Savvy Talk on the Hispanic Market
Real Talk LA01/01/2008
Real Talk LA
The Latino culture now holds an enormous place in Los Angeles, likely beyond even its own understanding. Dynamic business and job growth opportunities are everywhere and hardly only for Hispanics. But to succeed you have to comprehend the culture's unique characteristics. Herein, what works - from an expert.
Jose Legaspi has thrived in LA on the strength of being one of the most knowledgeable people in the country on the topic of the Hispanic market, everyone's hot audience and the moment. Legaspi, who helped former Mayor Richard Riordan get elected based in part on his advise regarding Latinos and who has quietly impacted the landscape of Los Angeles in many ways, has over time accumulated a storehouse of data and perspective about the idiosyncracies of the market along with compelling overview of the immense place the Hispanic culture now holds in Los Angeles and the business opportunities therein. He shares his wisdom and blunt insights.
Some background: Legaspi operates The Legaspi Company, whose core trade is realty services along with marketing consulting. The firm works primarily with businesses in finding and developing sites for retail stores in Hispanic neighborhoods and then helps design an atmosphere conducive to attracting Hispanics. Separately, he is partnered in managing some major pension funds' joint venture investments in shopping centers.
For years active in community affairs, he chairs the Los Angeles Community Design Center, an oversight role in developing badly needed subsidized housing, on of his two primary current societal interests, the other being education (he is a regent at Loyola Marymount University, raising money and promoting scholarship opportunities for Latino students). Under Riordan he served on the Department of Water and Power board and then the MTA board and was tasked with helping to restructure both agencies.
Politically, he says, his interest is in supporting educated "heart-with-the-community candidates who understand the overtones and are sensitive to the community."
Legaspi's father was born in Iowa, where his grandfather had fled after the Mexican revolution. The family returned to Mexico in 1921, and Legaspi's mother and father moved to Los Angeles in 1965, when he was 14, at his mother's insistence the her kids have U.S. college education.
He went to Roosevelt High School in Boyle Heights, then Loyola Marymount University of Los Angeles and was graduated with a Biology degree and a second major in psychology.
On the way to becoming a doctor, insufficient finances intervened, there being no scholarships for Latino students as the time. After he graduated, he worked at John Hancock to gain sales experience and found that he was good at peddling insurance. In the mid- '70s he obtained a real estate license to accomodate clients who wanted to invest.
How did you get started as a Hispanic market expert?
"The ups and downs of real estate are horrible, so I decided [also in the mid-'70s] to try sales in either TV or radio. I ended up at a fledgling advertising agency that was trying to sell the Hispanic market to advertisers. My scientific background helped me understand the statistics and the populations trends and I did pretty well, but I missed negotiating, so I began to do "business opportunity" sales. People told me what it is they wanted and I'd go after it. Someone wanted a beer distributorship or a liquor store, I would find it. I found someone a TV station in McAllen, Texas. That gave me a lot of business background and understanding of operational methods.
One time during a trip to Mexico City I saw a charbroiled-chicken stand. I came back to the U.S. and discovered El Pollo Loco. I subsequently helped them open 21 stores. I became an owner of El Pollo Loco franchises. Using the understanding I had about the Hispanic market from working with the advertising agency helped me understand site location for businesses. Denny's eventually came in and bought El Pollo Loco from the owners and they also bought my units.
From then on I began to develop real estate opporunities for poor people in the Hispanic areas and represented a lot of different Hispanic-oriented businesses into the Hispanic market. I started acquiring a databank of demographics and businesses who would want to reach in the Hispanic world, and I created a system to educate the retailers, the cities, and Wall Street on the Hispanic market. We pushed bringing needed goods and services to that world. And so The Legaspi Company was formed right around 1979/ 1980. We basically do the market study for where retailers need to be to reach the Hispanic market, then we do real estate negotiations for the acquisition of the sites and then we implement the store build-up. I did a deal recently with Target in San Jose and tried to design centers that provide a gathering place and that comfort level for Latinos so that they can feel good, safe, secure, comfortable and welcome."
