Retailers are always on the hunt for consumers with the most growth potential – and few populations have a higher future for growth than U.S. Hispanics.
Presently, active Hispanic households will account for about half of the country’s population growth in the next five years, spending an average of $2.17 million in their lifetime, outspending white non-Hispanic households by more than $600 million. As the non-Hispanic white population ages and their fertility rates remain low, Hispanics will represent an increasingly large share of growth in population and spending.
But while many retailers have some understanding of their future influence, many lack a baseline understanding of their buying habits, to identify and reach potential shoppers on the medium of their choice.
The first mistake is thinking that one general mix of channels for one Hispanic population applies to ALL of the Hispanic population. Hispanics are multifaceted, geographically dispersed and complex in their brand affiliation, and these complexities must be respected and appreciated by retailers. Understanding these complexities will allow campaigns to be successful and for brands to build long-term relationships.
The key in determining these nuances is a combination many factors, but there are two key channel-related criteria that apply to large subsets of the Hispanic population:
First, Hispanics over-index on mobile
When it comes to shopping online, 64 percent of Hispanic shoppers used mobile devices as part of the “pre-tail” shopping process, checking out their resources and options online before they visited a store to buy something. 45 percent of Hispanics use their phones to go online more than they use a computer. Don’t make the mistake of assuming that only millennial Hispanics are online; Hispanics of all ages are over-indexing on mobile, particularly when it comes to consuming digital media.
Second, Hispanics are over-indexing on social platforms
Studies have shown that Hispanics interact more with authors, artists and brands through social media, which should be a signal to marketers that this is where they need to focus their efforts. Digital media is the language that they speak, thus brands must target them with personalized ads on digital platforms.
But where should a retailer get started? The first step in identifying these nuances is to quantify the specific market opportunity. For example, one of our client’s designs targeted media campaigns for a national furniture retailer. To demonstrate how much money is spent by Hispanics on a variety of products, they map a 5-mile radius around each furniture store location, sharing the percentage and number of Latino residents within that area. These maps, coupled with projected 2015 spending on furniture helped solidify the investment opportunity that Hispanics represented. In many of their stores, nearly 50 percent of the dollars spent on furniture is spent by Hispanic consumers – and it’s often spent differently based on their ethnicity and how acculturated they are.
The second step is to examine certain key demographic criteria that highlight differences in spending patterns and media habits. This often includes years in country, level of household income, location and country of origin. There are major differences within Hispanic populations among people based on how long they have been in the U.S. and how integrated with mainstream culture they have become. In many cases, low-acculturated people are looking for foods and food items that remind them of home, typically referred to as “heritage brands.” Individuals who are more acculturated are looking for different brands and stores as they gain income and stature.
By identifying race or ancestry of a particular community and then looking more closely at these consumers for such socio-economic factors as income, education, language preferences and even the level of acculturation, marketers can be target these consumers with offers and products that better resonate.
To do so, we have a scale known as Hispanicity, which helps to segment the Hispanic population by their affinity with American culture or their home culture. We find that associating the population on the Hispanicity scale leads to clues into how they consume media, including their life state. While Generation Z (those under 18 today) are predominantly digital media consumers, those in Baby Boomer (born 1945-64), Generation X (born 1964-1980) and Y (Millennial; born 1981-1998) are still consuming a fair amount of traditional over the air and print media. The recently immigrated adult may just be getting himself on his feet may respond to more traditional forms of advertising such as television, print and radio. The consumer who has lived in the U.S. his entire life is much more accustomed to American culture, thus mobile ads would be better targeted at him.
Hispanics are shopping via all outlets, all the time. They’re a sophisticated group of shoppers who use their resources wisely to compare options and find the best deals. They place great value mobile and spend more time on their devices than many other consumer segments. Marketers are slowly learning the intricacies of Hispanics, but they need to pick up the pace as more and more Hispanics join the population. After all, with an estimated $1.5 trillion in spending power, Hispanics have a lot to offer both today and increasingly into the foreseeable future.
Cesar Melgoza is the CEO & Founder of Geoscape