by Arturo Nava, Managing Partner, Marketealo
Special to The Shelby Report
There is a huge emerging Latino wave “multiculturizing” America that also will change the mainstream market in the U.S.
Latinos represent a massive $1.3 trillion in purchasing power and 56 percent of U.S. population growth. The Latino population is 52 million strong and growing; they represent 17 percent of the U.S. population. The number of Latinos living in the U.S. is expected to grow up to 29 percent of the population by 2050 according to the Pew Hispanic Center.
U.S.-born Millennial Latinos are driving this huge wave as they will represent 80 percent of the 18-29-year-old U.S. population growth by 2015, according to the Pew Hispanic Center. These Latinos, unlike their parents, want to stand out and be noticed, they want to do good in the world and get ahead while embracing a working-class moral compass. They are becoming more educated and more affluent: Latino college enrollment grew 20 percent in 2011 and Latino affluent households now number 5 million. The U.S.-born Latino’s heart is Latino but their head and aspirations are American. Their heart is rooted in their Latino culture so they embrace their family, food, music and community; their aspirations reflect the American cultural values of education, financial success and freedom.
Latinos: Today’s ‘super trendsetters’
The rise of U.S.-born Latinos has fueled the new Latino status as today’s super trendsetters. They are rapidly becoming the most influential voice in business and politics. Their deciding role in the outcome of the 2012 U.S. presidential election was the watershed moment for Latino influence in the U.S. Latinos are having a powerful influence over non-Latinos by spreading their culture and shopping preferences through technology at higher rates. Latinos are twice as likely vs. non-Latinos to be first to share with friends and try new products first. They also shop more with mobile phones (56 percent vs. 33 percent) and tablets (43 percent vs. 25 percent) vs. non-Latinos, according to the “Latino Shop” study by the Center for Hispanic Leadership. Retailers across all channels are trying to find ways to capture this trendsetting and extremely attractive Latino shopper. They know that Latino households will actually spend more at retail than white non-Latino households over their lifetime in categories such as food (at home and away from home), apparel and personal care products.
Latino culture, food, music and overall product preferences are very attractive to non-Latinos, so the more they are exposed to these influences the more they will embrace them. Latino influence has already inspired a growing number of non-Latino mainstream consumers to embrace Latino culture, food, music, fashion, sports and shopping preferences. According to a study by The Latino Influence Project at Experian, non-Latinos living in high-density Latino neighborhoods behave, buy and believe more similarly to Latinos than non-Latinos living in low-density Latino neighborhoods. These non-Latinos were 5.5 times more likely to eat jalapenos, two times more likely to shop organic and natural food, six times more likely to listen to and enjoy salsa and merengue and 70 percent more likely to experiment with new clothing styles.
Latino celebrities in the mainstream spotlight
In popular culture, Latino celebrities are all the rage as evidenced by the popularity of Sofia Vergara, Pitbull and Shakira (the new judge on the popular show “The Voice”). Latin food and beverages have won over the American palate and are expected to grow 31 percent over the next five years to $10.7 billion in sales. Tortillas now outsell spaghetti, macaroni, pasta, hamburger and hot dog buns, and salsa is growing twice as fast as ketchup, according to a 2012 report from Packaged Facts. Top Latin food chefs are more popular than ever as evidenced by their huge foodie following and the fact that they are widely considered as the ones to watch at the 2013 James Beard Awards. Walmart launched Supermercados (Latin grocery format stores) in some markets and has expanded its Latin food aisles in many stores. In Florida, Publix launched Publix Sabor. In fast casual restaurants, Chipotle is a shining light, increasing sales by 20.2 percent in 2012, according to research firm Technomic.
It is very clear that Latino influence has hit the mainstream in a big, big way. This influence on the mainstream market will continue to grow as more non-Latinos discover more of the beautiful, colorful and flavorful world of Latino culture, food, music, fashion and experiences.
Yet there remains a lack of Latin-inspired retail stores, products and brands that reflect this new market reality. Retailers who don’t embrace Latino inspiration will lose relevance not only with Latinos but also with what we at Marketealo have coined “The Latino influenced mainstream consumer.” This group is comprised of non-Latinos that are being influenced by Latino culture and that will demand more Latino-inspired retail experiences, brands and products. The grocery retail, food & beverage, entertainment and restaurant industries should be the first ones to evaluate how their store layouts, shopper and customer experiences, product offerings and brands are addressing the needs of this Latin influenced consumer.
Appealing to Latinos has indirect benefits
An interesting phenomenon is under way that will enable progressive retailers to increase their relevance with two distinct consumer groups at the same time. Those retailers who choose to broaden their appeal with Latino shoppers also have the opportunity to better address the needs of Latin-influenced “foodie/gourmet” consumers. According to RetailNet Group, Latino grocery shoppers are looking for better experiences that involve more than just functional shopping. They are seeking interactive, multi-sensory, fun, social and culturally relevant experiences designed with the Latino family in mind. Latino format stores are the best at delivering these types of experiences: differentiated departments such as fresh bakery with tortilla department or butcher shop; tailored product assortment that includes more ethnic options; emphasis on fresh, well-stocked produce with greater prominence; and unique in-store experiences such as festive cafes or juice bars. Retailers who cater to authentic Latino shopper preferences and do so with an awareness of the cross-over appeal with Latin influenced foodie/gourmet consumers will capture the value of both segments. They’ll drive more traffic to stores and a higher rate of shopper conversion in-store, which will separate these retailers from the pack. This convergence opportunity is optimal where the local community mix includes both the Latino and foodie/gourmet consumer segments.
In communities with a heavy Latino skew, retailers of all kinds should cater to Latino shoppers’ preferences as first priority. As food for thought, we look to recent success of Latino shopping malls such as La Gran Plaza Mall in Fort Worth, Texas, to capture key insights regarding what is being done with formats outside the store to see what could inspire great ideas for better in-store experiences. According to a recent article in Ad Age, these Latino mall developers have a simple concept: Build a plaza that doubles as a center of entertainment that attracts Latino families on weekends, especially Sundays, and stays open late (9 or 10 p.m.) for what in Spanish is called “domingeo” or hanging out. Mall owners pick up the tab for year-round Latino entertainment and they also make sure to celebrate Latino “legacy events” and holidays that may be different from American holidays, such as May 10, Mother’s Day in Mexico and most of Latin America; Day of the Dead celebrations; and special celebrations around religious holidays like Easter or Christmas “posadas.” They also spend time coaching and training non-Latino anchor retailers on how to sell to Latinos, which may include reviewing merchandise inventory for specific colors and sizes. Overall, culturally relevant, community and entertainment event tie-ins are key to their success that’s measured in net operating income, increased foot traffic and increased sales per square foot ranging between 8 percent to 30 percent.
The need to “multiculturize” retail stores and brands to continue to be relevant in this rapidly changing Latino influenced marketplace couldn’t be more urgent. To multiculturize is what we at Marketealo call the process of infusing Latino inspiration into brands, products and retail outlets to win with the Latin influenced mainstream and multicultural markets. Multiculturizing encompasses product innovation, brand positioning, go-to-market plans, in-store merchandising and shopper marketing. There is not a one-size-fits-all solution here; the amount and type of Latin influence needed will have to be tailored for each retailer’s situation. Latin inspiration can range from a very subtle infusion to a full embrace. Retailers would be wise to seize the moment and get Latin inspired to capitalize on this fantastic market opportunity.
Marketealo is a strategic brand marketing and innovation firm focused on creating and marketing Latin-inspired brands to help companies win in the Latin inspired mainstream and multicultural markets. Contact Nava at email@example.com.