You are here
By Renee M. Covino
NEW YORK -- A food market in central New Jersey recently found itself with a cultural diversity situation. The store was located in what was previously known as a white, non-ethnic neighborhood, but quite rapidly and unexpectedly changed with an increase in Hispanic customers. Not knowing why or how to service its new customer base, the store called upon Ricardo Lopez, president of East Brunswick, N.J.-based Hispanic Research Inc., specializing in the U.S. Latino market.
"I got in my car and drove over there, and found that right across the street from the store there was a new housing project, and it was filled with Mexicans," said Lopez. "I started talking to the people and discovered they had crossed the border and were being bussed there."
While most couldn’t speak English, they had labor jobs and wanted to buy their familiar grocery items. "They were now this store’s biggest consumer base," Lopez explained.
So he conducted some grassroots focus groups at the local fire station and found out exactly what kinds of products they wanted—certain cheeses, beans, fruits, vegetables and other Mexican staple items—so the store could cater to this new clientele. And when the store followed through with the suggested SKU expansion, along with targeted promotional strategies there was a significant boost in sales, according to Lopez.
This may be a dramatic example of a store going from zero to 60 in ethnic merchandising, but it is representative of the growing cultural neighborhood needs of many c-stores today.
Exponential Ethnic Growth
According to Mintel and the U.S. Census Bureau, the overall U.S. population is projected to increase 4.4 percent between 2008 and 2013, but Hispanic and Asian populations will increase by considerably more in the same period—Asians by 13.7 percent and Hispanics by 12.9 percent. The African American population is also expected to grow at higher than the national rate—by 6.2 percent.
This presents an opportunity for c-stores who get more in touch with their ethnic side.
"I have seen some c-stores in L.A. targeting Hispanics with great tortilla sections and an assortment of sauces, but this kind of thing is an exception more than the rule," said Rafael Hernandez, partner in Hispanic Marketing Insights, based in Liberty Township, Ohio.
"My own perception is only approximately 10-15 percent of c-stores are at the forefront of ethnic merchandising," added the former research manager for ExxonMobil, who was part of the oil company’s group that introduced c-stores to Latin America.
For c-stores wanting to embrace more of their ethnic customers, it doesn’t have to be complicated or expensive, according to the experts. But it should be taken down to the store, or at least the regional level, since ethnic merchandising is proven most effective when a particular neighborhood is considered, which means getting store managers and store employees involved in the process, too.
"The simplest place to start is with your customers—store personnel has to start asking questions, finding out where ethnic customers are from and what they’d like to see in the store," Lopez maintained.
He said one of the best examples of this he’s seen so far is in a certain L.A. neighborhood where "Chinese store owners learned to speak Spanish to cater to their Hispanic customers. They’re doing a tremendous job. They interviewed their customers and learned what they needed and wanted in their stores. It’s amazing to see these Chinese women chatting with their Latino communities."
Of course, learning to speak a foreign language isn’t required. "If you can hire someone that’s bilingual, or even better, is from the same region as the majority of your ethnic customers, do it," Lopez advised. "You won’t have to pay them any more, and you’re immediately able to cater to [your ethnic customers]."
Ethnic customers, particularly recent immigrants, are also quite drawn to calling cards, according to Raul Perez, president of Utilis/Hispanic Consumer Research, based in New York. Convenience stores wanting to appeal to such a group should have great quality and selection on calling cards and display prominent signs about it, he explained.
"But beware, Hispanics are notorious for being product-loyal, and they’re quick to tell their friends about it if they feel they’re getting a good deal. They are also quick to tell them when they get a bad deal," cautioned Leyla Ahuile, multicultural reports editor for Mintel International Group, based in Chicago.
In keeping with Perez’ advice about offering "great quality and selection" on calling cards, she wanted retailers to "make sure customers are getting the minutes it says they’re getting." In other words, beware of hidden fees.
Hispanic Hot Buttons
Of all the ethnic groups, Hispanics are being watched closely for their current and future spending power. In 2008, that buying power totaled more than $980 billion, according to market research publisher Packaged Facts in its recent report, "The Hispanic (Latino) Market in the U.S.: A Generational View, 7th Edition."
Tracking the U.S. Hispanic market since 1996, Packaged Facts predicts the buying power of Hispanics will continue to grow "at a relatively rapid pace undeterred by the present dreary outlook for consumers as a whole." It predicts that Latino buying power will reach $1.3 trillion in 2013, with a cumulative growth rate of 31 percent.
"Latinos will change the profile of American society over the next four decades," said Tatjana Meerman, publisher of Packaged Facts. "The Hispanic population will grow much quicker than other population segments, and Hispanic consumers will represent an increasing percentage of the American consumer base."
Gen-Y Latinos (ages 18-29) and Gen-X Latinos (ages 30-44) are particularly influential, because they control more than 60 percent of all Hispanic buying power, according to the report.
With many convenience stores identifying Hispanics/Latinos as their largest minority group, here are additional insights to keep in mind when targeting them, according to Ahuile:
-- "Hispanics tend to view lunch as the most important meal of the day," she stated. "So if you have those lunch specials, that include a sandwich, chips and a soda for $5.99, maybe you should consider offering them a sandwich, a cup of soup, a fruit, some kind of dessert and a drink—perhaps for $6.99. Lunch specials need to be heartier and stronger for this group, especially in an area where Hispanics do manual labor. A sandwich and a bag of chips are not going to fill them up."
-- Hispanics index higher on nutrition and health-focused drinks, such as energy drinks and yogurt drinks, according to Ahuile. "Milk with fruit is very popular in Mexico and Latin America. They drink those a lot of times with their lunch," she said. "So [retailers] may want to consider increasing the selection of those kinds of drinks for Hispanics. Fruit juices are popular, too, as is fresh fruit."
-- Don’t assume all Hispanics have the same taste, especially when it comes to hot or spicy foods. "Hot sauces and such are not going to be a big seller to the Caribbean [Hispanic] consumer group, whereas to the Mexican descendants, they will be," said Ahuile. C-stores, therefore, "need to be very observant where exactly their [ethnic] customers come from."
Another lunch meal tip from Perez -- "Offer warm sandwiches," he said. "Hispanics typically don’t like cold sandwiches."
-- Authentic Latino Foods Deliver Fresh Flavors in a Lighter Form
-- Walmart Puts Hispanic Retailing Efforts Into Hyperdrive
-- Early Bird Registration Opens for 2009 Hispanic Retail Summit