Gigante

WADE DANIELS Staff Reporter The Mexico City-based supermarket chain Grupo Gigante may have closed escrow on a long-vacant site in Arleta, but some question remains as to whether the company actually will build a market on the property. Early last month, Mayor Richard Riordan’s office announced that Grupo Gigante had bought three acres on the site of a former Gemco store and assumed a 62-year lease for the remaining 9.6 acres. But Gigante spokesman Ignacio Toussaint said recently that the company has not yet decided if it will build a supermarket at the location. The company, which has been scouting out sites in L.A. for about 10 years, also is considering holding the property and selling it at a later date something it has done with other possible store sites in Mexico. “Our management is deciding a lot of things, such as whether we want to devote more resources to stores in the United States instead of investing in Mexico,” Toussaint said. A final decision is expected within the next three months, he said. Such coyness does not seem to bother city officials, who are convinced that the supermarket will be built. “We worked with them extensively and they have a detailed plan for the project,” said A. Randall Steinberg, a Valley representative on the L.A. Business Team, Riordan’s business-retention organization. According to designs submitted to the city, Gigante intends to build a 59,400-square-foot supermarket at the site. The company also has submitted designs for a 16,120-square-foot drug store, a 12,100-square-foot auto parts and service facility, as well as 10,200- and 4,500-square-foot retail buildings whose use has not been determined. While many of the chain’s stores in Mexico carry dry goods such as clothing in addition to groceries, the Arleta store only would carry food and groceries. Should Gigante build the Valley store, about 20 percent its products would be imported from Mexico, Toussaint said. The rest would be comparable to the selection of other supermarkets. The only other large supermarket in the vicinity of the proposed Gigante site in Arleta, which is the home of a large contingent of Mexican immigrants, is a Lucky store. Grupo Gigante is Mexico’s third-largest grocer in terms of sales. The company is considering building as many as 10 stores in California, Texas and Illinois, said Esteban Galindez, senior retail analyst for the Mexico City office of Deutsche Bank Securities, although it remains unclear how many of these will be built in L.A. or California. Galindez said the size of Gigante’s investment in the Gemco lot makes it all but certain that the firm will indeed build a store there. “I think that buying land and taking a 62-year lease shows a big commitment compared to the land speculation they do in Mexico,” Galindez said. Richard Giss, a partner at the trade and retail service group of Deloitte & Touche LLP in Los Angeles who is consulting Gigante, said he knows of no other large Mexican grocery chain that is planning to enter the U.S. market. However, there is no telling how long that will be the case. “There is recognition that the immigrant population in some areas is underserved, so a lot of local and foreign companies will step in to fill that need,” said Giss. Giss refused to comment on the likelihood that Gigante will ultimately set up a Valley store. At the end of 1997, Grupo Gigante had a total of 222 stores and restaurants, all in Mexico. The company reported $2.1 billion in sales for 1997, which was a 2.8 percent rise from the previous year. Its sales are projected to rise by 8.9 percent this year. Gigante also participates in joint-venture operations of 47 Radio Shak stores and seven Office Depot stores throughout Mexico.