Hispanic Gen Y and Gen Z Food Culture Collides With Macro Trends

Macro Food Trends Are Closely Tied to Hispanic Food Culture

Organic, locally sourced, natural, sustainable, Non-GMO, fresh, and socially responsible are all macro food trends that resonate loudly with consumers under 35, and Hispanics are no exception.

In fact, according to The Hispanic Millennial Project study by Sensis Agency and Think Now Research, over half of Hispanic Millennials believe it is “very important/somewhat important” that the food and beverages meet macro trend criteria. Hispanics are willing to pay up to $4.89 or 22% more for a more natural product that would otherwise cost $3.00, according to the same study.

Younger Hispanics’ tendency to place importance on natural and fresh foods is not surprising given how closely tied these food characteristics are to their food culture of heritage. We could say that “fresh and natural” and otherwise “clean” foods are really not a trend among Hispanics at all, but rather a culturally-driven orientation.

Hispanics are Impacting Food Choices of Younger Consumers at Large

In general, as younger generations’ orientation to being green and socially responsible grows, it will continue to fuel a greater orientation to fresh and natural foods. And, NPD Group expects that the tastes and choices of U.S. Hispanics, which make up a large percentage of Millennials and Gen Z, will continue to grow in importance over the next five years significantly impacting what consumers at large buy and eat.

Non-Hispanics’ affinity to Hispanic foods is driven by a perception that Hispanic foods are more healthful because the cuisine emphasizes legumes, fruits, vegetables, herbs and ancient grains.  The NPD Group confirms that as younger Hispanics continue to observe food traditions of their culture, they are influencing all Millennial and Gen Z’s eating patterns, reinforcing interest in buying fresh and natural foods and cooking from scratch.

Fresh and Scratch Cooking on the Rise

Between 2003 and 2013 fresh foods saw a sales increase of 20%. NPD predicts that between 2013 and 2018, we’ll see an increase in fresh food sales of 11% for Gen Z and 7.5% for Millennials, far outpacing their respective shares of the population change (2% and 2%, respectively).

Interestingly, Gen Z is shaping up to have an even greater orientation to fresh food and cooking from scratch. Simmons National Consumer Teen Study indicates that 56% of Hispanic Gen Z goes grocery shopping; 46% say they typically grocery shop with their parents; and they focus on the perimeter of the store, meaning they are influenced by parents’ choices – many of whom are Millennials.

NPD forecasts that between 2013 and 2018, we’ll see an increase of 6% for Gen Z and 5% for Millennials consuming meals prepared from scratch and an increase of 11% for Gen Z and 8% for Millennials consuming meals using fresh products. They also report that top foods purchased/consumed by Gen Z include fresh chicken, eggs/omelets, potatoes, fresh bananas, fresh apples, fresh carrots, and bacon.

By all accounts, the growth trend for fresh and scratch cooking is on a steady course with Hispanic Millennials and Gen Z aligning closely with their non-Hispanic cohorts on this front.

Younger Hispanics’ Food Choices Remain Strongly Rooted in Culture of Heritage

One might think that as most Millennials and Gen Z Hispanics were raised or where born in the U.S., their Hispanic food traditions would have weakened as they adopt more mainstream food habits and that they would be less influenced by their culture when they shop and cook.  However, this is far from the truth irrespective of place of birth. Hispanic culture is not fading among younger generations. According to Univision, 96% of Hispanic Millennials say they will never stop doing things that are part of their heritage.

As it turns out, 73% of U.S.-born and 71% of foreign-born Hispanic Millennials say heritage and cultural background drive the food and beverage brands they buy and 80% of Hispanic Millennials with incomes higher than $40K agree according to The Hispanic Millennial Project report. Additionally, 56% of U.S born Millennials agree with the statement, “I use/buy ethnic brands of food and beverages” according to the Hispanic Millennial Project report.

When asked how often Hispanic Millenials cook from scratch in a given week, 78% of U.S.-born and 86% of foreign-born Millennials said they cook at home once a week or more, often according to The Hispanic Millennial Project report.

Most important of all, the NPD report It’s Mealtime with Hispanics indicates that Hispanic Millennials are just as likely as total Hispanics to say they always or often follow tradition when planning and serving meals at home.

The NPD report shows heavy use of stove top versus microwave and oven use among Hispanic Millennials compared to Non-Hispanic Millennials as further evidence of scratch cooking dominance.

Hispanics’ Top Food Choices

Looking at the top 15 meals and meal components consumed at home among Hispanic and Non-Hispanic Millennials, it is clear to see how in home food orientations differ.

Regardless of language dominance, Hispanic Millennials are more likely than non-Hispanic Millennials to choose fruit, bread, salads, rice, Hispanic dishes, poultry, eggs, soup, homemade dishes and tortillas as top meals and meal components.

Non-Hispanic Millennials are more likely than Hispanic Millennials to choose vegetables and legumes, RTE cereal, sandwiches, salty snacks and potatoes for their in home meals.

