Ethnic Grocers Losing Their Niche

Shozo Michise stacks boxes of soy sauces and dried noodles on a stairwell as he empties two of the three floors of his Japanese grocery store in McLean.

The shuttered top and bottom floors are vestiges of a time when embassy officials, expatriate businessmen and their families crowded the market to buy Japanese food, rent movies from Tokyo and exchange news that kept the community connected with itself and with its homeland.

Today, Naniwa Food is a much smaller operation. Tucked in a business park with a collection of ethnic restaurants, accounting firms, law firms and beauty salons, it has suffered from steadily falling sales since it opened at the location eight years ago.

The decline is partly the result of slowing growth in the local Japanese population -- a trend felt nationwide as immigration slows from Japan and birthrates drop. But mostly, it's a reflection of the competition the store faces from fast-growing ethnic food giants like H Mart, Grand Mart and mainstream grocers that are offering broader selections of ethnic foods, often cheaper.

"Now customers come to us for the things that only we have and that you can't find at the big Asian groceries," said Michise, 55, who came to the United States in 1978 from his native Osaka to work as a chef at a traditional Japanese restaurant in New York.

The big ethnic grocers are overwhelming small markets like Naniwa, just as mainstream supermarkets crowded out mom-and-pop groceries in the 1960s and 1970s, said Matthew P. Casey, a supermarket real estate consultant.

The Asian supermarkets are as big as or bigger than many mainstream grocers, and they target ethnic shoppers with wide selections of specialty produce.

"We mainly target Asians like Koreans, Japanese and Chinese, but we also want to expand to Hispanics, Indians and other Americans who haven't yet tried Asian foods," said Hyun Hwa Gil, who works in the marketing department of a local chain of Lotte Plaza supermarkets.

Lotte's parent company, grocery wholesaler Rhee Bros., sells goods to many small ethnic grocers around the region. But Gil said the small grocers will increasingly face challenges keeping pace with big ones.

"It's a trend you can't avoid," she said.

The success of the ethnic big boxes has prompted mainstream grocers to expand the choices of food in their aisles. At Wegmans in Fairfax, long aisles are dedicated to Mediterranean, Latin American, Thai, Japanese, Korean and Vietnamese food.

"There is a growing need for variety and these big supermarkets like H Mart, Grand Mart, Safeway, Wegmans and Giant can offer all kinds of variety and often at lower prices because they have greater purchasing power," Casey said.