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Multiculturalism is changing the face of communities large and small, across the United States. Unfortunately, for many within the grocery channel, the authentic ethnic market remains elusive.
At least part of the problem is that past paradigms are clouding the vision of many decision-makers in the grocery space. They still hold to an outdated belief that ethnic consumers are disenfranchised, and too poor to be thought of as potential core contributors to the bottom line. The facts, however, clearly call for a new archetype.
Recently I was engaged by a major grocery retailer to help it to explore incremental opportunities in the multicultural market. I soon discovered that within a two-mile radius of its 1,250 stores, located from California to New York and from Seattle to Miami, all growth during the past 18 years came from ethnic populations.
Obviously this vast network of stores was no longer serving the same markets it was when it first opened. The second-largest age group in this operator's trade area now is between the ages of 25 and 34, and is 48 percent ethnic. Additionally, a remarkable 52 percent of the 1- to 14-year-olds in this broad market slice are ethnic.
We've come to expect major metropolitan areas such as New York, Los Angeles, Chicago, and Miami to have dense "minority" populations, but two cities in Utah symbolize the extent of this ethnic transformation. In the 2000 Census, Salt Lake City and Ogden reported 18.9 percent and 23.6 percent Latino penetration, respectively. Count on those numbers to have migrated upward significantly by 2010.
The Food Marketing Institute released a report in May 2005 indicating that Hispanics spend $133 a week on groceries, compared with $92.50 by other shoppers, an impressive $40.50 difference. Hispanic shoppers will make twice as many trips to the grocery store as non-Hispanic shoppers.
The simple explanation for this gap is that Hispanic moms are committed to using fresh products in their daily cooking routines. Indeed, Hispanics could be considered poster children for the fresh concepts being adopted by grocery chains everywhere, if grocers would acknowledge that connection and learn to exploit it successfully.
Over the course of a year, that $40 difference between the weekly grocery expenditures of Hispanics and non-Hispanics adds up to $2,106. Over a 10-year period the spread becomes $21,060.
This represents a considerable financial upside, which should justify grocers' reallocation of corporate budgets and resources to more effectively pursue the Hispanic shopping dollar. Too often, however, the multicultural initiative within retail organizations is paid lip service, but lacks the teeth of real endorsement to spur the sweeping changes required to win and retain new ethnic customers.
Your passport to the undiscovered U.S. multicultural market is as simple -- and as crucial -- as this:
-- Starting at the corner office, embrace the minority community with passion. It could well represent the conduit to achieving double-digit growth.
-- Integrate multicultural vision into the general corporate business strategy, and allocate resources against growth market opportunities.
-- Recruit an executive management team that reflects the demographic trade area.
-- A fourth requirement is patience. Even if you closely follow the above formula, it takes years to build a successful multicultural franchise.
Don't be swayed by pessimists who try to downplay marketplace realities. If you're skeptical about the opportunities presented by the multicultural market, there will never be sufficient data or case studies to change a predetermined mindset. Conversely, if your interest is to exceed shareholder expectations and be a leader in this changing commercial environment, then you're on your way to discovering new revenue streams in this as yet undiscovered country.
Armando L. Martin is devoted to helping retailers maximize their ethnic initiatives. To that end, he has worked in retail marketing and merchandising in the grocery industry, discount department store channel, and financial services industry. He can be reached at [email protected].