The Bottom Line

While the majority of Millennials and Gen Z Hispanics are mostly U.S. born and speak English, their food traditions remain strongly rooted. Food manufacturers wanting to attract them must develop a full understanding of what this means. This includes their natural inclination for fresh and scratch cooking and for the flavor profiles of heritage to which they remain connected. That said, their adventurous side should be considered as they are still a product of their generations.

Given Hispanics’ steadfast adherence to their food of culture, it is not surprising that sales of Hispanic foods (excluding frozen) are expected to increase by 7% over the next five years among Hispanic Millennials, according to The NPD Group.

This said, non-Hispanic Millennials’ appetite for Hispanic foods continues to grow and sales of Hispanic foods and beverages are expected to reach $10.7 billion in 2017, up 31% from the present market level.

Manufacturers who want to leverage these generations’ love for Hispanic food, including among non-Hispanics, would do well to lead with Hispanic flavors and textures as innovation drivers. This is where the greatest upside growth opportunity exists.

Hispanic Millennials like variety and like to explore new flavors and will surely view new flavors and textures as different and appealing.

Terry Soto is a Hispanic market strategist and CEO of About Marketing Solutions Inc. For  25 years, Terry has consulted for best in class Fortune 1000 companies in the U.S. and Internationally. Clients have included ALDI Supermarkets, August Storck KG, Verizon Wireless, H&R Block, Walgreens, CVS Pharmacy, Disney Theme Parks, Autozone, Citibank, El Pollo Loco restaurants.

Terry partners with top executives to accelerate Hispanic market revenue growth and drive overall business performance. Known for being bold, straight-forward and persuasive, Terry is sought out by business leaders who need her expertise to accelerate results. Terry is constantly interviewed and quoted by business and trade media and is frequently engaged to speak to executive groups across the country. Terry can be reached at terrysoto@aboutmarketingsolutions.com or 818-842-9688.

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“Total Market” – Still Misunderstood By Marketers

I just spent three days at the Multicultural Retail 360 Summit in Anaheim, California where I was invited to MC for a day. A new and fun experience for me! The conference agenda was solid and the speakers were great! But here’s the thing that caught my attention. Total Market is still a misunderstood concept.

As much as Total Market was discussed during the sessions, companies are still confused and speak to multiple definitions of Total Market, and they question its value, purpose and how it should be executed.

Integration, Total Market’s predecessor is a topic I cover extensively in my book, Marketing To Hispanics – A Strategic Approach To Assessing And Planning Your Initiative.

In my book I explain the premise behind integration as taking a company’s stated growth platforms and acknowledging that the company’s highest potential targets vis-à-vis its growth platforms likely include non-Hispanic whites, Hispanics, Asians, African American and other ethnicities and nationalities who fit specific consumption, attitudinal and lifestyle profiles given a brand’s positioning.

Stakeholders would then consider these racial, ethnic and cultural backgrounds as they think, plan and implement solutions relevantly across every area in the company that plays a role in the creation and production of the products and services, how these products and services are made available in the marketplace, how consumers are serviced pre, during and post purchase across all channels and how the company communicates its offerings – marketing.

Stakeholders would also work to align and coordinate back-end operations which support the delivery of its products and services, including human resources, suppliers, infrastructure, customer service centers, and reporting.

Total Market is no different. And, it is not a concept that only applies to marketing communications, it is a way of doing business which must be applied more broadly to how a company organizes to operate more relevantly.

Total Market does not mean a brand is all things to all people as I heard some folks say in disapproval. It is not about finding the common denominator marketing insight at the expense of more engaging cultural insights as some marketers have adopted it. It is not about creating one size fits all marketing communications that reaches all target consumers in the same way in order to create efficiencies in agency services and production.

Total Market is about creating alignment within an organization so a company’s go-to-market strategy is optimized for relevancy among its target consumers in context with how a target normally interacts with a category and how it fits in targets’ lives.

This type of alignment requires some organizational and operational optimization (yes, change). It also still requires leveraging diverse target insights to plan and implement dedicated marketing efforts based on what is most engaging to each cultural sub-segment under an umbrella consumer target and strategy.

In my view, the concept of Total Market, is meant to advance companies from a homogenous to a global consumer view within our own borders because this is the reality of the U.S. consumer market today. The U.S. consumer market is far from the way it used to be even just 5 years ago.

If companies want growth in today’s increasingly diverse shopper environment, companies must evolve their thinking and approaches. Today, it’s simply counterproductive and unprofitable to think that anything but a Total Market approach will place companies on an accelerated growth path.

Terry Soto is President and CEO of About Marketing Solutions, Inc., a Burbank, California – based strategy consulting firm specializing in helping her clients to dramatically improve overall business performance by optimizing their strategies to also succeed in today’s diverse U.S. market. Terry is the author of Marketing to Hispanics and Strategic Approach to Planning and Implementing Your Initiative and co-author of Grow With America Best Practices in Ethnic Marketing and Merchandising. She is a contributor to a variety of trade publications and is a frequent speaker at industry conferences. Terry can be reached at terrysoto@aboutmarketingsolutions.com or 818-842-9688.

