October 19, 2009 -
More than 350 retailers and marketers turned out for the Hispanic Retail 360 Summit in Las Vegas. This is part two of Convenience Store News' exclusive coverage of the conference presentations.
Research Presentations During the session titled "Seeking Growth via Hispanic Segments in a Down Economy," Cesar M. Melgoza, co-founder and president of Miami-based Geoscape, an analytics firm and sponsor of Hispanic Retail 360, showed data on the spending power of Latino customers over their lifetime.
Geoscape looks at each consumer base's "lifetime profit margin contribution," or what impact consumers can have on a company's bottom line over the course of their lifetime.
Because the median age of Hispanic consumers in the country is 27 (vs. 40 for non-Hispanics) and they live to a median age of 83 (compared to 81 for non-Hispanics), the Latino consumer group contributes 56 years of spending, the longest of all consumer groups in the U.S. And although they don't spend the most, Hispanic consumers spend longer, and are valuable, Melgoza said.
Hispanic spending power at various retail channels was the focus of the "Hispanics and the Retail Experience" concurrent session, presented by Leylha Ahuile, multicultural reports editor and senior analyst for Mintel International Group.
Latino consumers' purchasing power will reach more than $1 trillion next year, primarily through the group's population growth, said Ahuile, noting there are more Hispanics born in the U.S. annually than those who immigrate to the U.S. In 2008, Hispanic babies made up 24 percent of all babies born in the U.S., while 62.7 percent of Hispanics were younger than 34. And because there are more Hispanic children growing up in the U.S., they will likely learn how to speak English, receive higher education levels than previous generations and be able to earn higher incomes, she explained.
In the convenience store channel, Hispanic households' average annual spend totaled $299, 10 percent higher than non-Hispanic households. In addition, Hispanic households' trips to convenience stores were also up 3 percent over non-Hispanics, at 15.2 visits annually, she said.
Within Hispanic shoppers, those aged 18-34 visit convenience stores once per week or more, and younger Hispanic consumers are interested in finding financial services at convenience stores. Other service opportunities for the channel include cash wiring services, bill payments, printing, fax and photocopy services, along with Redbox and video game rentals.
Overall, Hispanic consumers are more likely to purchase automotive products and phone cards at convenience stores, and they would like to see more home office services in the channel, along with entertainment options, Ahuile said.
Workshops Manny Fields, a partner with multicultural consulting firm XLEdge, urged audience members in his breakout session to leverage assets from their general market programs to maximize results in their multi-cultural programs. He pointed to retailers such as H-E-B and Publix as examples that do this the best, as well as manufacturers such as Nike, Procter & Gamble and Unilever.
Latinos were described as "coveted employees" in a highly interactive workshop led by Mariela Dabbah, author of several books including "The Latino Advantage in the Workplace." The session was designed to help people who hire and manage Latino workers, as well as for Latino employees seeking advice on career advancement. Dabbah presented a series of Latino traits that are advantageous for employers, such as their adaptability and resourcefulness, as well as tips on how to avoid shortcomings of each trait, such as losing sight of career goals and their need to be encouraged to take on the next challenge.
She used relevant examples from such companies as ExxonMobil and McDonald's Corp.
Georgia Galanoudis, group director of custom solutions for Meredith Corp., used Kellogg's Healthy Beginnings strategy as a case study to explore how brands and retailers work together for Hispanic success. Started in 2006, the Healthy Beginnings program evolved through trial and error into both a general and Hispanic market program that provides long-term customer engagement with four key healthier-for-you brands.
Innovation is Key The final day of the summit was highlighted by a dynamic panel of retailers discussing best practices and innovation in addressing the needs of Hispanic shoppers.
Led by business strategist Art Turock, the panel included representatives from three major regional grocery chains, an award-winning independent grocer and the largest electronics superstore chain in the nation.
First, Turock got the audience thinking by pointing out how difficult economic times are the best times for innovation to flourish, citing numerous examples from the creation of King Kullen supermarkets to Starbucks. "Any day you stay hunkered down [during the recession] is a day you don't further your competitive edge," he told attendees.
Daniel Herrera, marketing manager for North Carolina-based regional supermarket Food Lion, spoke about the retailer's five-year planning process that resulted in undertaking a major remerchandising program, turning 59 of Food Lion's 1,200 supermarkets into Hispanic stores. For something of this magnitude, "it has to be a corporate initiative," said Herrera. The company also visited Hispanic supermarkets in several markets, including Houston, Atlanta, Raleigh-Durham, N.C., and Richmond, Va., among others.
But a real key to rolling out the program was conducting both qualitative and quantitative customer research. "As valuable as focus groups are, you can't make decisions just on the basis of 12 people," said Herrera. "You have to do the quantitative research as well."
