IN U.S.

By Dees Stribling

The image of the Korean grocery store as a single, mom-and-pop operation on some American street corner has gotten dated fast. These days Korean stores in the U.S. are morphing into supermarket chains. And Super H Mart, a chain with headquarters in the New York City borough of Queens, is leading the charge. In the early 1980s Il Yeon Kwon, a South Korean immigrant, opened a small market in the Woodside neighborhood of Queens. Today he is chairman and CEO of privately held HAR Grand Corp., Super H Mart's Maspeth, N.Y.-based parent. The chain operates 22 stores, mostly in East Coast suburbs and a handful in California, Colorado, Georgia, Illinois and Texas.

The chain grew modestly until the early part of this decade. Of late, its pace of expansion has quickened. Between 2005 and 2007 the company opened six Super H Mart stores, including the ones in Georgia and Illinois. Another half dozen are slated for this year, and some of these will open in a few more new markets. The most recent store opened in January, in the north Dallas suburb of Carrollton, representing the chain's first foray into Texas. A Houston unit, too, is on the horizon for this year. “Super H Mart is growing rapidly, and it has the demographics it needs to grow for quite a while,” said Matthew Casey, president of Clark, N.J.-based Matthew P. Casey & Associates, a grocery store consulting firm that has no business relationship with Super H Mart. “Everything has a saturation point, but for now there aren't enough of them even to be close to a saturation point.”

Not long ago emigrants from the Korean peninsula, or even anyone seeking good kimchi or some other Korean specialty, typically found their way to some Korean grocery store in the neighborhood. These also served a social function for the local Korean populations, of course. Such stores are still around, but they now face competition from the Korean supermarkets. Another East Coast chain is Grand Mart International Food.

Super H Mart's growth is anchored by the growth of the U.S. Korean population. In 1980 the Census Bureau counted about 289,000 first-generation Koreans living here. By 2005 that had grown to about 973,000 first-generation and 432,000 second-generation Koreans.

U.S. Koreans tend to be relatively affluent and geographically concentrated. Most of them had settled in Hawaii, Southern California and the New York and Chicago metro areas. These areas still boast large Korean populations, but so now do Atlanta, Washington and the larger cities in Texas.

And yet Koreans are not the whole target market for Super H Mart. “We prefer locations with large Asian populations, not only Koreans,” said Jimmy Kim, Super H Mart's marketing director. Though still distinctly Korean as a store — its signs are in Korean and English — Super H Mart units also carry items from other Asian culinary traditions and a fair selection of mainstream Western items as well.

In fact, Kim says Super H Mart supermarkets draw non-Asian people who are exploring Asian cuisines. “At some of Super H Mart's locations, as many as 50 percent of the customers aren't Asian,” Kim said.

Casey posits that Super H Mart and others are tapping into a U.S. demand for greater variety in food. “It isn't unusual for non-Koreans or non-Asians to shop there — say, someone curious about new cuisines, or someone looking for something unusual,” he said. “Mainstream supermarkets are offering a much greater variety of items than even 10 years ago, but stores such as Super H Mart are still ahead of the curve when it comes to an interesting variety, far greater than mainstream markets.”

To those who grew up with the standard post-World War II American grocery stores, a place like the Super H Mart in Niles, Ill., which opened in 2006 on the site of a former Dominick's Finer Foods (a Safeway brand in metro Chicago), does offer novel experiences. At nearly 20,000 square feet, the Niles Super H Mart is at the low end of the supermarket size spectrum (the typical U.S. supermarket measures about 48,250 square feet, according to the Food Marketing Institute). Some Super H Mart stores measure 60,000 square feet or more, but that total can include smaller shops subleasing space from Super H Mart. “The location is more important than the size,” said Kim. “If the location is strong, we can make a wide range of sizes work.” The company is pursuing growth through new development as well as redevelopment of closed supermarket sites, he says.

As he brings a little bit of Korea to more and more communities around the U.S. this year and beyond, Kim says he does not anticipate any fundamental change in the way Super H Mart stores fit their niche. “Consumers have been enthusiastic wherever we've opened,” he said. “Our goal is to keep it that way.”