-By Mehgan Belanger and Don Longo

With more than $1 trillion in spending power up for grabs, retailers and marketers didn't let the current poor economy dissuade them from attending this year's Hispanic Retail 360 Summit, which took place from Aug. 9 to Aug. 11 in Las Vegas.

On the first day of the conference, attendees viewed four leading Hispanic-focused retailers in the Las Vegas market — grocer La Bonita, Mariana's Supermarket, electronics retailer Best Buy and value grocer Food 4 Less, a Kroger chain. Led by the summit's master of ceremonies, Armando Martín, managing partner of XLEdge; his partner, Manny Fields; and Barbara Soto of api plus, the tour-goers saw two authentic Latino grocers, an example of a major grocery chain (Kroger) that does a great job of matching its footprint to the local community, and a giant superstore chain (Best Buy) staffed with young, bright and enthusiastic young people steeped in the language and culture of their community.

Hispanics and the Economy

An examination of the effects of the recession on Hispanic consumers and their shopping habits was in focus as Daniel Aversano, product leadership, Nielsen Consumer Panel Services for The Nielsen Company, discussed the debt ratio of Hispanics. Because Hispanic consumers tend to carry less debt and pay for items with cash, one theory is Hispanics may actually be less affected by the downturn in the economy. Conversely, because Latino customers also are being impacted by high unemployment and the downturn in the construction industry, and generally have lower incomes than non-Hispanic customers, they could be impacted to a greater degree than the general market, he noted.

However, the picture is not that simple, Aversano explained, because the consumer is in the middle of the picture, and is influenced by the media, which has painted a gloomy picture of the economy. What really matters is consumer perceptions of the economy and their resulting actions, he said, noting purchasing power is increasing for some consumer groups, while July retail sales grew and fewer jobs were lost in July than in previous months. "It's starting to look like recovery," he said.

While Hispanic unemployment is higher than the general market, at 12.3 percent, it has shown a leveling off in the past two months. Meanwhile, consumers were de-leveraging — during the economic boom, total consumers spent money they didn't have, and now are saving their dollars or lowering debt, which is expected to continue once recovery occurs. However, since Hispanic consumers don't hold as much debt compared with the total consumer group, they are a better consumer to target during the recovery, since they aren't de-leveraging or chaining their purchasing habits to the extent of the total consumer group, Aversano said.

Looking at the impact of the economy on a granular level, 41 percent of Hispanic consumers said they're eating at home more often for the breakfast daypart, while 60 percent said they are eating dinner at home more often, he said, noting the emphasis is now on what consumers need, not what they want.

"Value is king," Aversano said. "When push comes to shove, you have to cut."

When asked what they would cut spending on if they had to, Hispanic consumers said they would reduce money spent on energy, food, clothes, transportation, entertainment and travel.
"True economic recovery will not begin until Hispanics are convinced it is here," he concluded.

Supplier Diversity

A general session on supplier diversity, presented by Michael Byron, VP of supplier diversity for Minneapolis-based grocer Supervalu, focused on "educating people to think differently." Byron explained how supplier diversity can connect companies to their communities, noting that the "true meaning of supplier diversity is how we enrich lives of people in the community, and create jobs in its areas."

If done properly, supplier diversity allows a company to differentiate its business model, along with supporting sales, gaining access to new markets and surviving the changing economy.
"Look at it as a competitive advantage," Byron said, adding there are supplier diversity opportunities in construction, legal and marketing.

Indeed, the current economic crisis means that marketers have to prove their value every day, according to Reinaldo Padua, assistant VP, Hispanic Marketing for Coca-Cola North America. In a presentation enlivened with videos showing how Coke connects on a cultural, emotional and functional level with the Hispanic consumer, Padua showed how the giant soft drink brand stays relevant to its customers even in the current economic environment.

"We're in more than 200 countries — that's more than the number of countries that belong to the United Nations," said Padua, who emphasized that Coke's success is heavily reliant on its retail partners.

One TV commercial that wowed the audience showed a blue-collar Hispanic father visiting his surgeon daughter. "It doesn't matter if you are from Cuba or Mexico, or if you're first generation or second generation, we are all looking for a better future," said Padua, after showing the "Dreams" commercial. While the Dreams campaign appeals to all Hispanics, Coke also developed special programs tied to World Cup soccer and Spanish-language TV telenovelas. Padua noted that in 2010, Coke will take the World Cup (the first ever held in Africa) to new heights.