You also do the reverse: Go find a tenant for an existing center or one being built. How does that play out?
"Years ago I began to create tenancy for clients who operated shopping centers, meaning that if I needed a department store in an Hispanic area and JC Penny and Sears didn't want to be there, I would go out and find someone and expand them into a chain. In many cases I brought businesses from Mexico to open stores here because I needed anchor tenants to fulfill the mission of providing needed goods and services from Mexico."
When you say you "needed," do you mean the community needed it or you have a space you wanted to rent out for a client?
"It just all depends. For example, I was called upon by a project manager of the Redevelopment Agency for Downtown Sanata Ana in about '86/'87. Downtown Santa Ana had gone downhill and they didn't know what to do with it. There was nothing going on downtown, the whole demographic had changed. I said, "Ok, we need department stores, restaurants and movie theatres to serve the people who had moved into the downtown area." We redid the whole downtown just to serve the Hispanic community. It's called Fiesta Marketplace and it's like the Third Street Promenade in Santa Monica, except we did it eight years earlier.
In order for me to be able to serve the community well, I had to find retailers. A lot of the national retailers didn't want to go there. I would go and find a specific tenant and say, "Okay, why don't I help you organize your business a little and move you over to my center? Let me help you expand." I did that quite effectively throughout Hispanic Southern California. In Pacific Grove, Huntington Park, Downtown Los Angeles, San Fernando Valley, San Fernando Road, and Panorama City. In Texas, I have another partnership with a private group, where we owned two malls, one in Houston, one in Dallas-Fort Worth and all designed specifically for the Hispanic Community. The one in Houston has been sold, though."
What if anything is particularly satisfying about your trade?
"We have an ability to acquire money from GMAC or Citibank, some the big Wall Street money sources, and have them feel comfortable that we know what we're doing. They're not putting any constraints on us by insisting that we bring in only a certain type of retailer, somebody who's big and powerful and has a big net worth. For example, our conditions with the banks in Fort Worth allow us to bring in mom and pop tenants. Now we're not going to bring in somebody who doesn't know how to run a business, but we're able to bring in someone who may not have the operational experience or the net worth to be able to run a business, and we'll help them.
At the end we're going to leave them alone. Helping the community help itself is the most satisfying."
How did you go from here to marketing expert?
"As I began to work with the retailers, they would tell me what kinds of things Hispanics are buying and why. How much money they spent. We'd explore: can there be a better was to sell to them and can you create better merchandise or a better retail environment? I also became a lecturer at various universities on Hispanic retailing. I lectured about understanding the culture and what the difference is between one Hispanic and another Hispanic and second, third and fourth generations from a socioeconomic point of view."
Talk about those differences.
"I began to realize that the actual Hispanic consumer base had three unique characteristics, and even though you may have Spanish-only or English-only Latinos, they share thses three things. One of those is that you need to provide a sense of gathering place, and whether it is a recent arrival or a second or third generation, higher income Latino, sense of place is very important.
Another characteristic is the culteral element, the extended family unit. It's a social culture rather than one based on individualism. This plays out in many ways, one of which is that a lot of business is done on the basis of personal relationships. It translates into, "Let me help you. Let me do this with you. Let me work with you." For example, in a large corporation the policy manual may not allow for relatives to work together in the company, or at least within the same department. The assumption is that somebody's going to exploit the company because now you have a group of people who may have geared one another to screw the company up, steal or whatever. However, it is a bad idea to do it that way with Hispanics. The reason is it's not an individualistic type of culture; it's more social.
The opposite happens because, I, as a Latino, if I bring my cousin to work with me in that department, I want to make sure that he does his work right, because I don't want to look bad to my employer.
Also, because we're a social culture, children stay at home until they are much older than in other cultures, even when they are out of school and working. This means more disposable income because they are not paying rents, so we are very good consumers in areas that you might not expect.
