As the Hispanic market continues to boom, retailers must invest now to ensure their future
Did You Know? The use of English in the home appears to increase after around 20 years living in the U.S. Seventy percent of Hispanics living in the U.S. for five years or less speak only Spanish in the home.
Source: "What It Means to Be Hispanic in America," AP/Univision/Nielsen Media Research, June 2010
For years, the Hispanic market in the U.S. has been characterized as a niche market by many American retailers and suppliers. But today that is hardly the case, considering Latinos comprise one of out every six people living in the United States; there are more than 50 million steady Hispanic residents in America; and Hispanics account for 52 percent of the overall U.S. population growth between 2000 and 2010.
What all this adds up to is the reality that the multicultural market is now the general market.
"The definition of American culture is changing rapidly. There is no county in the U.S. today that doesn't have at least a few Hispanics [residing there]," said CÃ©sar M. Melgoza, founder and CEO of Geoscape, a market intelligence firm based in Miami. Nevertheless, most companies are still under-investing in marketing to this booming population, he said.
Melgoza was one of more than 40 presenters at this year's sixth-annual Hispanic Retail 360 Summit, the only cross-channel conference providing retailers and suppliers with a 360-degree view of the Hispanic shopper. This year's event, held Aug. 8-10, at San Diego's Hyatt Regency La Jolla at Aventine, featured representatives from the world's largest retailer, the world's largest convenience store chain and the world's largest consumer electronics superstore among the Hispanic marketing experts who addressed the record crowd of more than 430 attendees.
The speed of change in demographics was cited by summit co-emcee Armando Martin, principal of cultural marketing firm XL Edge. "At the last Census, it was projected that minorities would out-number whites by the year 2050. Now, that timetable has been moved up to 2040," said Martin, who emceed the event with Graciela Eleta, senior vice president, brand solutions for Univision.
Martin also noted diversity is everywhere ("the Denver public school district is a minority-majority market") and said audience members need to be agents of change within their organizations.
The summit kicked off with an experiential store tour guided by experts from XL Edge, and assisted by Mark Arabo, president of the southern California-based Neighborhood Market Association. Three buses packed with executives from around the country visited three independent grocery stores: Supermercado Murphy, Appletree Market and Northgate Market. Each showcased a unique layout, approach and retail strategy for their predominately Latino customers.
Delivering the conference's opening address, Walmart's Director of Multicultural Marketing Carla Giovannetti Dodds said multicultural marketing has never been more complex than it is now. Yet at the same time, it's never been more critical for marketers to break the code.
Walmart is focusing on three opportunities to strengthen its multicultural marketing:
- Ensuring it has a total business and market approach;
- Fully integrating community affairs into its marketing team; and,
- Delivering a 360-degree shopping experience in its stores.
"This is the time to make sure multicultural is at the forefront of everything we do," Dodds said.
As Walmart is doing, retailers also need to take a more multidimensional approach and redefine the Hispanic shopper, said Steven Wolfe Pereira, senior vice president of MediaVest and managing director of MV42, who joined Dodds in delivering the opening address. Defining "Hispanic" must go beyond language, country of origin and designated market area (DMA), he said. This question of how to segment the Hispanic market was one touched upon by many of the conference speakers. Dr. Felipe Korzenny, director of the Center for Hispanic Marketing Communication at Florida State University, said many marketers make the mistake of thinking external factors, such as language and acculturation level, are most important among these consumers. But in fact, the most important aspects are those that reside inside of Latinos, such as the feeling many share of not being from America or their home country, he said.
"If you're going to cross cultures, you need to know a lot more than you think you need to know," Korzenny advised. "We [Hispanics] look at the world in a very different way."
Keynote speaker Soledad O'Brien, acclaimed special investigations correspondent for CNN and host of the network's "In America" documentaries, knows a lot about viewing the world through different lenses. She held conference attendees in rapt attention with her stories of growing up as a first-generation Latina, along with insights gained from years of being a journalist.
O'Brien è whose mother is African-American and Cuban, and whose father is Australian and Irish è said there's a tendency to want to cast a wide net around a specific group of people, such as Hispanics. "Where we go wrong is aiming at stereotypes instead of reality," she said.
One of the things O'Brien loves most about working in television news is it allows her to not only impact one individual, but an entire community with the stories she chronicles. And she noted it's not much different for retailers and marketers looking to connect with Hispanics è both are about creating an authentic experience that accurately represents that community.
"If you're looking for solutions, it's a community question," she said, stressing authenticity only comes from truly understanding the community one is trying to reach, which is why she makes it a point to work with a diverse team of staff members at CNN.
"If we're going to do stories on Latinos, I need people who speak Spanish fluently. If we're going to do stories on the gay community, I need gay staff members. Only then can we tell the stories that accurately capture a community," O'Brien explained.
