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Grocers Adapt Merchandising, In-Store Experience For Ethnic Customers

merchandising Soto

Expert: It ‘doesn’t make economic sense not to’ tap into growing consumer diversity

by Eric Pereira / staff writer

The combined buying power in the U.S. of African-Americans, Asian-Americans and Native Americans is an estimated $2.4 trillion, while Hispanics lead the way with $1.5 trillion, according to a Multicultural Economy Report from the University of Georgia.

The report found that African-American buying power has spiked from $961 billion in 2010 to an estimated $1.3 trillion in 2018. Since 2000, this market has seen a 114 percent increase in buying power. 

The report notes, “Asian-Americans command an estimated 6.2 percent of the nation’s total buying power, roughly $1 trillion. The 267 percent increase since 2000 makes the Asian market the fastest-growing minority market in the country.”

The Hispanic market is the second-fastest growing minority market in the country, rising by 212 percent, or $500 billion, since 2000, according to the report.

Grocers Adapt Merchandising, In-Store Experience For Ethnic Customers
Terry Soto

So how can a food retailer better connect with these consumers? Terry Soto, CEO of About Marketing Solutions, said grocers need to start by doing their homework if they want to get involved in marketing to a new ethnic audience. 

“Get to know your ethnic customers – where they’re from, what they eat, what they drink, their food pillars/staples, popular dishes,” she said. “Leave your office and get out into their neighborhoods. Go into some ethnic supermarkets. 

“Observe the shopping behavior. Observe what’s in the shopping carts – types of product categories and quantities. Observe the proportion of packaged/center store versus perishables/perimeter of the store products.” 

According to Soto, grocers should take their understanding of food preparation of ethnic communities and apply it to merchandising and cross-merchandising efforts. 

“Include staple products in your assortment, ensure there’s a critical mass of product SKUs, merchandise like you mean it,” she said. 

She added that they should also lead with key staples on deal at the front of the department/store. The customer experience should be as good as for the grocers’ core customers. 

“Access is key: bilingual employees who are encouraged to speak in the customer’s language, bilingual signage – if it’s there, it’s important,” she said. 

Customer service access is key as well for phone and digital. 

“If customers feel they can’t speak to your employees and ask a question or get help they need, they will assume you can’t help them,” she said. “They will leave and they likely won’t come back.”

Other measures that should be taken into consideration, per Soto: 

 Understand key holidays – mainstream and ethnic and recognize it with your assortment and in-store communication.

 Appreciate and acknowledge them when they’re in the store. Make them feel welcomed and valued. This is the strongest marketing a retailer can do.

 Ensure your social media is able to reflect your ethnic audiences, ensure they are being managed such that the first or second languages ethnic consumer may use are acknowledged.     

Grocers Adapt Merchandising, In-Store Experience For Ethnic Customers

Why should grocers devote their resources to a new ethnic audience? “The No. 1 reason is the top and bottom line, the same as why they market to any other consumer,” Soto said.

However, she emphasized that this should not be approached as a public relations effort or nice thing to do. 

“Trade area demographics have and continue to change and they’ve become more increasingly diverse,” she said. “Best-in-class retailers remain attuned to these changes and adapt their merchandising, marketing and customer experience to capitalize on their new and growing diverse consumers. 

“Retailers who insist on ignoring these changes are seeing their sales decline as these consumers take their business to retailers that understand and are responsive to their needs.”

The U.S. multicultural population is more than 120 million strong and represents 38 percent of the country’s population, Soto said. “It is on a growth fast-track and is projected to be the majority population by 2044.”

Younger multicultural populations reached the food retailers grocery shopping “sweet spot,” last year, according to Soto. In 2020, 25 percent of children younger than 18 (Gen Z) and 45 percent of Gen Y and Gen X were multicultural.

She also noted that non-Hispanic white Baby Boomers and seniors represent less than 38 and 25 percent of the population, respectively. 

“These are primarily empty-nester households, which are shrinking in size, and as a result their market baskets are significantly smaller than younger, larger households,” Soto said. 

Thinking about the lifetime value of a customer, multicultural consumers are on average nearly 10-15 years younger than their non-Hispanic white counterparts, presenting a greater value over a longer period of time. 

“It simply doesn’t make economic sense not to,” she said on pivoting to become relevant to ethnic consumers. “To grow same-store sales, retailers must focus on expanding their strategies to growing consumer markets that represent the greatest economic opportunity.”  

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