Cardenas, a grocery store chain specializing in Mexican and Southwestern cuisine, closed its location in Tucson, Arizona in 2022 after being open for over 50 years. This was a major loss for the Tucson community, as Cardenas was a beloved local institution and one of the few large supermarkets specializing in Mexican and Southwestern ingredients in the area. In this article, we will explore some of the key factors that led to the closure of the Cardenas in Tucson.
Competition from Other Grocery Chains
One of the biggest challenges Cardenas faced was increased competition from large national supermarket chains opening locations in Tucson. Chains like Walmart, Safeway, Fry’s Food Stores, and Albertsons aggressively expanded their presence in Tucson over the past decade. These national chains utilized their size and buying power to offer very low prices that smaller regional chains like Cardenas struggled to match. The national chains lured away many of Cardenas’ customers seeking cheaper groceries, making it difficult for Cardenas to attract enough shoppers to stay profitable.
Rise of Online Grocery Shopping
Another factor was the rise of online grocery shopping and delivery services. Companies like Amazon, Instacart, and Walmart offered the convenience of grocery delivery and pickup, which cut into foot traffic at Cardenas’ brick-and-mortar location. With consumers able to shop from the comfort of their homes, fewer were making weekly trips to grocery stores. The pandemic accelerated this trend towards digital grocery commerce. Cardenas did not have a robust online shopping presence and was slow to adapt to these industry changes.
Increased Rents and Operating Costs
As a physical retailer, Cardenas had to contend with the costs associated with operating a large supermarket space in Tucson. Commercial rental rates rose substantially over the past decade in Tucson, squeezing margins for grocers. On top of rent, Cardenas had to contend with higher costs for labor, utilities, maintenance, supplies, and other operating expenses. These mounting costs made it difficult for Cardenas to turn enough of a profit to justify keeping its Tucson location open.
Like many businesses, Cardenas likely faced challenges hiring and retaining staff in Tucson. With unemployment low in recent years and competition for workers high, Cardenas may have struggled to maintain proper staffing levels in key positions like cashiers, stockers, and managers. Understaffing would have put additional strain on existing employees and impacted the store’s ability to provide quality service and keep shelves stocked. If labor costs were also rising, it would have further eaten into profits.
Transition of Ownership
In 2015, Cardenas was acquired by a Louisiana-based company, Associated Wholesale Grocers. Transitions like this can sometimes introduce shifts in strategy that lead to store closures. It’s possible the new owners evaluated the Tucson location and determined it was no longer a good fit for the company’s vision. Changes in management structure during an acquisition can also impact day-to-day store operations and performance.
Declining Tucson Population
Tucson’s population declined over the past decade according to Census data. A shrinking customer base in Tucson proper likely contributed to falling sales and foot traffic for Cardenas. With fewer households overall to draw from, the store may have struggled to attract enough regular weekly customers to support its large operation.
Increased Supplier Costs
As a grocery retailer, Cardenas relied on a variety of suppliers to stock its shelves with ingredients and products. Costs from suppliers have been rising, whether due to inflation, supply chain issues, labor shortages, or other factors. As supplier costs rose, Cardenas may have had trouble maintaining its inventory at prices customers were willing to pay while still earning enough margin to turn a profit.
Competition from Specialty Stores
Tucson has seen an increase in the number of specialty food stores focused on items like organic, gluten-free, vegan, ethnically diverse ingredients, and more. Stores tailoring specifically to certain demographics and dietary preferences may have drawn customers away from Cardenas’ broader selection and more traditional offerings. The growth of farmers markets and stands providing fresh produce year-round also potentially took a bite out of Cardenas’ customer base.
Changes in Tucson’s Demographics
Over the past several decades, Tucson’s demographics have shifted with the aging of the population overall. Cardenas was popular with the area’s Hispanic community, which made up a significant portion of Tucson’s population growth. However, the percentage of residents age 60 and older has also swelled, now making up over 20% of the population. It’s possible Cardenas failed to adapt its offerings and marketing enough to cater to the tastes and needs of Tucson’s rapidly expanding senior and retiree communities.
Public Perception and Reputation
Consumer sentiment can be difficult to measure but is critical for any retailer’s success. Despite its long history in Tucson, Cardenas may have developed a stale or outdated reputation over its last years in business. Changing public perceptions about the quality, value, and convenience offered by the store could have driven customers to seek alternatives. Failing to adapt to evolving consumer preferences impacted brand loyalty and word-of-mouth promotion that previously sustained it.
Rising Rent and Housing Costs in Tucson
As housing costs increased faster than incomes in Tucson over the past decade, more households experienced financial pressures that impacted grocery spending. With more disposable income going towards rent or mortgage payments, Cardenas’ core customer base may have had less budget available for groceries. This could have impacted average basket sizes and overall sales volumes for the store over time.
