Adjusting to New Realities

Every week brings new evidence of the changing face of America. New census data constantly reveals the growing and changing ethnic mix of the nation, mainly in the form of the burgeoning Hispanic and Asian populations. Increasingly we see reports of major cities that no longer have a majority group population and similar shifts in the statewide populations in California and Texas.

Those changes, like any shift among consumers, bring new challenges for retailers looking to keep their stores relevant to local communities. Grow With America: Best Practices in Ethnic Marketing and Merchandising, a 2002 study from the Coca-Cola Retailing Research Council, outlines many of the key steps companies must take to find success in this new market. The six critical steps outlined in the study bear careful consideration.

1. Retailers must learn about their ethnic customers to serve them better. This includes understanding key product choices that these new consumers desire and the need to find suppliers for these types of products. Plus retailers must determine how they want to serve the ethnic consumer and start by learning about the group’s food consumption profiles.

2. Define an ethnic merchandising look and organize to execute it. Retailers need to demonstrate commitment to customers through product positioning must organize to support the strategy and must understand how to adapt category management skills to these new demands.

3. Tailor offerings to appeal to target customers by understanding that it ‘s important to carry key ethnic brands in certain categories to have marketing relevance. This again requires commitment in the store and through the supply chain.

4. Establish relationships with the community by using marketing in the correct languages and demonstrating sensitivity to these shoppers’ needs. Part of this falls on store management and part on company management. Plus, buyers need to find and source products from local minority suppliers to build relations.

5. Recruit diverse staff members to reflect the ethnic and racial make up of the local population. This requires a new philosophy to retain these workers and to build the community relationships necessary for success among shoppers and workers.

6. And as with any strategy, build a marketing plan that communicates value at every level. Success here demands that plans are always held to a standard of relevance to all parties involved. While so many of these points are standard building blocks of success for any business, the nuance of the ethnic market make them more complex than ever. Grow With America is must reading for retailers in all markets where changing population trends are changing the face of shoppers, cooking and eating.

And as census data reminds us, those markets are everywhere.

Michael Sansolo
Research Director
Coca-Cola Retailing Research Council of North America

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One Response to Adjusting to New Realities

  1. guaya11 says:

    As lead consultant/author of this report, I can say that nine years later, the best practices Michael highlights are still very relevant and very valuable guides to retailers interested in becoming more relevant to not only the multicultural grocery shopper, but also the maintream grocery shopper who has an insatiable appetite for foods of a multitude of nationalities.

    I think now more than ever retailers have an opportunity to leverage the growing demand for ethnic foods not only in the perimeter and center store, but also in hot foods.

    It is surprising to me that more retailers haven’t taken multicultural markets more seriously as a growth platform when they represent billions in sales to Hispanic independents. In Los Angeles alone, the top five retailers generate over $5 billion dollars in sales with a fraction of the footprint. And to my point earlier, it is not unusual to see non-Hispanics shopping the perimeter and hot food sections of the Independents.

    In mid-June at the Consumer 360 Conference in Miami, Nielsen’s CEO David Calhoun told 1,400 retailer and CPG executives to spend 65 percent of their time figuring out their Hispanic opportunity because it is no doubt the single biggest source of growth for all companies in the U.S. in the short and long term.

    “The story here is that within the next five years, multicultural clients will drive 86 percent of the total growth on spending at retail and if you look at growth without these groups, you are only addressing 10 percent of the growth,” added Nielsen’s SVP, Claudia Pardo at the same conference.

    The gap is wide between the multiculturally influenced general market and the bulk of US retailers who can’t “see” the relevance in educating their game to new consumer market trends.
    In most cases, generational and cultural skews represent significant challenges for a lot of today’s retail executives. However, if you want your companies to remain relevant and in demand, you are tasked at this particular point in marketing and merchandising history to not only shed traditional views and ways, but to learn to understand and address cultural diversity and resulting shopper needs at the shelf.

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