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Infrastructure Alignment is Fundamental to Delivering Growth

By Terry Soto, Author and CEO, About Marketing Solutions, Inc.

Some of us use the terms infrastructure and organizational structure interchangeably. In this blog, I will use the word infrastructure to refer to technology platforms and digital assets. There is a myriad of technology, information systems and digital assets on which your companies rely to operate your businesses. However, given the diverse customer base which shop your products you must ask if your infrastructure is optimally aligned to support your goals across all customers Hispanic and non-Hispanic regardless of language preferences. Consider the various ways in which your company relies on its infrastructure and determine if your company has created the necessary alignment to:

  • Generate reporting – For companies who target Hispanics, it’s important to ask if your company’s Information Systems are aligned to deliver on the company’s information needs on all your customer including your Hispanic customers. Are you able to track sales, segmentation, demographic, geographic, product categories, usage and other behavior your Hispanic customers may exhibit so appropriate decisions can be made in a manner that is relevant to your Hispanic customers and relevant to your business model?
  • Communicate with customers – Ask if your Information Systems are set up to effectively communicate important information bilingually so your Hispanic customers understand your letters, forms, brochures, user guides, warranties, rebate forms, and statements the way your company intended. Ask if your current methods effectively communicate with Hispanic recipients and whether they truly understand your messages, the intended level of urgency, the action that is required of them, by when, and where and how the action needs to be taken.
  • Drive cost away from your business by using technology to automate activities which would otherwise be handled by people – Ask if your company’s technology and digital assets support a quick and comfortable transition and adoption of automation so Hispanics grow less dependent on people and more dependent on your technology to shop your products, ask tech support questions, send emails, chat with customer service representatives and even make payments in automated ways. If Hispanic customers do not understand the purpose of that fabulous kiosk your company just installed in all your locations and can’t understand the screens, it might as well just be a fabulous piece of store décor as far as Spanish dependent Hispanics go and the phone will keep ringing for live support.
  • Enhance the shopping experience for our customers and drive sales through the digital assets you have in your locations – If every piece of technology with which you want your consumers to interact to browse your products, and help customers fall in love with your experience so they ultimately buy is not understood by a proportion of your Hispanics customers, they simply won’t engage and your digital assets won’t work across those Hispanic customers who are excluded from utilizing and enjoying these digital experiences.

Take a few moments to assess the many ways in which your company relies on infrastructure to 1) understand your customers so you can make better decisions, 2) communicate with them, 3) drive cost away from the business and 4) enhance the shopping experience and ask if you are having the same effect on your current and potential Hispanic customers. If not, ask yourself why you’d want your infrastructure investment to perform at anything less than 100% and why you would want to deliver anything but a seamless customer experience.

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. She can be reached at terrysoto@aboutmarketingsolutions.com or 818-842-9688.

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Are You Going Against the Corporate Tide

By Terry Soto, Author and CEO, About Marketing Solutions, Inc.

This week I presented a webinar entitled, Is Hispanic Strategy Still A Separate Initiative? Here’s How to Create Strategic Alignment That Makes Good Business Sense. I wanted to begin this year’s webinar series with a topic that I sensed continues to challenge most Hispanic marketers. Suffice it to say, registration numbers where the highest of any webinar I’ve hosted in the last 15 years.

Here’s the crux. In spite of the fact that as an industry of Hispanic marketers we’ve become very sophisticated in our methods and resources, we’re still stuck in a time warp. What do I mean by this? We continue to focus on US, what WE do well, what WE need and what the Hispanic market needs instead of focusing on our clients’ companies or the companies where we own responsibility for Hispanic Marketing and where we’re responsible for contributing to OVERALL growth.

I know this because, in my consulting work I’m engaged in ongoing conversations with the very high level folks who typically hire me, a team of 20-30 folks in different parts of the company, the Multicultural Managers (MC Managers) and their respective Hispanic agency counterparts.

The common theme in conversations with the MC Manager and their Agencies is the feeling being marginalized. Feeling like they’re not a part of the high level strategic conversations. Feeling like order takers. Not having the attention or the support they need from the rest of organization. And the ever recurring concern that Hispanic marketing is an afterthought.

From client leadership, I hear “Our agency is not strategic. They don’t bring us the strategic solutions.” Or worse, “Our agency or MC Managers understand Hispanics but they don’t understand the business.” Or “We don’t think what we’re doing in the Hispanic market is in sync with where the company is focused or headed.” I’ve even heard client leadership call their agencies and MC Managers self-absorbed and self-serving.”

There is clear misalignment between those who drive business results, agency partners and MC Managers. I’ve propose to agencies and MC Managers that they immediately refocus and broaden of their thinking so they think about and speak to the business not just the Hispanic plan. I’ve cautioned that if the current focus and conversation is maintained, agencies and MC Managers will continue to be marginalized and pigeon holed into the realm of advertising and promotions execution and will find it difficult to be considered valuable partners in growing the business in a way the company values.