Growth of Dollar Stores
Dollar stores like Dollar General and Family Dollar have expanded significantly across Tucson in recent years. These small-format, low-priced stores likely syphoned away some of Cardenas’ more value-conscious shoppers for certain items like packaged, frozen and shelf-stable foods. Less affluent households switched some of their grocery spend to dollar stores, impacting Cardenas’ customer traffic and sales.
Food Quality Concerns
There is some evidence that the public perceived Cardenas as having lower quality and freshness, especially compared to fancier supermarket chains entering Tucson. Whether valid or not, if enough customers came to view Cardenas as lacking in terms of produce, meat and prepared food quality, it would have driven shoppers elsewhere. Maintaining a positive reputation for freshness and quality is critical for any grocer.
Increased Credit Card Fees
Like all retailers, Cardenas had to contend with fees charged by credit card processors on transactions. As these fees crept up over the years, they would have cut into margins on sales. If enough customers used credit over cash, small fees can add up fast and impact profitability. This is an overlooked expense that can strain grocers relying heavily on credit card payments.
Regional Distribution and Supply Chain Challenges
Food retailers face immense challenges managing distribution and supply chains, ensuring proper product inventory and stable sourcing. As a regional chain, Cardenas likely faced greater hurdles than national chains with more resources and leverage with suppliers. Any breakdowns in distribution and supply chains that caused stockouts or gaps in fresh foods would have impacted store traffic and sales.
Growth of Health Food Stores
Consumer interest in health and wellness accelerated the growth of natural food stores and co-ops in Tucson. Retailers like Whole Foods tapped into this trend, providing shoppers focused on fresh, organic and natural products. As more consumers sought out specialty health food stores, traditional grocers like Cardenas may have seen declines in foot traffic and sales.
Dependence on Cross-Border Shoppers
Cardenas’ Tucson location was popular with Mexican shoppers who crossed the border to buy groceries and other goods. Tougher border security measures in recent years made these cross-border trips more difficult and less frequent. Declines in Mexican nationals shopping at the store impacted overall customer traffic and sales volumes.
Growth of Prepared Meals and Restaurants
From meal kit delivery services to fast casual dining to supermarket prepared meals, consumers had more alternative options to frequent grocery shopping trips. As people substituted restaurant meals and prepared foods for home cooking with groceries, traditional grocers like Cardenas saw less consumer demand and foot traffic.
Limited Ability to Raise Prices
With intense competition on prices and more value-focused consumers, Cardenas was likely limited in its ability to raise prices to offset higher operating costs. Keeping price hikes modest to attract shoppers may have prevented Cardenas from passing rising expenses on to customers. This squeezed profit margins over time.
Inability to Adapt to Changing Tastes
Cardenas originated as a more traditional Mexican grocery but may have failed to adapt as Hispanic consumer preferences shifted. Younger generations increasingly sought more variety, specialty items, organic and natural options. Insufficient flexibility to meet the needs of evolving ethnic demographics may have cost Cardenas customers over time.
Lack of Innovation
Successful retailers innovates constantly – whether it’s implementing new technologies, testing product selection, optimizing layouts, analyzing data, enhancing services or digitizing operations. Cardenas may have become outdated and stale, failing to innovate and actively improve the shopping experience. Inflexibility makes it hard for aging chains to attract youthful shoppers seeking freshness.
Failure to Remodel and Refresh Stores
To keep shoppers interested, grocers need to periodically refresh store aesthetics and layouts. Cardenas may have neglected necessary remodels and enhancements to modernize its aging Tucson store. An outdated decor and floorplan paired with lingering quality issues could have driven customers to seek updated options.
Poor Store Management and Operations
Ineffective leadership and management at the store level can lead to a downward spiral impacting staff culture, product quality, customer service and sales. Though difficult to confirm, insider accounts suggest the Tucson Cardenas may have suffered from weak oversight and daily execution. Poor operations make it hard for any retailer to stop sales declines.
|Level of Contribution to Closure
|Competition from national chains
|Rise of online grocery shopping
|Increased rents and operating costs
|Transition of ownership
|Declining Tucson population
|Increased supplier costs
|Competition from specialty stores
|Changes in Tucson’s demographics
|Public perception and reputation
In the end, it appears the closure of Cardenas in Tucson was driven by a perfect storm of factors that made the large-format, regional grocery chain unsustainable. Shifting consumer preferences, demographics, and shopping habits paired with growing competitors and costs squeezed profits over time. Cardenas failed to adapt and innovate quickly enough to shifting retail trends in Tucson. The combination of declining sales and rising expenses likely made the Tucson location unprofitable to keep open. While regular patrons were disappointed to see a local institution close, the failure of Cardenas reflects broader challenges facing traditional grocers in a market driven more than ever by value, quality, and convenience.