Connecting at Retail
This year's Hispanic Retail 360 Summit provided attendees with numerous real-life success stories from retailers and suppliers of how they are reaching out to Hispanic consumers. During a panel discussion on serving blue-collar and budget-conscious Latino shoppers, 7-Eleven Inc.'s Senior Director of Multicultural Marketing Irene Sibaja said the convenience chain conducted focus groups last year to determine how blue-collar Hispanics perceive the 7-Eleven brand. Based on the findings, the retailer is now doing a comprehensive pilot program that includes adding bilingual signage and "authentic products from home" to its stores.
"What we heard from this customer is 'make me feel welcome in your stores,'" Sibaja said of the focus groups. "If we make our stores friendlier and more culturally relevant, we'll make ourselves a better destination for this consumer."
7-Eleven's store-level strategy calls for the following:
- Improve product assortment;
- Community involvement;
- Franchise recruiting program (less than 2 percent of its franchisees are Hispanic);
- Grassroots marketing (for example, a brand ambassador van in the Chicago market); and,
- Cultural awareness training for sales associates.
The c-store operator also is arranging one-on-one meetings with vendors to identify which products over-index with Latinos. "There's a myth that 100 percent of the products that go into a Hispanic's basket are Hispanic â and we've found that's just not the case," said Sibaja, who is the first employee at 7-Eleven to be given multicultural marketing as a full-time job.
Another falsehood, she said, is that Hispanics only want to be communicated with in Spanish if the speaker is fluent. In fact, Sibaja said 7-Eleven's research uncovered that Hispanic customers don't care if associates mispronounce words. "They appreciate the effort," she said.
Commenting on a partnership between 7-Eleven and Constru-Guia al Dia, the Spanish-language magazine for the construction industry, another panelist, publisher Kevin Kilpatrick, noted the average construction worker shops at a convenience store five times a week. "We like to say that 7-Eleven is the break room for blue-collar, working Hispanics," added Sibaja.
Like 7-Eleven, supermarket chain Food Lion also performed market surveys and a lot of data analysis to develop a Hispanic program for its stores. The program, which started as a five-store pilot in the Raleigh-Durham area, was expanded to 63 stores, according to the grocer's Hispanic Marketing Manager Daniel Herrera, who also participated in the panel discussion.
Hispanic-specific programs are a must, he said, because "when you try to translate general market programs to the Hispanic market, you are viewed as non-Hispanic." For Food Lion, loyalty rewards programs tailored specifically to Latinos have done well. Past programs rewarded customers who reached a set purchase limit with phone cards or PIN numbers.
"Be authentic" was one of the key messages of speakers such as Daniel Herrera of Food Lion (top left) on a panel with Irene Sibaja of 7-Eleven and Kevin Kilpatrick of Constru-Guia al Dia and others (clockwise from lower right) Al Rondon and Reinaldo Padua, Coca-Cola; Dr. Felipe Korzenny, Florida State University; and Joe Kutchera, Latino Link.
Both 7-Eleven and Food Lion cited in-store sampling as an effective tool as well. 7-Eleven conducted a sampling program with Lala yogurt in the Dallas/Fort-Worth market, and now, months later, Lala sales in stores that did the sampling continue to outpace those that didn't, said Sibaja.
No matter the type of marketing, retail speakers at Hispanic 360 said the key is to leverage the people, places and things that are most meaningful to Latino shoppers.
Soccer continues to be a passion point for Hispanics, while also influencing mainstream America. Convenience retailer Kum & Go LC and grocery retailer Jewel-Osco spoke about the ways they used the recent 2010 FIFA World Cup to score with their customers.
Kum & Go, which operates more than 435 stores in 11 Midwest states, partnered with Coca-Cola to bring Mexico soccer star Alberto GarcÃa Aspe to two of its stores. His first appearance brought out 800 people, while the second drew 1,100 people - about 90 percent of them Hispanic, said Kevin Krause, chief marketing officer for the retailer.
Meanwhile, the chain's current customer base is 88-percent Caucasian, he noted.
The company promoted the visits through radio and social media. "If we knew the response would be so strong, we would have done that type of event in our other core markets," Krause said.
Also in conjunction with Coca-Cola, Kum & Go stores ran a promotion where customers who purchased two 12-packs of Coca-Cola and two Powerade beverages received a free Coca-Cola/Kum & Go World Cup soccer ball. During June and July, Coke sales were up 18 percent and Powerade sales were up 52 percent at Kum & Go's stores, according to Krause.
"We were hoping to attract the non-Hispanic consumer with the special," he explained. "Our thinking was that kids would come in with their parents and want the soccer ball," leading the parents to purchase the special. The balls were sold separately for $11 each.
