Ethnic businesses gain from customer loyalty

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Inside a small, busy market on Sacramento’s 47th Avenue, Ricky Khan filled a shopping cart with bags of flour for the Italian restaurant he runs in Stockton.

Khan, 27, is Muslim and he drives to the East West Market several times a week for supplies that meet Muslim dietary guidelines, or halal.

“It’s kind of family,” he said of the market. “I don’t have to tell them what I need. They already know,” he said, patting packages of meat in his cart. He’s been coming to East West since he was a child in tow with his parents.

The one thing ethnic businesses can take to the bank during a recession is loyalty, the undivided devotion of longtime customers in search of specialized products, say marketing experts.

“If small, ethnically owned stores do a good job with service, the customer is still theirs to lose,” said Dennis Tootelian, a marketing professor at California State University, Sacramento. “Small, ethnically owned stores are building friendships.”

Ethnic businesses face great challenges during economic hard times, he said. Because they are typically small businesses, they might not obtain credit as easily from suppliers and cannot compete on prices, he said. Family members are often employees who must work long hours.

“The most important thing is to hang on to customers at almost any cost,” Tootelian said. “Be willing to do special orders, even if the profit margins aren’t good,” he said.

Abdul Khan, who manages the East West Foods, said he reduced hours for his 16 employees when business slowed. Adjacent to the butcher shop and market, he opened a small restaurant this year to boost income, he said.

Still, he believes that people are buying less expensive products rather than just less. He is, after all, selling food.

“It’s a limited market, but on the other hand, if you have to eat, you have to eat,” said Khan, who is not related to his customer, Ricky Khan.

“In our case, it’s the only halal business in the area, and it’s not available everywhere, and we have a quality product.”

Loyalty is what draws his customers from as far as Fresno and Redding, he said, and his willingness to cater to their needs, such as ordering rare spices.

In another part of town, overlooking a busy sweep of Freeport Boulevard, a giant storefront sign reads “King of Curls.” Inside, Jay Brown, the king himself, barbers heads and, next door, several women weave and braid hair for mostly black customers. Brown also sells ethnic clothing that he buys from Africa, though he hasn’t been able to go lately.

“This is one of the worst times since I’ve been in business,” he said, above the buzz of the razor on a sweltering afternoon.

At the same location since 1988, Brown said he’s nurtured his business enough in good times to keep it afloat in times like these. “If you’re diligent about your work, you’ll succeed.”

He takes appointments seven days a week and any hour.

“If they want to come at 10 o’clock at night, that’s fine with me,” he said. His customers could be working two jobs, or have child-care conflicts or going to school and can’t make regular business hours, he said.

Another option he offers to regulars is rare among his peers: He lets those who have fallen on hard times pay him later.

“If you’ve been doing their hair for 10 or 15 years, you should be letting them do that,” he said.

Chris West, an Elk Grove psychologist, sat in Brown’s chair with his 5-year-old grandson on his lap.

He’s been coming to Brown for years, he said as Brown sheared his grandson’s head. He likes the 8 a.m. Sunday slot.

“I’ve never found a barbershop that would do that,” West said.

Challenges for ethnic businesses vary depending on the economic wealth of the constituents, said Massoud Saghafi, an international marketing professor at California State University, San Diego.

A Latino community of primarily hospitality and service industry workers could be among the first to be laid off, so businesses relying on them are going to suffer, Saghafi said.

San Jose Latino businesses cater to a more middle-class population and are faring better than those on the outskirts of Los Angeles, he said.

Even internationally, businesses primarily relying on the economically disadvantaged, such as Pakistani-owned restaurants in the United Kingdom, are hurting more than other small businesses, he said.

At Wing Wa Seafood Supermarket in the Fruitridge area of Sacramento, manager Tom Hua said his customers are suffering and so is he.

He sells noodles, roast pig, roast duck and other specialties primarily to Asian customers. The place bustled until the economy slid downhill, Hua said.

“Everything went kaput, upside down,” he said. Fewer buying customers come in to the store. He blames job cuts and other economic ills.

He has cut back on hours for employees and is contemplating layoffs, he said.

“I don’t know what to do,” he said. “Maybe I should write to Obama and ask for a bailout?”

Another challenge for ethnic businesses is growing competition from national chains that are adding product lines or even opening new businesses, such as Wal-Mart’s Supermercado de Walmart grocery stores.

But Tootelian, the CSUS professor, said those concepts would not likely wipe out smaller ethnic businesses.

“Just because they’re stocking more ethnic products, it doesn’t mean people are going to flock to them,” he said. “Ultimately, retail is personal, about personalized service. It’s still something difficult to match.”

In the heart of a robust Latino business district on Franklin Boulevard, music floats out the open doors of Ritmo Latino, a music and video store. There are nearly 50 of the stores throughout Texas and California, said manager Maria Estudillo.

The store offers membership discounts and negotiates special deals with popular Latino artists to obtain new releases a week before they hit mass-market stores, which boosts loyalty, Estudillo said. The store does special orders.

But the recession has meant more sales and specials and handing out more fliers to promote the store, she said.

Weekly customers would walk out with six or seven CDs before, she said. “Now, they carry out two or three.”

(c) 2009, San Jose Mercury News (San Jose, Calif.). Source: McClatchy-Tribune Information Services.