Ethnic Marketing and Merchandising: Opportunities in the Face of Adversity

Terry J. Soto, Author and President & CEO, About Marketing Solutions, Inc.

A few years back, I and some colleagues were contracted by the Coca Cola
Retailing Research Council of North America to help the council tackle what had
become a critical issue among U.S. food retailers: How to successfully market
and merchandise to ethnic consumers. The result was the actionable “Grow With
America Best Practices in Ethnic Marketing and Merchandising” industry report.

As I thought about how I would begin this 10-month consulting project alongside ten major retailer CEOs, and almost fifty retailer targets, I decided that valuable insights would come from interviewing various stakeholders outside of the retailers themselves. I was sure their observations on the state of ethnic marketing among US retailers would set the stage. I obtained CPG manufacturers’ experience when selling in ethnic trade programs which proved a revealing portrayal of the importance retailers place on attracting ethnic shoppers. And input from trade publications and associations provided a high level view of the true state of ethnic marketing and merchandising in the U.S.

The result was a frank conversation outlining the persistent obstacles directly impacting retailers’ ability to plan and execute ethnic trade programs successfully. The bottom line we found is that retailers are still in a nascent stage when it came to ethnic marketing and merchandising. Some of the most critical obstacles include:

  1. Limited top-level supermarket management commitment to prioritize ethnic marketing
  2. Scarce dedicated management resources to drive ethnic marketing and merchandising initiatives, relative to other marketing expenditures
  3. Inability to reconcile efficiency models and to customize offerings to ethnic consumers
  4. Centralized assortment decisions versus those that address local needs
  5. One size fits all category management benchmarks drive assortment decisions with little room for ethnic assortment adjustments
  6. Reliance on vendor partners to mine ethnic sales data
  7. Tactical store level ethnic initiatives, rather than ethnic initiatives integrated into the retailers’ strategy
  8. Sporadic vendor funded ethnic initiatives comprised mainly of revenue-generating promotions and events
  9. Limited ethnic marketing and merchandising focused on trade advertising and promotions with minimal focus on ethnic customers
  10. Cultural and generational homogenous retail decision makers gets in the way of evolution
  11. Diversity initiatives related to staffing and suppliers are uncommon due to a resistance to change

I presented this report at the Food Marketing Institute Show and as I stepped down from the stage, I was swarmed, not by retailers, but rather by CPGs.

Shortly after, I was hired by these CPGs to share these findings to their brand managers and business directors who immediately saw the following opportunities:

  1. CPG companies identified dedicated and cross functional resources to help retailers understand the ethnic sales opportunity possible through turn-key CPG ethnic programs.
  2. CPG companies helped retail partners create ethnic store clusters and respective category management filters that consider ethnic assortment requirements and ethnic velocity benchmarks.
  3. CPGs optimized distribution systems to facilitate efficient DSD distribution systems to help retailers overcome centralized decisions and distribution hurdles.
  4. CPGs proactively mined Hispanic sales data to help retailers overcome uncertainty about ethnic consumption and size of the opportunity.
  5. CPGs created year-long ethnic marketing trade and consumer marketing calendars with proactive retailer input meetings to deliver continuous strategic programs in support of key sales drive periods.
  6. CPGs pursued more robust diversity goals across their own marketing and sales functions.

Today, retailers continue to struggle with the same hurdles identified eight years ago while being evermore focused on operational efficiencies. However, CPGs have grown increasingly proactively about understanding their retailer partners on their ethnic marketing goals. In doing so, they’ve gained the insights to develop programs which deliver on what retailers, consumers and CPGs value and which are well executed which is the true test of CPG and retailer alignment.

Terry Soto is President and CEO of About Marketing Solutions, Inc., a Burbank, California – based strategy consulting firm specializing in helping her clients dramatically improve overall business performance by optimizing their strategies to succeed in the Hispanic market. For more information please visit www.about marketingsolutions.com or send me an email at: terry@aboutmarketingsolutions.com

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