Here’s where I believe the misalignment exists.

Consider that Hispanic Market Strategy is not synonymous with Hispanic Marketing (which is where many of us focus) and beyond this, Hispanic Marketing, which technically includes product, price, promotion and place is not synonymous with just advertising and promotion (which again, is where many of us focus).

Much of what we call Hispanic Market Strategy (and I use the term “strategy” loosely) are really communication strategies (P for Promotion). To make matters worse, while brilliantly planned and executed, many of these communication efforts are conceived first and foremost with the Hispanic market in mind RATHER than with the companies’ business goals and strategic direction as context.

As a result, our “Hispanic Market Strategies” are often out of alignment with our companies’ or clients’ strategic imperatives which by the way, is where companies’ resources and attention will be laser focused. And THIS is the main reason most Hispanic efforts remain separate, disconnected, underfunded and are the first to be cut when budgets are reduced.

A Hispanic Market Strategy cannot exist separately from the corporate strategy. It is born first and foremost from the goals and strategic imperatives a company has identified to achieve growth this quarter, next quarter and the following.

Developing an aligned Hispanic Market Strategy is about recognizing and heeding the company’s strategic direction and optimizing existing strategies to be effective among Hispanics across the organization structure, operations, infrastructure and marketing. There should be no such thing as a Hispanic Market Strategy that doesn’t follow from this premise.

This focus and conversation is what creates cohesiveness, collaboration and engages management’s full attention and financial support. It’s not enough to be culturally relevant, you must be business relevant first.

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. She can be reached at terrysoto@aboutmarketingsolutions.com or 818-842-9688.

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Optimize Your Hispanic Marketing and Merchandising Initiatives For Retail Success

By Terry Soto, Author and CEO, About Marketing Solutions, Inc.

A few years back I along with 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.”

As I thought about how I would begin this 10-month consulting project alongside ten major retailer CEOs, I decided that valuable insights would come from interviewing various stakeholders outside of retail to understand for example, observations among trade publications and trade associations of the state of ethnic marketing among US retailers as well as the experience among CPG manufacturers when attempting to gain retailer support for ethnic consumer programs at retail.

The result was a very frank conversation of the obstacles which directly impact retailers’ ability to successfully plan and execute ethnic trade programs, but the bottom line was that retailers were still in a nascent stage when it came to ethnic marketing and merchandising. Some of the most critical include:

  1. Limited top-level supermarket management commitment to prioritize ethnic marketing.
  2. Relatively scarce dedicated management resources to drive ethnic marketing and merchandising initiatives.
  3. Inability to reconcile efficiency models and the capability to customize offerings to ethnic consumers.
  4. Mainly centralized assortment decisions versus those that address local needs.
  5. One size fits all category management volume benchmarks drive assortment decisions with little room for ethnic assortment adjustments.
  6. Heavy reliance on vendor partners to mine ethnic sales data.
  7. Mostly tactical store level ethnic initiatives, rather than integrated into the retailers’ strategy.
  8. Sporadic vendor funded ethnic initiatives comprised mainly of revenue-generating promotions and events.
  9. Ethnic marketing and merchandising is limited and focused on trade advertising and promotions with minimal focus on ethnic customers.
  10. Culturally and generationally homogenous retail decision makers and diversity initiatives related to staffing and suppliers are not common.

As I stepped down from the stage at FMI after presenting the results from this behemoth project, I was swarmed, not by retailers, but rather by CPG companies.

Shortly after, I proceeded to make the rounds at major CPGs where brand managers and business directors saw the following opportunities in the findings:

  1. Top to top meetings between CPGs and retailers to make retailers aware of the wealth of information available through their CPG partners.
  2. CPG companies identified dedicated and cross functional resources to help retailers understand the ethnic sales opportunity possible through turn-key CPG ethnic programs.
  3. CPG companies helped retail partners create ethnic store clusters and respective category management filters that consider ethnic assortment requirements and ethnic velocity benchmarks.
  4. CPGs optimized distribution systems to facilitate efficient DSD distribution systems to help retailers overcome centralized decisions and distribution hurdles.
  5. CPGs proactively mined Hispanic sales data to help retailers overcome uncertainty about ethnic consumption and size of the opportunity.
  6. CPGs created yearlong ethnic marketing trade and consumer marketing calendars with proactive retailer input meetings to deliver continuous strategic programs in support of key sales drive periods.
  7. 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 not the consumer.

However, CPGs have grown increasingly proactively about understanding their retailer customers about their ethnic marketing needs. 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, and isn’t this the true measure 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. She can be reached at terrysoto@aboutmarketingsolutions.com or 818-842-9688.

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Beware of Best Practices!

By Terry Soto, Author of Marketing to Hispanics a Strategic Approach to Assessing and Planning Your Initiative and Grow with America: Best Practices in Ethnic Marketing and Merchandising.

