Keeping Up with a Multicultural Crowd

Ethnic shoppers can be a boost to the c-store business, especially for retailers that understand their specific cultural clientele

Ethnic shoppers are no strangers to convenience stores, but are some c-stores treating their ethnic shoppers like strangers?

Multicultural customers from all walks are growing in numbers — and they like to be catered to, even just a little bit. Cultural comforts in the form of fresh foods, beverages and packaged goods or through bilingual signage and customer service can be a draw for ethnic shoppers, even when they are American-born.

Nine million people identify themselves by two or more ethnicities, according to the 2010 U.S. Census, and cultural experts say “staying true to their roots” is a common theme among all ethnic groups.

The trick for c-stores is to know which ethnic group(s) they are dealing with; this can vary greatly by store and by neighborhood. Complexities also may exist for stores that serve more than one ethnic group or for stores that have more than one subset of an overall ethnic group, such as the various Hispanic ethnicities. But experts say it behooves a c-store to start the ball rolling, learning and tweaking (i.e. a special product mix) as it goes.

BP ampm is one convenience retail chain fully committed to its Hispanic clientele, which is actually part of its core customers, defined as male (58 percent), multicultural (42 percent), blue collar (51 percent) with an annual income less than $40,000 (55 percent), according to Jim Hachtel, senior category manager. With nearly 1,000 c-stores and gas stations primarily located in California and the Southwest, the Hispanic consumer “is right in our backyard,” he stated.

To cater to this consumer group, the company launched a separate website, ampm-espanol.com; employed a media campaign in Spanish (including television, radio, print, outdoor, digital and social); and got involved in sponsorships and promotional activities deemed close to Hispanic consumers’ hearts.

On a smaller scale, single-store owner Plaza Chevron in Costa Mesa, Calif., is catering to its ethnic crowd with hand-selected items. “I noticed that many big-box stores use a lot of space to cater to different ethnic backgrounds, so I’m taking some of the top-selling ethnic snacks around here and using my flex space to give my ethnic customers that familiarity,” explained owner Marylou Mendez. “I want these customers to see something they know and feel welcome here.”

Two of the snacks she’s carrying are “super spicy” Takis chips and Asian Panda cookies. Rather than devoting one single section to ethnic items, Plaza Chevron merchandises these products intermingled throughout the store, based on product category.

HISPANICS AT THE CORE

Hispanics are not only the largest minority group in the United States, but they are also part of many c-stores’ core customer group, just like at BP ampm.

No doubt, the Hispanic population has an affinity for convenience stores (or bodegas and tienditas as they are known in Spanish). A recent report from The NPD Group found that Hispanics visit c-stores nearly two more times per month than non-Hispanics — 7.3 times a month vs. 5.7 times. The research also showed that bilingual and Spanish-dominant Hispanic speakers visit c-stores the most — bilingual Hispanics visit 9.2 times per month, while Spanish-dominant speakers shop 6.7 times a month.

Why do Hispanics like c-stores? Three out of four surveyed said “convenience” was the primary reason. In addition, 10 percent of the Hispanics polled said they shop at c-stores because a Spanish-speaking employee is available to them there.

“My Mexican grandma doesn’t drive or speak English very well, but she can walk to the local Conoco for milk and snacks in between when I take her to the supermarket,” explained Adriana Martinez, a resident of downtown Denver. “She goes on the afternoons when she knows her Spanish-speaking [clerk] will be there.”

The Latino culture is particularly influential in food and beverage sales. Packaged Facts reported that Hispanic food and beverage sales overall exceeded $8 billion in 2012 and are projected to approach $11 billion in 2017, up 31 percent from last year.

The Hispanic consumer also has some specific beverage purchasing profiles. For one, they like to drink more coffee than other racial and ethnic groups — 74 percent of Hispanic-Americans drink coffee daily, 12 percentage points ahead of other Americans, according to data from the National Coffee Association. Latinos were also more likely to consume cappuccino and espresso on a past-week basis.

Hispanics also “over-index” on nearly all non-alcoholic beverages and are the most likely of any ethnic/race group to consume thirst quenchers/sports drinks, at 56 percent vs. 38 percent of Caucasian consumers, 50 percent of African-American consumers and 39 percent of Asian consumers, according to research from Mintel. This is driven not only by the relative youth of the Hispanic market (Millennials, aged 22 to 35, comprise 65 percent of the U.S. adult Hispanic population), but also the high likelihood that these consumers perform manual labor jobs where thirst quenchers prove beneficial.

With a 90-percent Hispanic consumer base, Mr. G Food Store in Harlingen, Texas, sells a lot of sports drinks, particularly Powerade, as well as thirst quenchers. Owner Rudy Garza reported he also sells “a lot of vegetable and fruit juices. Hispanics typically go for the sugary drinks, but it’s a trend that’s slowly changing,” he said. “We’re trying to help our clientele make more informed beverage choices. At least, we’re trying to test out some alternatives for them — the mid-calorie sodas and more teas.”