Following the general session programs, Hispanic Retail Excellence Awards were presented to Wal-Mart for its Supermercado de Walmart, and Mi Pueblo Food Centers. In presenting the awards, Convenience Store News Editor-in-Chief Don Longo said the goal of the awards is to "recognize leadership of serving the wants and needs of Hispanic shoppers."

Innovation is Key

A dynamic panel of retailers led by business strategist Art Turock — and including representatives from three major regional grocery chains, an award-winning independent and the largest electronics superstore chain in the nation — discussed best practices and innovation in addressing the needs of Hispanic shoppers.

Daniel Herrera, marketing manager for Salisbury, N.C.-based regional supermarket Food Lion, spoke about the retailer's five-year planning process, which has resulted in a major remerchandising program to turn 59 of Food Lion's 1,200 supermarkets into Hispanic stores.

For something of this magnitude, "it has to be a corporate initiative," said Herrera. The company also visited Hispanic supermarkets in several markets, including Houston; Atlanta; Raleigh-Durham, N.C.; and Richmond, Va.

But a real key to rolling out the program was conducting both qualitative and quantitative customer research."“As valuable as focus groups are, you can't make decisions just on the basis of 12 people,” said Herrera. "You have to do the quantitative research as well."

Marco Orozco, who spoke earlier in the program as part of the Best Buy keynote, pointed out that it’s "all about foundation and fundamentals." And those fundamentals start at the store level, he noted, citing the idea to create an experience for Latino mothers around a culturally relevant holiday like Mother's Day. "That was an initiative that was instigated by employees," said Orozco.

However, Orozco also warned that "innovation has to be measured and provide a return on investment." As an example, he recalled how Best Buy had much less success with a program designed to help its customers learn English. "We tested some language software programs, but we found that the community didn't look to us to do that, so we stopped it because there was no ROI."

"I was told to go out and get the best and the brightest to work for Hy-Vee," said Jose Amaya, director of diversity at West Des Moines, Iowa-based Hy-Vee supermarkets, and a former Ohio State professor. Amaya acknowledged that, like Food Lion, Hy-Vee is a late entry into Hispanic retailing. But, he said, the Midwest grocer found itself in the "eye of a perfect storm" between the growth of the Latino population and the company's ability to address the health-and-wellness concerns of that community.

Knowing that Latinos index higher than the general population on such health issues as obesity, lactose intolerance and heart disease, Hy-Vee launched an extensive health-and-wellness program. The grocer now has a dietitian working in 173 of its 225 stores — with plans to place one in every store. The company's pharmacists work extensively with these dietitians to advise Latino customers on how to eat healthier, said Amaya, noting that local and organically grown produce is selling "quite well" in stores where this is happening.

Tracy Krogstie, marketing and promotions manager for Jewel-Osco, spoke about several ways the Chicago-area grocer is bringing its "Cosa Buenas a la Vuelta de la Esquina" ("Good Things are Just Around the Corner") campaign to life, including a direct- mail piece. "Hispanics actually respond well to direct mail about grand openings," said Krogstie, who noted that coupon redemption rates are much higher when the offers are positioned as a "gift" rather than a discount.

She also noted that teaming with key vendors on in-store events is important. Jewel has done in-store demonstrations with Unilever, and autograph signings with Hispanic sports and telenovela stars with both Anheuser-Busch and General Mills.

Working with nontraditional partners has also been effective for Jewel. Examples include programs with Mexicana Airlines (discounts) and Dodge Chrysler (coupon for oil change). Krogstie also noted that eight of Jewel's top Red Box DVD rental kiosks are in Hispanic markets.

Juvenal Chavez, founder and president of San Jose, Calif.-based Mi Pueblo Food Center, cautioned general market retailers trying to cash in on the Latino market that "the easy thing to do is to cut your prices, paint the store bold colors and say you're doing business with Hispanics. It's not so easy. It is very challenging."

Chavez, who arrived in the United States on Independence Day in 1984, opened his first 4,000-square-foot Hispanic grocery store in 1990 and now has 10 full-size stores in northern California, said he's still learning. "There is a wisdom in knowing you don't know all the answers," he said. "You must never stop learning."

The 2009 Hispanic Retail 360 Summit attracted more than 350 leading retailers and marketers interested in growing their business with Latino consumers. The summit was hosted by Convenience Store News, Progressive Grocer and Nielsen Business Media. Presenting sponsor Coca-Cola was joined by other sponsors, including Geoscape, Café Bustelo, Anheuser-Busch and Western Union. Next year's Hispanic Retail 360 Summit will be held in Scottsdale, Ariz., in August 2010. For more coverage of Hispanic Retail 360, including video tours and interviews, visit www.progressivegrocer.com/360.