In my consulting helping companies assess and improve their chances of success in the Hispanic market, I’m inevitably asked somewhere along the way to share examples of best practices – to share about those companies that “are doing it right.”

I have three things to say about best practices and the role they should and should not play in developing a successful Hispanic market strategy:

1. I caution companies from subscribing to another company’s best practices because I don’t believe that any company’s best practices, however derived and implemented, can ever be adopted in part or in whole to help create success in another company. No company is the mirror image of another. Even within the same industry, there are different corporate cultures, companies are in very different market positions, and different business priorities and strategies simply make it impossible for another company’s best practices to be either effective or efficient elsewhere.

2. Best practices are always in the eye of the beholder. You’ve heard the saying “the grass is always greener on the other side?” While on surface it may seem as though a company’s best practices are generating success for them, in reality, they may be facing just as many challenges. Consider that when companies’ successes, case studies or conference presentations are made public, they typically highlight the positives and are generally absent of the missteps, the trial and error, the shortfalls and even the resistance or lack of support faced internally.

3) In my experience, internal stakeholders responsible for implementation are seldom as engaged or as committed to adopting, implementing and ensuring the longevity of a best practice or even a strategy they’ve had a minimal role in creating and frankly, which hasn’t been vetted against the reality of their functions, responsibilities and challenges. Stakeholders will always feel greater ownership of solutions which have been generated internally especially when they’ve had the opportunity to provide input in their development.

So while it’s always interesting and even motivating to think there is “a best way” and think we can rely on external best practices, I encourage my best clients to apply the same methods in research, planning and strategy development for the Hispanic market as part of the process employed for the company as whole.

I always tell my clients there are no shortcuts and there are no cookie cutter approaches. I recommend that four key steps to follow:

  1. Always start with the company’s direction and strategic growth priorities as the foundation.
  2. Acknowledge that you don’t know what you don’t know about the Hispanic market and be open to learning and to grow your competence
  3. Identify and take the time to understand who your most productive Hispanic targets vis-à-vis your current core target characteristics.
  4. Develop your strategy so it takes into account all consumer with these winning characteristics including Hispanics and align their implementation accordingly.

In short, create your own best practices – practices that have been customized to your specific business situation, goals and existing strategies. I encourage you to take on this approach because it’s the only way to target Hispanics in a manner that will be meaningful to both stakeholders and your consumer targets.

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: terrysoto@aboutmarketingsolutions.com

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5 Ways to Find Out Who’s Shopping Your Stores

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

City level concentrations among Hispanics is typical, but far from the norm anymore. Suburbs, exburbs and small cities across the country which might surprise, have seen significant growth in Hispanic populations for quite some time. And this isn’t just a dynamic among U.S. born Hispanics. According to the Brookings Institute, in 2010, half of the foreign born population lived in suburbs.

If you’re a company with brick and mortar locations you should be sitting up at attention right about now. It used to be that companies would define certain inner city locations as ethnic or Hispanic stores, but today this method of designation is no longer valid. Some Hispanics live and concentrate in working- and middle-class suburbs, and others live in white middle-class suburbs. The end result being that Hispanics are shopping in a much greater number of your stores and you may not be taking this into account. This has tremendous implications for retailers in terms of hiring mix, staffing schedules, merchandising, signage, collateral, and product assortment to name a few.

So how do you define how the population mix has changed in your trade areas? Here are 5 ways to help you understand your customer mix situation:

  1. Geo-Demographic Analysis: Run an analysis that will tell you the customer profile in store trade areas. A good tool that I like is Geoscape will provides information on all population types including Hispanic. In addition to population figures, their tool can also tell you the acculturation of the Hispanic population and even how much they spend on certain categories within store trade areas.
  2. Customer Records: Utilize customer records if your company has them to profile the Hispanic population where customers live and compared this to the Hispanic profile of the stores in which these same Hispanic customers transact. You will likely find that stores you considered non-Hispanic white stores actually have lots of Hispanic traffic and you may be serving a much larger Hispanic population than you thought.
  3. Store Manager and Employees: Organize your regional directors to survey store managers and employees to determine if you might be trading more heavily among Hispanics than your population numbers might have you believe.
  4. Customer Counts: Organize your store managers to conduct a Hispanic and non-Hispanic customer count for one week to obtain a count and proportion of Hispanic to non-Hispanic customers. Compare this to what your data says about the population mix for your stores. If customer data collection is not part of your business model, go one step further and ask Hispanics walking in the door to provide you with their address and email for a small token – high value coupon for example.
  5. Environment Scan: Organize your store managers to conduct a trade area environment scan. The idea is to take note of the types of businesses in your trade areas. Hispanic oriented stores, store brands and Hispanic focused offerings are good clues that the trade area is more Hispanic than you may have originally thought.

Evolving to practices that can help you define how and where Hispanics shop your stores is critical to knowing how to optimize your store execution and winning a larger share of today’s Hispanics’ wallet.