The third is religion. Most Latinos are Catholic and there is a huge, strong spiritual sense. It's a strong element. For example, the Christmas Posadas are strong cultural icons that as they are organizedas a gathering opportunity, it brings the community together in one place where services and goods can be provided."
What are some examples of differences between one Hispanic and another and between different generations?
"Differences are less noted in Southern California as they would be in other parts of the country. The large percentage of Mexican-descent Hispanics provides for a semblance of homogeneity. On the other hand, there are differences in regards to language acquisistion, going from the Spanish-ony speaker to the English-only Hispanic, also different perspectives and reactions of the different groups towards the external non-Hispanic world. Socioeconomic differences accentuate this. Strong customer service, though, is imperative for all Hispanics."
What are some of the characteristics of the households that are middle class and up?
"Mexico is losing a lot of middle class to the U.S. It's no longer just the rural class. They may not be making more than $10 per hour here, but they certainly have the attitudes of the middle class. Did you know that the biography of Gabriel Garcia Marquez sold more units in Spanish in the U.S. that anywhere else? That shows the thirst for elements of cultural quality. There are various authorities who are pushing the theory, which I subscribe to very much, that the Latino community in the U.S. is a culture until its own, with its own music, its own art, its own literature, its own everything; different from what Mexico may have or Latin America may have."
What do you see as the premier opportunity in the Hispanic business world in Los Angeles County?
"Everything. Everything. There is $800 billion worth pf purchasing power in the whole U.S. The LA five-county area holds about 8.2 million Hispanics, who hold about $100 billion plus in purchasing power. Mexico City's metro area holds about 22 million people with an internal gross product of about $120 billion - and you've seen Mexico City. Probably only about 20-25% of the Mexico City population can be said to have disposable income. The rest don't have much money.
But if you look in Mexico City, you'll find lots of banks, wonderful shopping centers, great movie theatres, museums and all of that, and Southern California doesn't have any of that for Hispanics. So just imagine where the void is: Everywhere. The biggest void is financial services, entertainment, soft goods and hard goods - any food product. There is a need for a bunch of other kinds of manufacturing. The market is just so big.
The #1 cheese manufacturer name brand in Southern California is Cacique, bar anyone. Just like the #1 radio station is Spanish language. The #1 newscast is 6 o'clock PM, Channel 34, bar any, okay? Entertainment, movie theatres - the #1 world market in Spanish music is Hispanic U.S., with LA being the principal area - only because of the number of people. Miami have become the center of Hispanic music because of its proximity to the rest of Latin America.
However, for the Mexican community, it's LA.
The amount of money that is spent in entertainment is much higher that people assume. Locally there are a not of opportunities for entertainment businesses. Right now there are a few dance venues that only specialize in northern Mexico regional music, which is the Norteno, which is like polka. As people get to know about these, it opens up for others who are looking for business opportunities to say, "Oh, maybe I should do this as well." There is a lot of that going on.
So truly, any area, any catagory, is a high opportunity base."
Talk more about the music business scene.
"Los Angeles have become a breeding ground for exporting music to Latin America that may be totally Mexican in nature. Actually, LA I believe, has more Mariachi bands than Guadalajara does, which is where the Mariachi was born. The #1 regional Norteno music singer in Mexico is a young man who was born in Long beach, and his name is Lupillo Rivera. The #1 Charro, which is a Mexican cowboy, that won the championship in Mexico, is from LA and he is a U.S. born grandchild of the owners of a prominent Hispanic supermarket chain in LA."
Is Healthcare an opportunity or growth area?
"Healthcare is a huge issue in the Hispanic market. How do you create insurability of people who don't have insurance?"
How much of the Spanish middle and educated class is adopting LOHAS: a lifestyle of health and sustainability? Like the Anglos who shop and Wholefoods, do yoga and support environmental sustainability?
