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    Are Retail Giants Sleeping on Hispanic Opportunity?

    Many companies cling to outdated perceptions of the Hispanic consumer.

    I just returned from the nation's largest retail/real estate event known as ICSC/ReCon (International Conference of Shopping Centers/Retail Conference) and was pleased to find many companies interested in exploring how to gear up to serve the Hispanic opportunity. What's surprising is that many of these mega retail brands have not done very much to capture the spending power of the more than 50 million Hispanics.

    The default scenario is to appoint a Hispanic or multicultural marketing manager without sufficient budget or staff to really make an impact on how a company goes to market -- often these appointees are not in direct contact with the teams making important site location decisions. Whereas they might commit to an advertising campaign, most have relegated Hispanic marketing to an ancillary effort, in effect putting salsa over their general marketing efforts and hoping this will be sufficient to capture the growth.

    The participants at ReCon were mostly real estate and merchandisng executives and analysts who look after the interests of the firm overall. Among the subjects covered are site selection, store planning and optimization, real estate leasing and so forth. These are generally well-prepared analysts and technicians for general purpose marketing and it was a pleasure to help them understand the Hispanic market via Geoscape's market intelligence data, systems and analytics. What became clear is that this process will continue to require patience and time -- corporations are like large ocean liners, normally requiring time to change directions.

    Among the perceptions that were evident at this event and in other "general market" discussions is that the Latino consumer is considered "downscale" -- although few would go so far as to use this term to describe us. What many of these retailers and brand marketers need to understand is that the Latino consumer is often not a downscale consumer -- especially within categories such as food consumed at home, quick-service away, apparel and other such categories.

    Due to cultural factors and values, Hispanics are buyers of premium products who don't compromise much when it comes to providing for our (larger) families. For example, if one measures the lifetime spending potential of an average household from today through its projected lifetime, you will see that Hispanic households will actually spend more, not less than white non-Hispanic households, to the tune of about 48 percent in food consumed at home and away, 82 percent in apparel and 22 percent in personal care products. The greater lifetime spending is due in part to the younger ages of Hispanics, their longer life expectancy and family sizes. For more details, download the AMDS Executive summary report at www.geoscape.com/amds.

    A new friend whose company develops shopping malls and manages retail leases told me a story about a quick-service restaurant (QSR) chain that was offered a prime real estate location in Los Angeles, only to turn it down because of their restaurants' relatively high average ticket price. My friend then proceeded to dine at competitive "in-culture QSRs" in the area, saving his receipts. He then scanned and e-mailed these receipts to his prospective land buyer -- much to the QSR's surprise, the ticket prices were roughly equivalent in amount to the upscale metric that had been defined for the new QSR chain -- essentially proving that the average ticket price was not an issue when it comes to Hispanic dining. Do you think the QSR proceeded to acquire the property? You'll have to contact me in person to find out more. (Out of courtesy, the parties in question need to remain anonymous.)

    So, the 10,000 peso question is whether mainstream retailers and brands are designed to take advantage of the Hispanic opportunity? If you stay in touch with Hispanic marketing conferences, the consensus is that the investment in marketing to the Hispanic audience is far too low. And this doesn't even include infrastructure investments such as product, distribution, location, staffing and in-store experiences, which likely lag even further behind.

    What this does represent, however, is an opportunity for those retailers and manufacturers who do understand it; they can accelerate forward while those slow to turn might risk hitting an iceberg and sinking in today's increasingly competitive economy.

    César M Melgoza is founder and CEO of Geoscape. He can be reached at [email protected], www.geoscape.com or (888) 211-9353.

    Editor's Note: The opinions expressed in this article are the author's and do not necessarily reflect the views of Convenience Store News.

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