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: terrysoto@aboutmarketingsolutions.com

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An Honest Understanding of Today’s Consumer Market Has Deep Strategic Implications

Bessie Ramírez, Managing Partner, About Marketing Solutions, Inc.

As business leaders, it can be a challenge to stay abreast of relevant industry trends and consumer dynamics. Often times, it is hard to assess the validity of the latest research publication and its relevance to your particular business. This is where a high caliber industry conference like Hispanic Retail 360(HR360) can come in handy. This conference covers the gamut between strategy and tactics in the retail space but, because it involves a variety of experts who are in the trenches with consumers daily, HR360 serves as a barometer for trends critical to any business dependent on today’s consumer.

Let me share with you a few big picture take-aways so that you can judge for yourself:

  • To do or not to do Hispanic marketing? Is no longer the question. The real question is What Hispanic?
  • Outreach in Spanish is still very relevant, but it is not the end all be all
  • Market leaders build integrated business strategies that address the needs of high growth sub-segments
  • This is elevating the conversation into the multicultural arena, including the Hispanic market as well as the Non-Hispanic market that loves all things Hispanic
  • Digital engagement is a powerful tool to bring integrated strategies to life while addressing specific market needs—and it is especially relevant to Hispanics

As you can see, this conversation cuts across industries, with applications well beyond retail and CPG, into areas such as financial services and healthcare, to mention a few.

What Hispanic?
Hispanics are not a homogeneous group and you need to know which sub-segment is most critical to your business today and in the future. US-Born Hispanics (UBH) account for about 2/3 (64%) of all Hispanics. Most of them (75%) are 34 years old or younger, driving the segment to a median age of 18. That’s a whole lot of Millennials, 34 million in 2012 according to Pew Hispanic Center, who are driving growth for categories such as beer and shifting channel dynamics, such as fueling growth in Drug.

But that still leaves a substantial 19 million1 Foreign-Born Hispanics (FBH) who are a force to be reckoned. Foreign Born Hispanics dominate larger households (5+ people)2 so, while they spent less in 2013 v 2012, they still accounted for the highest average $ spend per home/grocery department ($842 FBH, $770 UBH, $782 NH). Two thirds of FBH are 34+ years old, driving some categories such as shampoo and conditioners where their household spend outpaces that of UBH and NH.

Brand perception and product preference can vary significantly among Hispanics based on nativity and acculturation as evidenced by Suavitel, which enjoys a stronghold among First Generation Hispanics (i.e., Foreign Born) and has a significantly softer following among Second and Third Generation Hispanics (i.e., US Born). Ultimately, deep consumer knowledge coupled with an assessment of your business objectives, the category, your competition, and your brand will point to pertinent Hispanic and Non-Hispanic sub-segments. That focus will in turn drive strategy.

Spanish: Sí / No
Unlike previous years, where the industry seemed to hold on fiercely to the idea that outreach in Spanish was virtually the only way to truly capture the Hispanic market, this year’s conference speakers carried a different tune. While the last ten years saw a significant rise in homes that are equally bilingual in English and Spanish, Nielsen reports that Spanish TV ads resonate better than English TV ads across sub-segments (i.e., English-Dominant, Spanish-Dominant and equally bilingual consumers).

This is due in part to the fact that many general market ads just don’t resonate with Hispanics. Hispanics often don’t relate to the situations and/or the cast being portrayed. Nonetheless, Hispanics are spending significant time consuming English media (Hispanics’ share of time spent on English Cable and Spanish Broadcast is very close, 39% v. 36% respectively), so if an advertiser is only advertising in traditional Spanish language media the message is likely to miss many Hispanics who don’t consume Spanish media.7

Is there a verdict? Should your outreach to Hispanics be in Spanish, English or both? A one-size-fits-all answer won’t do. Hopefully it’s becoming clear that it depends on various factors, not the least of which are your business objectives, your category and the composition of your target market.

Multicultural
Now, you may be thinking that the Hispanic market just got more complex than it was before. The reality is however, in the words of Walmart’s Javier Delgado-Granados: “If you don’t reach the Hispanic consumer, you are not going to grow. (You) need to engage the customer, regardless (of ethnicity).” At the end of the day, it’s about marketing fundamentals while being honest about the market. Your consumer profile is no just bound by age, gender and marital status; ethnicity and language are critical parts of the equation and can no longer be ignored. These are now part of the “musts” of consumer profiling for strategy development and subsequent activation. Angel Colón talked about what this means for Kroger: “Collaboration, not silos. Passion for growth. Want to engage all customers with a multicultural approach.” He contends that data helps to understand the market and optimize the store.