Marco Orozco, who spoke earlier in the program as part of the Best Buy keynote, pointed out that it's "all about foundation and fundamentals." And those fundamentals start at the store level, he noted, giving as an example the idea to create an experience for Latino mothers around a culturally relevant holiday such as Mother's Day. "That was an initiative that was instigated by employees," said Orozco.
However, he also warned the audience of 350 retailers and marketers that "innovation has to be measured and provide a return-on-investment [ROI]." As an example, he recalled how Best Buy had much less success with a program designed to help its customers learn English. "We tested some language software programs, but we found that the community didn't look to us to do that, so we stopped it because there was no ROI."
Jose Amaya, director of diversity at Midwest-based Hy-Vee supermarkets, observed he was the only academic on the panel. "I was told to go out and get the best and the brightest to work for Hy-Vee," said the former Ohio State professor. Amaya acknowledged that like grocery chain Food Lion, Hy-Vee is a late entry into Hispanic retailing. But he said the Midwest grocer found itself in the "eye of a perfect storm" between the growth of the Latino population and the company's ability to address the health and wellness concerns of the Hispanic community.
Knowing that Latinos index higher than the general population on a variety of health issues such as obesity, lactose intolerance and heart disease, Hy-Vee launched an extensive health and wellness program. The grocer now has a dietitian working in 173 of its 225 stores -- with plans to place one in every store. "We also know that this community is not just un-banked or under-banked," said Amaya. "We know they are also in need of sound medical advice." The company's pharmacists work extensively with these dietitians in every store to advise Latino customers on how to eat healthier, he said, noting the dietitians will also work to help consumers make compromises to meet their budgets and health goals. He also noted local and organically grown produce is selling "quite well" in stores where this is happening.
Tracy Krogstie, marketing and promotions manager for Jewel/Osco, spoke about four ways the Chicago area grocer brings its "Cosa Buenas a la Vuelta de la Esquina" ("Good Things are just Around the Corner") campaign to life. The first is through a direct mail piece. "Hispanics actually respond well to direct mail about grand openings," said Krogstie, who noted coupon redemption rates are much higher when the offers are positioned as a "gift" to the Hispanic family, rather than a discount. Buy-one, get-one-free; 10 for $10; and 99 cents promotions are also very effective.
She also noted partnering with key vendors on in-store events is important. Jewel has done in-store demonstrations with Unilever, and autograph signings with Hispanic sports and telenovella stars with both Anheuser-Busch and General Mills.
Working with non-traditional partners has also been effective for Jewel. Examples include programs with Mexicana Airlines (discounts) and Dodge Chrysler (coupon for an oil change). Krogstie also noted eight of Jewel's top Red box DVD rental kiosks are in Hispanic markets.
Finally, she pointed out ethnic and special integration is extremely important. Because few stores represent a monolithic customer base, Jewel found success integrating Kosher, Polish and other ethnic and specialty items into its Hispanic ads.
Juvenal Chavez, founder and president of San Jose, Calif.-based Mi Pueblo Food Center, showed a video of his stores, after which Turock asked audience members to describe what they saw. Responses included "authentic," "relevant," "spacious," "friendly," "home," "colorful" and "clean."
Chavez, who earlier in the conference accepted a 2009 Hispanic Retail Excellence Award said, "At Mi Pueblo, we make you feel at home. We realize customers visit us for a basic need. We turn the mundane need into something different."
However, he cautioned general market retailers trying to cash in on the Latino market that "the easy thing to do is to cut your prices, paint the store bold colors and say you're doing business with Hispanics. It's not so easy. It is very challenging."
Chavez, who arrived in the U.S. on Independence Day in 1984, opened his first 4,000-square-foot Hispanic grocery store in 1990 and now has 10 full-size stores in northern California, said he is still learning. "There is a wisdom in knowing you don't know all the answers," he said. "You must never stop learning."
The Mystery Margin Master of ceremonies Armando Martin closed the conference by reminding attendees, "where there is mystery, there is margin." He encouraged retailers and marketers to look at their general market resources and the amount of dollars devoted to the multicultural market, and analyze the gap between the spending and the amount of opportunities in each market. In most cases, this analysis will show the company is under-spending against the multicultural opportunity.
The 2009 Hispanic Retail 360 Summit attracted more than 350 leading retailers and marketers interested in growing their business with Latino consumers. The summit was hosted by Convenience Store News, Progressive Grocer and Nielsen Business Media. Presenting sponsor Coca-Cola was joined by other event sponsors including Geoscape, Cafe Bustelo, Anheuser-Busch and Western Union. Next year's Hispanic Retail 360 Summit will be held in Scottsdale, Ariz., in August 2010.
This year is special for Convenience Store News, as it marks the 40th year of publication, making it the longest continuously published news source for the convenience store industry.
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