"There is a consciousness of healthiness already in place. Latinos tend to have lower incidents of dying due to heart attacks becasue they go to the supermarket more frequently that non-Latinos. They fo and buy fresh "naturally grown" fruits and vegetables, meat and chicken. They will pay extra. But transferring that philosophy of healthiness for you and your family, which comes from our social nature... transferring it to a society level is not that typical.
People have been trying to survive, trying to get rid of racism and to create opportunities. That's where the focus has been."
Is there an equivalent to Business for Social Responsibility, which looks at adopting high environmental, ethical, employee relation and community give-back standards?
"In Mexico there's very strong environmentally conscious and socially conscious movements. Here, it's very basic. It doesn't translate the same way for Latinos here. There's more toxic manufacturing in poor areas, Latino or otherwise, so people organize to fight it. It's the same for people organizing for social services because they are personally impacted by poverty.
In general, it's like Maslow's Hierarchy of Values. People first focus on their own survival needs, then when they get some money and security they look out beyond themselves. It's absolutely true. I follow that to the T. Up until very recently the idea was to create opportunities for the Hispanic person, whether they were in business or education or any of that. Now as a lot of these students are coming out of college and getting into business, they have an idealistic streak.
My sons, who work with me by their choice, are examples. They are very idealistic."
What are some of the more exciting individual companies you've come across?
"Oh, wow. There's a lot of interesting companies. In the healthcare business, for example, there's Molina Healthcare. Cacique is a private company that's very sharp. They make cheese, every kind of cheese you can think of. There are the Cardenas supermarkets, they do very good work. They create a sense of place. The other one that's very much like him is Northgate Gonzalez Market. I call them the Bristol Farms of the Mexican world. Then there is Vallarta in the San Fernando Valley. They have such a wonderful service orientation that even non-Latinos are going there now to buy fresh fish. People from Encino will drive all the way to San Fernando to buy seafood. There's the coffe company Gavina, they are in the city of Vernon. They buy coffee from all over the world. It's premium coffee.
There's El Gallo Giro- it's a restaurant that I call the Jewish deli of the Mexican world because it's a hot food deli and they make all the food in front of people. There's one on Pacific and Florence Avenue in Huntington Park and it's the #3 grocer and restaurant in all of LA County. They make tortillas from scratch right in view of everybody. They take the hominy and cook it and they make the dough and the tortilla right in the view of everbody. It's a wonderful, wonderful, wonderful company.
There's a company right near here that's called BJ Brothers. They make the most beautiful pinatas and people come from all over and they're wholesaling the pinatas all over the U.S. There is one guy who actually started selling tamales door-to-door. Now he has 5 locations and everybody just comes for his tamales in East Los Angeles. Lillianas Tamales does extremely well. Also, the best Mariachi guitars are being made in East L.A."
We know Latinos hire Latinos, it's part of the social culture or bonding. But do Latino employers also exploit Latinos? Do you see much exploitation here in East L.A.?
"Yeah. Yeah, there is, absolutely. I can tell you that a lot of the garment industry sweat shops are run by Latinos themselves. That's because people like to work for people who are of the same ethnic background. You will find huge exploitation in a lot of the restaurants. Also for the people who are cleaning hotels and office buildings, there's a lot of exploitation in that area. Which brings me to another point, I do a lot of business in Mexico and the difference between doing business in Mexico and doing business in the U.S. is truely like night and day because in the U.S., the capitalistic system is based on trust.
You shake my hand, I shake your hand, we're okay. You know that I'm going to close the deal and you'd better take care of me, because if you don't take care of me, I'm going to go to your competitor. In Mexico you don't have that. It's a very monopolistic, materialistic, exploitative system. The reason why the middle class doesn't stay in Mexico is because their attitude is if I don't screw you, you're going to screw me first.