Now, the definition of race and ethnicity is changing. The 2010 Census saw a significant increase in multi-race households. Some contend that the U.S. will become a Majority Interethnic Society this year. Also, consumer beliefs are reflecting favorability for cultural differences (66% report that “respecting racial and cultural differences makes society better”).7 Keeping pace with the times, HR360 announced that it will evolve into “Multicultural Retail 360” next year. Sounds like a pretty smart move! They can turn to Tom Herman from Northgate Gonzalez Market for inspiration. Tom shared how their customer composition has evolved whereby US Born Hispanics and Non-Hispanic “foodies” have become a great source of growth. This has driven them to become bilingual (v Spanish dominant) and broaden their offering beyond traditional Hispanic fare.

Digital
Hispanics are spending less time viewing TV (about 40 hours less per month than NH) and more time on digital devices (almost 2 hours more on the computer and one hour more on mobile than NH). Online plays an important role among Hispanics along the purchasing funnel. For perspective, online influences 76% of purchases among Foreign-Born Hispanics.

Mobile devices have become the primary online access for almost 2/3 of Hispanics. Not only does mobile help Hispanics stay connected with friends and family, but it enriches the shopping experience. It is important to note however that, while a greater proportion of Hispanics own a smart phone versus Non-Hispanics, mobile behavior among sub-segments varies as well. Foreign-born Hispanics are more likely to use a mobile device for price comparisons and coupons. Also, more of them use their mobile device in-store as compared to UBH and NH. Conversely, a greater proportion of US-Born Hispanics report making mobile purchases versus FBH and more of them say they use mobile devices at home as compared to FBH and NH.

Bottom Line

  • Ethnicity is a critical component of consumer profiling
  • Hispanics are not a homogeneous group
  • The answer to the “Spanish question” is contingent upon your specific category
  • Culturally, bilingual Hispanics are a “hybrid” consumer. Assuming that a general market approach will capture bilingual Hispanics or assuming that last year’s Hispanic marketing will do are both a high stakes gamble.
  • Integrated strategic thinking is crucial for success in today’s America. Operating in silos, with ancillary Hispanic marketing or multicultural initiatives will limit potential and could be detrimental to your organization’s long term sustainability.
  • Digital needs to be elevated from isolated tactical executions to a powerful strategic tool. Mobile deserves serious consideration, inasmuch as it is mapped to your category’s purchasing funnel and in keeping the particular consumer sub-segment’s mobile behavior.

Let’s be honest about the market and what’s needed to succeed in today’s undeniably Multicultural America.

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The Hispanic Market Has Evolved. How Are You Evolving With It?

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

I just returned from the Hispanic Retail 360 conference where I presented with Darren Seifer of NPD. The main theme of our presentation was the evolution of the Hispanic market. We thought it was important to speak of this evolution because many marketers continue to operate with an outdated view of what the Hispanic market is today and as a result, many retailers continue to move slowly and cautiously to ready their organizations to be Hispanic market relevant and business ready to serve them.

Let me share some of the quick facts I shared last week that compare the Hispanic market of 1990 with the Hispanic market of today and you will quickly see how they differ demographically and socioeconomically and hopefully see the implications for your business.

  • Population: 22 million in 1990 when foreign-born immigration drove growth to 35 million in 2000. In 2014, there are 56 million Hispanics and natural births drove growth in the last decade. Today, the largest 100 metros in the countries are only 57 percent. These are likely the same places where most of us do the lion share of our business.
  • Acculturation: In 1990, the immigrant population was recently arrived. Many had lived in the U.S. 15 years or less and their culture of heritage dominated their beliefs and choices. In 2014, two thirds of Hispanics are Bicultural as a result of being mostly U.S. born or raised in the U.S. Two thirds of Hispanic Millennials are U.S. born and 70 percent are Mexican. Beliefs and choices have been shaped by both U.S. and culture of heritage. Few Hispanics living in the U.S. even after one year of living here are ever the same person again. What and how Hispanics buy today is driven by the fact that Hispanics have morphed into a hybrid consumer – stimulated by everything they see, smell, hear, taste and touch in the U.S.
  • Language: In 1990, Spanish was the dominant language of a largely foreign born population. Spanish was the language of comfort spoken in the home because few spoke English well. In 2014, Hispanics are largely bilingual. Up to 80 percent of Hispanics speak at least some English. Hispanics can now be selective about whether they will speak English or Spanish or both according to the situation and present company.
  • Geographic Concentration: In 1990, most foreign born Hispanics lived in urban enclaves where they were insulated and isolated. Three fourths of Hispanics lived in just 65 counties. Today, over half of the foreign-born and an even greater proportion of U.S. born Hispanics live in the suburbs. Between 2000 and 2010, diverse suburbs increased by 53 percent, predominantly non-white suburbs increased by 72 percent while predominantly white suburbs decreased by 23%. Retailers who are still segmenting their stores to identify “Hispanic” store sets are operating based on an outdated model and are missing the lion’s share of the Hispanic opportunity. Today’s Hispanic are shopping chain wide.
  • Income: In 1990, the average Hispanic Household Income was just under $20K and the per capita Income was just $8K. Today, Hispanics’ average household income has doubled to $40.5K right alongside per capita income ($16K). In fact, Hispanics’ per capita income is higher than in any of the highly coveted BRIC countries where companies spend billions to do business.
  • Spending Power: In 1990, Hispanics’ spending power was just $210 million. By 2015, Hispanics’ spending power will reach $1.5 Trillion and as a standalone economy, the U.S. Hispanic market will be the 12th largest economy in the world. Clearly the opportunity is greater and more accessible stateside.
  • Age: Hispanics have always been a young market and today is no different. Hispanics represent 95% of the teen population. Over 60 percent are under 35 years of age and 75 percent are under 45 years of age. Only 20 percent of Hispanics are Boomers compared to 40 percent in the market overall. One in five Millenials in the U.S. are Hispanic. The ratio increases to one in three in California and Texas and to one in four in Florida. With eight hundred thousand Hispanics turning 18 every year, Hispanic Millennials will drive 80 percent of Millennials growth and represent one quarter of the Millennial population by 2020.
  • Family: Hispanics have the highest fertility rate of any other group and this has been true for decades. One reason is Non-Hispanic whites have the oldest median age, 42.3, in 2011, according to population estimates. Hispanics have the youngest, 27.6. Hispanics are forming family households at astounding rates. In 2012, Hispanic households increased by one million households while non-Hispanic households declined by seven hundred thousand households. Clearly, Hispanics are prime opportunities for household related categories.

