Home retailers cross marketing border
August 24, 2001,
New York — Hispanics have become more and more of a force over the past few years, and several retailers have already searched out ways to specifically target this group — a smart move since Hispanics control some 6.4% of U.S. buying power with a disposable income of $452.4 billion.
As a group they are expected to comprise 41 million people by 2010 — and 25 percent of all Americans by 2050 — and they number 32.8 million people, or 12 percent of the U.S. population, according to the U.S. Census Bureau. Their buying power has increased 118 percent since 1990, while the overall U.S. buying power has grown only 70.4 percent, according to a study by the Terry College of Business at the University of Georgia.
"This is a wake-up call for any consumer business that's been neglecting these markets," Humphreys said in a separate release. "While the largest corporations have been researching and pursuing minority markets for quite a while, small and medium-sized companies still have a window to tap into this growth segment before it's saturated with marketing."
Sears, The Home Depot, Kmart, JCPenney, and Wal-Mart have already realized the potential of this underserved segment of the population, spending a total of almost $75 million on Hispanic marketing last year, according to Hispanic Business.
Further, many retailers have created company positions to focus on multi-ethnic groups or have hired agencies expressly to work on marketing to Hispanics. Kmart, for example, just appointed a senior executive to oversee multi-cultural merchandising — naming Rose Reza to the post — as well as a chief officer of diversity, Randy Allen, both new positions.
"It's the retailer's job to know who their customer is. It's taking care of our customer," said Reza.
Though Kmart already focuses on different market segments, Reza sees an opportunity to build on that. She previously worked in Florida, formerly for Wal-Mart, and, as a result, is closely familiar with that demographic.
Now, however, she said, "We're creating stores in the community that reflect the shoppers in that community," resulting in a "true" neighborhood store that targets its products — be it food, greeting cards, music, apparel, etc. — to the area. And this includes not only the key markets Kmart is in, but areas not typically associated with a growing Hispanic population like Connecticut, Atlanta and North Carolina, for example.
Reza also plans to improve on Hispanic advertising and merchandising, including signage in the stores, and enlarging the span of Kmart's Spanish circulars. She also plans to grow the number of ethnic vendors with which she works.
Though Kohl's is a relative newcomer in targeting ethnic groups, it understands the importance of doing so, hiring The Vidal Group, a New York-based Hispanic marketing communications agency, in May.
"As a result of our national expansion and the new markets we were entering, it triggered a desire to better understand this market and tailor to its needs as it became a more obvious opportunity," said Julie Gardner, senior vp, marketing, Kohl's. Last week, the retailer opened two stores in El Paso, TX, which is 75 percent Hispanic, and it broke mostly television and radio ads, with some direct-mail pieces.
"El Paso is a pretty unique market," she said. "We'll learn from that and assess both existing and new markets to take advantage of that market."
And with Sears' latest campaign — "Sears. Where else?" — due to hit the airways Sept. 6, the company will include national television ads and consumer magazines to Hispanics, created by Mendoza Dillon & Asociados, Newport Beach, CA, Sears' ad agency for the Hispanic market.
But this is not Sears' first foray into the market. In fact, Sears began targeting this segment in the late '80's and early '90s, said Gilbert Davila, vp, multi-cultural management and partnership marketing, though it has certainly accelerated its efforts, especially since now 175 of its stores are located in Hispanic markets.
Sears has also taken the extra step of publishing its own Hispanic magazine called Nuestra Gente (Our People), which is celebrating its 10th anniversary.
Complete with an in-house editorial staff, the publication has evolved from the original "flimsy book with tons of Sears ads — looking almost like a catalog," Davila said, to the "true magazine" that it is today, with celebrity profiles, fashion and beauty articles and how-to pieces, as well as ads from such companies as General Motors and Proctor & Gamble.
Printed four times a year, around major shopping seasons such as holiday and Back-to-School, the publication reaches 800,000 Hispanics, both from Sears' cardholder mailing list and distributed free in certain store locations, and is the largest ABC-audited Hispanic publication nationwide. "It's a wonderful vehicle," Davila said. "We felt that we had this rich Hispanic database and [that] a magazine would be a way to reach them."
In addition, "broadcast advertising is one of the most efficient and effective ways" to target the Latin community, he said, which is why Sears is such a large advertiser in this market segment, in both television and radio.
Sears also tailors advertising to certain geographic regions when appropriate, he said. It will create more "generic Spanish" advertising campaigns when they will be nationwide, but for different regions, it will try to localize them, with such programs as grass-roots and event marketing.
Home Depot has catered to this market segment for about five years, mostly to make a technical business less complicated, said Ana Campo, director of multi-cultural programs.
"The home improvement business is not always an easy experience, in English or not," she said. "When you're talking about the home sometimes you're not sure of what you need. If someone speaks your language, you feel more comfortable."
About 250 Home Depots are located in high density Hispanic areas, and will have both bi-lingual signage and associates to help consumers. Home Depot also has launched several ad campaigns to send a consistent message to the Latin community through TV, radio, local newspapers and magazines, the latest being "Manos a la Obra" — "hands at work."
Burdines, Federated's Florida department store chain, advertises heavily to Hispanics, since 25 percent of its consumers statewide are Hispanic, a figure that grows to almost 50 percent in southern Florida, said Cary Watson, sr. vp, director of marketing. Broadcast spots are the most effective way to reach this market, he said, and it will reshoot a general market ad to reflect Hispanic touches.
Marketing to Hispanics should not be a consideration limited to cities such as Los Angeles, Miami, New York, Chicago and San Antonio, TX.
For example, "One in three or four people in Denver is Hispanic," said Armando Martin, Don Coleman Advertising, Southfield, MI, Kmart's ethnic marketing ad agency. So, although Colorado has only 1 percent of the Hispanic population nationwide, Hispanics are a major influence in that area.
Martin also gave the example of North Carolina. In 1990, 76,000 Hispanics resided in that state. Only 10 years later, that number has grown to 376,000. "You'd be hard pressed to find another group that is that large, with money to spend," he said.
"You can not take a cookie-cutter approach" when marketing to Hispanics nationwide, said Susanna Whitmore, director of sales of the Los Angeles-based multi-ethnic research firm Cultural Access Group. "If you don't talk to them, you will lose out to the competition that is [talking to them]. But you have to court them in a genuine way."
Hispanics also have different levels of "culturation," she added — or, in other words, how Americanized an individual has become.
Hispanics also tend to be younger than other groups — making the time ripe to cultivate brand loyalty now. Nearly 70 percent of U.S. Hispanics are under the age of 35, while for non-Hispanics the number is 50 percent, according to the website of the Association of Hispanic Advertising Agencies.
And their families are bigger: 30.6 percent of Hispanic families in 2000 in which a Hispanic person was the head of the household consisted of five or more people, compared to 11.8 percent of non-Hispanic families, according to the U.S. Census Bureau.
The avenues to reach ethnic groups are now in place, where before they were nonexistent. Twenty years ago, Hispanics were an important part of California, though the media structure wasn't there to reach them, Martin said. "Now if you advertise in Los Angeles on the general market stations — you've missed the boat. The top three radio stations are Hispanic."
Though Stein Mart doesn't have the ad dollars to concentrate much on Hispanics, said David Bothe, vp, marketing and advertising, the retailer does sometimes translate its print ads into Spanish in three of its Texas markets: Laredo, McAllen and El Paso.
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