Along the same lines, Jewel- Osco teamed up with several manufacturers for its World Cup promotion. The chain, with 180 stores in Chicago, did a direct-mail piece that featured 14 vendors and offered recipients $28 in savings on the featured products. The direct-mail piece also was available in its stores, said Tracy Galindo, multicultural marketing consultant for Jewel-Osco. The grocer did a direct-mail campaign around the 2006 World Cup as well.
"You can take advantage of the passion for soccer at all levels," not just the World Cup, Galindo said, pointing out the U.S. bought the most 2010 World Cup tickets of any country.
Converting Shoppers Into Buyers
Retailers are not the only ones trying to become more relevant to Hispanic shoppers. Across almost all product categories, manufacturers are creating targeted campaigns too.
Hispanic 360 presenting sponsor The Coca-Cola Co. said it views three groups as "key Hispanic shoppers" for its brands: moms, teens and blue-collar males. To reach these groups â and ultimately drive traffic to its retail locations â the beverage company builds its marketing efforts around "connection points" such as functional/ body, emotional/mind and cultural/spirit.
Convenience retail is an important channel for attracting Hispanic teens, said Diane Wallace, vice president of shopper marketing for Coca-Cola North America. Fifty-seven percent of Hispanic teens visit a convenience store monthly vs. 50 percent of the general market, said Wallace, who co-presented with Coca-Cola's Reinaldo Padua, assistant vice president, Hispanic marketing, and Al Rondon, senior brand manager for national accounts.
Research and case studies were presented by (clockwise from top left) Shayne Walters, PowerDirect; Diane Wallace, Coca-Cola; Art Turock, panel moderator; Doug Darfield, The Nielsen Co. and Ceril Shagrin, Univision; and Julie Victor, Telemundo Digital Out of Home.
Blue-collar Hispanic males are also frequent c-store shoppers. To appeal to them, Wallace said Coca-Cola focuses on pairing its drinks with the snacks and other foods this consumer enjoys.
When it comes to attracting Latina moms, Coca-Cola's messaging has centered predominantly on pairing its products with meal occasions. However, this year the company decided to change things up and instead talk about pairing its products with home entertainment occasions.
Latina moms love watching telenovelas, so the company created the "Coca-Cola Telenovela Club," and recruited two popular telenovela stars to be the club's spokespeople. The program, which is running for 12 months, incorporates a digital platform and in-store displays.
Within two months, the Web site generated more than 30 million impressions, and as of August, retail outlets with the displays were reporting a 22-percent increase in Coca-Cola sales.
"We believe if we get better at this, we will take advantage of brand growth," said Wallace. Latina moms are General Mills' target as well. The company's "Que Rica Vida" program, which bundles many of its iconic American brands, strives to establish an emotional connection with Latinas, in turn making the products more relevant to them and their families, said Rodolfo Rodriguez, General Mills' director of multicultural marketing.
"Que Rica Vida" launched in 2007 with a direct-mail magazine printed four times a year and has grown to include grassroots promotions, a Univision media partnership, digital efforts and other strategic partnerships. The magazine continues to be a very successful piece, with households receiving the publication generating 10-percent higher sales, Rodriguez said.
Rather than segment by gender, MillerCoors focuses its initiatives on bi-cultural Hispanic consumers, those who "feel like a Latino, but think and dress like an American," according to Roger Garcia, brand manager for the Coors Family of Brands, Hispanic.
The brewer uses the acronym, SLICE, to describe its Hispanic market approach:
- Sponsorships (entertainment venues and New York's Puerto Rican Day Parade);
- Local markets;
- Innovations (its newest product is aluminum pints);
- Culturally relevant advertising and programming; and,
Garcia said retail activation is vital to bringing all of these pieces together to reach the consumer. "If we don't have retail displays that resonate, all of this can get lost," he noted.
This point was also echoed by Marla Rappaport of Kimberly Clark, who said engaging consumers at retail is a key aim of her company's Hispanic program for its Scott brand of paper products. Other key goals are to tap into Latinos' cultural passion points and foster a grassroots connection, according to Rappaport, who oversees Hispanic Family Care marketing for the company.
The Scott program is built around "dichos," folksy phrases used by Hispanics in their everyday conversations. The U.S. equivalent of a "dicho" would be "a penny saved is a penny earned." In its recent campaign, Scott asked consumers how they apply "dichos" in their own lives.
The campaign was called "Buen Rollo," which translated means "the good roll." The company partnered with retailers such as Walmart, Kroger, Family Dollar and Shop-Rite, driving consumers to the stores with in-store demonstrations, sampling, a free gift with purchase and giveaways. "Buen Rollo" community events also were held in various markets.
Kimberly Clark was pleased with the results, Rappaport said. The company saw 9-percent growth in measured markets and made 141 million impressions, exceeding its goal.
General Mills, MillerCoors and Kimberly Clark all executed their programs bilingually.