To be effective with today’s Hispanics, it’s important to take a time out to understand and calibrate who today’s Hispanics are as consumers. Don’t go by what you may have heard at some point. Don’t go by what others in your organization may have told you. Don’t go by out of context, piecemeal bits of trivia you may have read somewhere. Roll up your sleeves and do the homework. Get down to basics:

  • Update and rethink your understanding of who your Hispanic shopper is today.
  • Understand what excites your Hispanic targets when shopping your category.
  • Understand when your Hispanic customers want to be spoken to as a group and when they appreciate one on one communication.
  • Find out where and how you can best reach today’s Hispanic targets.
  • Rethink your media mix and technology options to relevantly engage your Hispanic targets based on their lifestyle, culture, and language preferences.
  • Leverage big data and analytics to tell you where your Hispanic targets’ dollars are going so you can take the necessary steps to better attract and service them.
  • Ensure your execution at retail considers that today’s Hispanics are shopping across your entire chain and adjust your execution accordingly.

 

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: terrysoto@aboutmarketingsolutions.com

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The Hispanic Shopper of Today Has Changed. Are Retailers Keeping Up?

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

Hispanics have been immigrating in large numbers to the United States for decades, but are retailers still using outdated assumptions about this multifaceted segment of the population? With large proportions of Hispanics having been born in the United States and being heavily influenced by both their heritage the American way of life, these consumers are very much of two cultures and often use English and Spanish in their daily lives.

Information from the Pew Research Center shows that the share of foreign-born Hispanics is on the decline. In 2012, only 35.5 percent of Hispanics were born outside of the United States compared to 40.1 percent in 2000, and these figures are even lower when looking only at children.

So what does this mean to retailers? It means the Hispanic shopper of today is a hybrid. For instance, despite the fact that many Hispanics are now U.S.-born, they are clinging to the traditions of their ancestors, particularly in their food and beverage choices. According to The NPD Group, 65 percent of Hispanics in the Millennial generation say they always or often follow traditions when planning and serving meals. This proportion is as large as among Hispanic women overall.

At the same time, it’s important to understand that the Hispanic Millennial shopper of today is not just about Hispanic foods. They have adopted and increasingly appreciate diverse foods from not only other countries, but good old fashion “American” cuisine; though this is mostly a food service dynamic, Hispanic are very accepting of packaged varieties they can enjoy at home.

Today’s Hispanic is also in love with convenience making certain frozen and canned items commonplace in their shopping carts. Today’s Hispanic mom has no qualms about striking a balance between fresh, packaged and frozen.

Today’s Hispanics are also more likely than Non-Hispanic Whites, Asians and Blacks to strongly believe that store brands are a good alternative to name brands. In fact, Nielsen Home Scan data indicates that the top 20 store brand edible and non-edible commodity categories shopped by Hispanics and non-Hispanics align very closely.

In and of themselves, these changes should make retailers and food companies sit up and reexamine what they know and the strategies being implemented as a result. Now the question is where? The answer is, pretty much everywhere. Hispanics have been increasingly migrating from urban to suburban communities for some time. According to the Brookings Institute, in 2010, half of the foreign born population and an even greater share of US born Hispanics lived in suburbs. So, the old thinking of targeting Hispanic store sets concentrated in urban communities hasn’t been valid for a long time. Today’s Hispanic shops urban and suburban stores. This is a game changer for retailers and manufacturers chain wide. Understanding how the majority of today’s Hispanics are different and the fact they are shopping retailers chain wide should directly impact store execution chain wide. This is critical to winning a larger share of today’s Hispanics’ wallet.

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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