I find that there are a lot of young Latino professionals here who are now learning that you don't need to be exploitative. On the contrary, you need to be giving. That is better business, common sense. By taking care of your employees, you'll be better off than anyone else and you will find that the employee base will immediately react to that and become a lot more loyal than ever."
Do you see where elements in the Latino business communities are working with elements in the Asian business community or the African-American business community, or are they going their own separate ways?
"Generally, they're going their own separate way. If they are U.S. born groups of different ethnic backgrounds, you will tend to see a kinship and you will tend to see partnerships. But if they are immigrants, they tend not to align themselves with other cultures only because their cultural elements are so far apart. But then, when you have an American culture it sort of creates a cohesiveness amongst all those groups."
What are some of the dissapointment? Where have you run into obstacles and struggles?
"Oh, lately, I can tell you my biggest struggles are in cities that may be run by Hispanics themselves. They take an approach of "I know what's best for my people and what's best for my people is not necessarily an Hispanic supermarket. I want Ralph's" And so they will put all the obstacles to any Hispanic type of retailing. Its happening in a bunch of cities, including some predominately Hispanic cities in LA county. "We want something better than that. Our people deserve better than just Hispanic store," they say. That squares with a lot of people's view that the class is ultimately a bigger divider than race. When you get the two of them together, you really have problems."
What about Hispanic leadership in politics, business and community affairs?
"There was an impressive report by Latino leadership groups here a few years ago looking toward the coming Latino dominance, and what was most encouraging was the careful thought being given to uplifting everyone, not just Latinos, and the ideas they had about how to do that. It was very aware of class and economic issues and quality of life issues. I don't think that the Latino community has a choice but to take leadership in Los Angeles, because we are the majority in the city and we will be in the county and we want to make sure that the city works for everyone, including us. We have no choice but to take over leadership.
One thing that I'm very positive and encouraged about is if we can take some of the U.S. system of doing business and then take some of that Latino social culture, "You're my family and I'm not going to screw you, because you're in my family" consciousness, and apply it to the larger community, very good things can happen."
What are your thoughts about the education system?
"It's a sad story that bilingual education is misunderstood. There's nothing wrong with having two languages. On the contrary, it's a huge benefit. Let's not call it bilingual, let's call it dual language. Isn't it wonderful that LA can be the pivotal world city of all people and all these people have the ability to be at least dual-cultural, right? Bicultural and bilingual, whether they are Korean, Armenian, Chinese, Japanese or Mexican. So what is wrong with allowing it in the education system and starting the kids as a young age? Is Europe all wrong in that everyone speaks at least two languages? I don't think so. Another problem with the education system in LA and everywhere elsei n the U.S. is that it tries to take the perspective of the Anglo-Saxon world, which tried to invoke the Marlboro Man, the independent man, the individualistic guy who's going to go out there and conquer the world. And the way you motivate that person is by saying, "If you want to go and become the wealthiest and most successful person you've got to get straight As for yourself." Whereas, if you go to the Latino kid and you say, "You want to make your grandmother proud? Get an A."
When you're teaching people according to their world view, then you're not creating confusion. Wouldn't it be interesting if, all of a sudden, everybody graduates from high school because now they're being taught and treated under their own world view?
One thing I learned about me, because I came to the U.S. when I was 14 I had no qualms as to who I was. I was Mexican. I had no qualms about speaking Spanish. I didn't have to be ashamed to speak Spanish. That is a tremendous, tremendous base to work from. I don't have to be ashamed of anything, right? Then I come and learn English. Now I get to pick and choose, culturally, what I want."
Any area where you've made enemies?
"No, I don't think so. That's one thing I proudly have been very good at. I'm the middle child of this very large family and that's why I'm such a good broker, because I basically ended up being the bridge between siblings. Sometimes I speak my mind when I find that a Latino may be screwing up. For example, there are individuals that I have found to be unethical in their way of doing business and I will not deal with them. And there are some who are just there to reward themselves and I will speak my mind and I will not accept that. Those are some things that I just don't like."
