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Food Industry Hall of Fame Innovator of the Year West

Ongoing Innovation Has Helped Cardenas Adapt To Change

Cardenas

Cardenas Markets, The Shelby Report of the West’s Innovator of the Year, began as a family-owned company in 1981. Jesús Cárdenas Sr. and his wife, Luz, co-founded the chain, which offered fresh, authentic Hispanic foods to communities across southern California’s Inland Empire.

The company has since grown to become one of the country’s largest Hispanic grocery chains, with a differentiated store concept serving the fastest growing demographic in the country.

Over time, the success of the Cardenas family caught the attention of two separate entities, KKR and Apollo, both global investment firms. KKR acquired the Cardenas business in 2016, and in June of this year, Apollo announced that it had agreed to acquire Cardenas from KKR.

Upon completion of the transaction, Apollo combined Cardenas Markets with Tony’s Fresh Market, a Chicago-based ethnic grocer, to create Heritage Grocers Group (HGG), one of the leading Hispanic and ethnic focused grocers in the country. 

Led by HGG Chairman and CEO Doug Sanders, both Tony’s and Cardenas will continue to operate under their respective brands and local leadership, while benefitting from greater scale, complementary capabilities and an expanded operating footprint.

Today, Cardenas Markets operates 65 stores in three states – California, Arizona and Nevada – and sources products from more than 500 different vendors. Sanders, who joined the company’s board of directors in 2018 and assumed the role of CEO in 2020, describes Cardenas as the most resilient company that he has been part of. 

“The company has endured a lot,” he said. “In a relatively short period of time, we completed multiple acquisitions, merged three different businesses, weathered a major cyber incident and worked through leadership changes all while navigating through the unknowns of a global pandemic.

“The pandemic highlighted how extremely hard our store teams work, and how dedicated they are in taking care of their customers, communities and each other during these unprecedented times.”

While dealing with the pandemic, the company itself went through major changes. The entire culture around Cardenas shifted as the senior executive team was rebuilt and the company restructured. 

Sanders takes that cultural shift to heart. He believes in human interaction – not micromanagement. He spends a part of his morning and afternoons walking the floors of the company’s support center, visiting with co-workers. He’s fond of his “hallway conversations” and that is part of the reason he incorporated a hybrid work schedule at the company’s support center during the pandemic’s height rather than completely close.

Over the past two years, Cardenas began to look at the infrastructure of its stores and has set about an aggressive remodel program. It plans to have the final renovations completed within the next couple of years.

The scope of these updates varies by store. They can include exterior changes such as signage and paint, as well as interior renovations. The latter have a wider variety of changes, including bilingual directional signage, which Chief Operating Officer Prabash Coswatte said is critical for customers unfamiliar with the stores’ formats.

Other inside touches can include updating dining spaces, LED lighting and additional merchandising components such as improvements to shelf space and refrigeration. 

Investment in technology has been Cardenas’ highest priority. When Sanders came aboard, he took the time to first understand the team members. He said he wanted to understand the complexity and challenges of their jobs then evaluate how their work experiences could be improved. 

He noticed that simplifying work through policy and technology would be the best place to start, so Cardenas implemented several new systems including a new demand forecasting and automated replenishment system. It started off as a system for center store replenishment but has since expanded to other departments across the store.

During the pandemic, Cardenas experienced many of the same issues that many other grocers faced as panic buying became rampant and shelves could not get refilled quickly enough.

“Due to overwhelming demand, products were constantly moving around and misplaced, and subsequently shelf tags disappeared,” Sanders said. “Next thing you know, the store was unable to reorder products that corresponded with the missing shelf tags.

“A great point about the forecasting and replenishment system is that it doesn’t matter if you have a shelf tag or not. The system will automatically place an order for the product. That helped us ensure the integrity of our product offerings, to the greatest extent possible, during the weeks of panic buying at the onset of the pandemic.”

The pandemic also presented an unprecedented number of challenges and the shift in labor helped guide Cardenas to some new features.

“We’ve been implementing initiatives focused on improved productivity. We have added numerous self-checkout registers over the past two years,” Sanders said. “From a labor shortage perspective, when COVID was at its peak, the only way you could get people checked out was through self-checkout. We haven’t been able to put them in fast enough, as they’ve been well received by our customers.”

The company has also worked to improve communication throughout individual stores, regions and the company as a whole via WorkJam. With the flair of a social media app, it brings together payroll, scheduling, company-wide communications and operations functions.

Cardenas began to roll out its e-commerce in early 2021 and can be found on eight different platforms today. It was also the first Hispanic retailer in the country to accept EBT for online purchases.

Cardenas’ history is steeped in Hispanic culture, and it shares that with its team members and customers.

While being bilingual is not a requirement, all store management across Cardenas Markets is fluent in English and Spanish, according to Sanders. This plays into his strategy to understand the team members and, by extension, customers.

“Understanding where the demographic shift is going is hugely important,” he said. “For us to engage and attract a broader range of customers, we can’t necessarily be Spanish only. When you look at our stores, we have English and Spanish signage. We’re broadening product assortment throughout the store. 

“There is that mix of culture in every one of the stores and addressing the needs of our evolving customer base is how we continue growing.”

For more information, visit cardenasmarkets.com.

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