Economic Impact of Hispanics in Independent Retail

The face of America is changing dramatically due to the growth of the Hispanic population and this translates to a tremendous growth opportunity for retailers and brand manufacturers across the country.

The U.S. Hispanic population is currently 52 million strong (17 percent of total population) and makes up more than 40 percent of the total population in a number of leading cities—including Los Angeles, Miami, San Antonio and others. The estimated total purchasing power of U.S. Hispanics exceeded $1.2 trillion in 2012, and is estimated to add $80 to $100 billion every 12-months to the U.S. marketplace.

Despite these gains, U.S. Hispanic shoppers remain disproportionately under-represented in almost every sector of the economy. There are several reasons for this:

1. Because the independent retail grocery channel is fragmented and difficult to measure, syndicated retail sales data undercounts an estimated 20 to 60 percent of purchases (depending on the category) made by Hispanic shoppers.
2. As a result, syndicated purchasing data for the Hispanic and other multicultural shoppers is often inaccurate, posing major challenges for marketers and corporations to estimate how much multicultural shoppers spend in the independent retail grocery stores, and accurately develop an ROI for their multicultural marketing initiatives.

To address this data gap and measurement issue, the Center for Multicultural Science and the National Grocers Association (NGA) formed a strategic alliance to conduct the first study to estimate how much the Hispanic shopper spends in the independent retail grocery channel.

This study was based on data collected for "The Economic Impact of Independent Grocers: 2012 study," published by the NGA, which estimated the total value of the independent retail grocery channel in the United States at $131.2 billion.

Key Findings

• Hispanics spent an estimated $23 billion in retail grocery stores in 2012, representing 17 percent of the total estimated annual sales of the independent retail grocery channel, which is commensurate with the Hispanic population in the U.S.
• Five states (CA, TX, NY, AZ, FL) generate 70 percent of the total Hispanic Independent retail grocery channel or $16 billion in annual sales. These five states represent approximately 75 percent of the U.S. Hispanic population.
• In the Top 10 Hispanic cities, stores in high Hispanic shopper areas (35 percent+ Hispanic population density) generated $1.4 billion in sales, or 77 percent of the total Hispanic purchases in independent retail grocery channel.

Project Director and In-Culture Marketing pioneer Isabel Valdés explains: “The Center for Multicultural Science Retail Study used an In-Culture methodology, which not only helped size the multicultural sales opportunity, but also uncover key shopper insights and purchasing patterns, providing retailers and suppliers with concrete, practical shopper insights.”

“Understanding the retail opportunity through an In-Culture marketing lens is critical,” Valdés added. “We can look at the opportunity from a national perspective; but the real richness and actionable insights come from the hyper-local In-Culture™ analysis. This is where the ‘rubber meets the road’ for retailers and suppliers.”

The study also conducted an In-Culture analysis of key Hispanic cities, including Los Angeles whose key highlights are listed below:

City of Los Angeles

• Some 88 percent of the total Hispanic independent retail sales were generated from stores in high Hispanic areas (35 percent+ Hispanic population density)—representing $462 million.
• Hispanic households are almost twice the size in high Hispanic areas (4.28) than in low Hispanic areas (2.45). Therefore, it is no surprise that the shopping basket is larger in those areas.
• On language, about half of Hispanics (49 percent) in high Hispanic areas prefer speaking in Spanish while 60 percent of Hispanics in low Hispanic areas prefer to speak in English. This data underscores the language differences among U.S. Hispanics, and that there is no single “one size fits all” approach in targeting Hispanics.

Marie Quintana, president of Tu Familia and former SVP of multicultural sales at PepsiCo, agrees. “The Center for Multicultural Science in-Culture retail study sheds light on the business opportunity at the hyper-local level—which is the key to drive growth for suppliers and retailers, alike.”

“As the U.S. marketplace is becoming increasingly multicultural, no one can dispute that growth will come from the multicultural consumer, now and in the future,” says Dr. Jake Beniflah, executive director of the center for multicultural science. "And that means a lot bigger shopping baskets, and larger bottom lines for retailers and suppliers who look to target the Hispanic and other multicultural segments—In-Culture."