Another major supplier, Kraft, maintains a "laser-like" focus on the consumer when it tests Hispanic programs. Autumn Dawn McDonald, director, consumer insight and strategy for Kraft, and Roberto Ruiz, vice president, brand solutions, Univision, presented a case study on using in-market testing for growth in the Hispanic market.
Ruiz said in-market testing allows a company to measure the impact before investing resources, to identify ways to improve performance before rollout, and to test the upside of Hispanic market investments.
McDonald, while pointing out that in-market testing should not be a replacement for other research tools, added many things can be tested, including new product launches. "You name it, it can be tested," she said.
The key to success, according to McDonald, is preparing the test appropriately and then measuring results, taking into consideration important factors such as clearly defining what you want to find out, choosing the right test period, and having both a test and control group of stores.
McDonald and Ruiz showed how a campaign around Hispanic-specific insights helped increase sales of Kraft Singles cheese 12 percent to the Hispanic market. "The general market campaign was geared to bringing back grilled cheese sandwiches â but that message doesn't resonate with Hispanics," said Ruiz. Switching to a Hispanic message focused on "made from milk" spoke more directly to Hispanic moms, according to Ruiz.
Additional retailer-vendor case studies were presented by Julie Victor, director and general manager, Out of Home Division, Telemundo; and Shayne Walters, vice president, business development, PowerDirect Marketing.
A whole afternoon of breakout sessions at the conference were directed to exploring how Hispanics use new media, such as mobile marketing and social networks.
Joe Kutchera, author and consultant with LatinoLink, moderated a general session entitled "Targeting Hispanic Shoppers in the New World of the Internet." Panelists Ana Grace, site manager for BestBuy.com, and Jose Rivera, digital marketing manager for American Family Insurance, discussed the best ways of engaging shoppers in the digital world.
"Currently there are 30 million Hispanics online once a month," said Kutchera. "By 2014, there will be 39.2 million. Fifty-four percent of them are Spanish-dominant speakers or bi-cultural, 61 percent look to the Internet first for product information, and wireless services have a 78-percent penetration rate among Hispanic teens â over-indexing against the general market."
Both Grace and Rivera answered questions from the audience about their successful online initiatives. One interesting finding of Best Buy's research was that Hispanic customers preferred a parity experience online rather than a Latino-specific site. "They said: 'We don't feel we can trust your company if you show me something different than what you have on your English site,'" said Grace.
Martin provided an emotional close to the conference by relating a boyhood experience of discrimination. That humiliating experience in life taught him that "diversity takes patience and persistence." He reminded the audience that despite the many divisions in America, "there is more that binds us together."
He added: "If you don't embrace the Hispanic market today you are running against conventional wisdom. Be patient and persevere, and remember it's all about how you are going to win at retail."
Hispanic Retail 360 Summit
was produced by Convenience Store News, Progressive Grocer and Stagnito Media, under the direction of Michael Hatherill, publisher of CSNews, and Don Longo, editorial director, food division of Stagnito Media. Longo, who is also editor-in-chief of CSNews, co-founded the Hispanic Retail Summit in 2005. Coca-Cola was the presenting sponsor. Other sponsors included:
- Supporting Sponsors: Wrigley, John B. Sanfilippo & Sons, and Unilever
- Official beer sponsor: Anheuser-Busch
- Gift bag sponsor: Geoscape
- Room key sponsor: Western Union
- Breakfast sponsor: Save-A-Lot
- Lunch sponsor: Telemundo Digital Out of Home
- Welcome gift sponsor: Advance Auto Parts
- Lanyard sponsor: Televisa
Latinum Network Connects Hispanic Marketers
With members from a wide variety of companies, from 7-Eleven, McDonald's and Burger King, to Procter & Gamble, Kraft, Nestle and Clorox, the Latinum Network was established to help corporations unlock the potential of the Hispanic market.
Co-founders Michael Klein, formerly of the Corporate Executive Board, and David Wellisch, founder of AOL Latino, spoke about how their 40-company "network model" seeks to help companies improve return-on-investment on Hispanic marketing initiatives.
The company's shared cost model helps fund networkwide research initiatives, provides peer-generated insights and company-specific, customized support.
"If you look at real growth in the U.S. economy from 2005 to 2008, 56 percent of that came from the Hispanic market," said Klein. "Take out inflation and Hispanics represent 10 times the spending growth of the rest of the market."
Klein also noted new Hispanic consumption offset 84 percent of the negative real growth across food, beverage and restaurants from 2005 to 2008. "There's no disputing that Hispanics are the primary demographic opportunity," he said.
One of the issues the network is currently researching and exploring is that of acculturation. "Is there a better way than acculturation?" asked Klein. "Or is acculturation just one of several constructs impacting Hispanic attributes?"
He listed family structure, economic and educational achievement, as well as time spent in the U.S., as other factors that are helpful in explaining Hispanic spending patterns.