When it comes to alcoholic beverages, Mintel research revealed that Hispanics drink more imported beer than any other ethnicity (34 percent vs. 28 percent of the total population). Wine is the least-favorite alcoholic beverage among Hispanics (34 percent vs. 28 percent of the total population), but that is expected to change in the coming years, noted Leylha Ahuile, senior multicultural analyst at Mintel. Between 2005 and 2010, the number of glasses of wine consumed by Hispanics per month increased by nearly 50 percent.

AFRICAN-AMERICAN OPPORTUNITY

African-Americans continue to experience population growth and are projected to reach $1.1 trillion in buying power by 2015, according to research released by Nielsen and the National Newspapers Publishers Association.

In separate research, Nielsen noted that African-Americans shop more often than all other groups, but spend less money per trip and overall. This behavior reflects their propensity to make quicker/smaller purchases based on short-term needs and less on deal availability or the desire to stock up. This behavior somewhat explains why African-Americans are more likely to frequent c-stores than non-African-Americans.

According to Nielsen, African-Americans made 165.7 shopping trips per household last year, compared with 153 trips for non-African Americans. However, their average basket ring per household was $37 per trip compared with $45 for non-African-American households. Overall, the research showed they spend $6,138 per household per year vs. $6,883 for non-African-Americans.

The African-American teen is an important target group for c-stores, especially given their strong penchant for purchasing snacks and drinks. African-American teens, on average, make nearly seven trips per month to c-stores, slightly more than the overall teen consumer, according to Mintel research. About 75 percent of African-American teens frequent a c-store at least once a month, a higher rate than the overall teen population.

Mintel research also highlighted several product categories that c-stores should focus on in order to cater more to African-American consumers:

• Home and personal goods — While African-American women view the c-store as a place for emergency purchases, the men consider the c-store an “all-purpose place of convenience” that offers a wide array of home and personal goods.
• Breakfast sandwiches, fresh produce and dairy — Some 85 percent of African-American women aged 18 to 34 who visit c-stores purchase food and drink items. By comparison, 69 percent of African-American women aged 55-plus purchase food and drinks at a c-store. C-stores could increase the likelihood of a purchase among older African-American women by offering a diverse array of food items of particular appeal, including eggs and breakfast sandwiches, fresh produce and dairy items.
• Carbonated soft drinks, iced tea and sports drinks — African-American adults are less likely to purchase any type of sugar-free or diet beverage than the total population of c-store consumers. Soft drinks, iced tea and sports beverages are particularly popular with this consumer group. C-stores may wish to use these beverages as incentives to create a bigger sale at the register.
• Vodka and beer — When it comes to alcohol purchases at c-stores, African-Americans show the greatest affinity for vodka (33 percent), yet a significant percentage also purchase regular domestic beer (31 percent) and imported beer (30 percent).
• Lottery tickets — Some 68 percent of African-American men aged 35 to 54 purchase lottery tickets at c-stores, while 58 percent of African-American women aged 35 and older purchase lottery tickets at c-stores.
• Newport and Kool cigarettes — C-stores enjoy strong tobacco/cigarette sales among African-American consumers, with Newport and Kool being the leading brands by a wide margin. C-stores should take note of this significant difference when offering cigarettes in high-density, African-American areas.

ASIAN APPEAL

The Asian-American market is a significant growth opportunity, with a 51-percent increase in population since 2000 and $718 billion in buying power. The market is expected to reach $1 trillion in buying power by 2017, according to Nielsen.

“With their significant buying power and growing population that stems from a continuous wave of immigration, the Asian-American consumer group is one that marketers simply cannot ignore,” stated Frank Piotrowski, senior vice president, measurement science, at Nielsen.

Slightly outpacing the Hispanic population, the Asian-American population is currently experiencing the highest growth rate of any multicultural segment and has grown at double-digit rates in 49 out of 50 states, according to Nielsen’s research. Additionally, 28 percent of Asian-American households have annual incomes greater than $100,000, compared to 18 percent of total U.S. households; and 50 percent of Asian-Americans aged 25 and older have a bachelor’s degree vs. 28 percent of the total U.S. population.

In the convenience store world, the Torrance, Calif.-based chain Famima!!, operated by Japan’s Family Mart, is known in the Los Angeles area for its Asian influence, with one fan on Yelp recently referring to it as a “high-end, Asian 7-Eleven.”

Another customer visiting a downtown L.A. location from New York said it “feels more like an Apple Store than a convenience store.” He added that the best part about Famima!!, which sets it apart from your typical 7-Eleven, is the abundance of pre-made, high-quality food. “The first refrigerated island you see when you walk into the store holds all these international treats, including sushi, paninis, Chicken Korma, Teriyaki Bowls and much more,” he wrote online.

The chain’s best-selling items, after sandwiches, are its Asian fresh foods or “the deli rice category” as the company refers to these foodservice products. This encompasses sushi, rice balls and bento balls (basically, rice bowls).