Many supermarkets may be shortchanging themselves when it comes to selling health and beauty care products to African Americans.
Retailers should be looking more seriously at how to improve their African American HBC sections, according to industry experts contacted by SN.
Minorities in North America are gradually becoming a majority. For example, African American women control $403 billion in buying power, according to 2005 numbers from the Selig Center for Economic Growth, University of Georgia, Athens. Out of this, they spent $6.5 billion on beauty and personal care products at a growth rate of 28% over the past five years.
"It's all about looking and feeling your best," said a nonfood executive with a major Southeastern chain. "With many African Americans across all income levels, self-image and preservation is an important part of who they are and who they aspire to be," he said.
"If you don't have your mind wrapped around African American HBC, you're really making a mistake and you're missing an important market," said Jim Wisner, president, Wisner Marketing Group, Libertyville, Ill.
African American women will visit the grocery store 21.3 million times in a week compared to 19.2 million times by Hispanic women, according to 2005 statistics from Mediamark Research, New York. Spending on HBC products by African American women is also growing more than five times faster than the general market (28% vs. 5%). Michelle Ebanks, president, Essence Magazine, New York, revealed these statistics to SN from a study it commissioned titled, Window on Our Women (WOW) II, a segmentation study on the African American woman.
Common products in supermarket HBC sections include relaxer kits, oil sprays, shampoos, gels, lotions, shave powders, and accessories such as doo-rags, picks and pins, experts told SN.
What is needed to drive growth in this market is a comprehensive, consumer-centric marketing approach, as outlined in the GMDC's Multicultural Marketing study, according to Roy White, New York-based vice president, education, for the GMDC Educational Foundation, Colorado Springs, Colo.
"I don't believe a small, special section will make a powerful enough statement to the customer base. A total store approach is necessary. Information gathering and sensitivity to cultural relevance is vital as a foundation, and careful attention to outreach, mix, promotion and the value of celebrations are key activities," White told SN. "It will be important for stores and chains to walk the walk, talk the talk and really commit to multicultural marketing, especially the African American market, to realize the potential."
Studies have shown that HBC items are more important to African Americans than to any other population segment, particularly hair and skin care products. According to the 2005 GMDC study on ethnic HBC and general merchandise, the most important areas of HBC for retailers to understand are beauty care, hair care and cosmetics because these categories differ both culturally and physiologically for African American consumers.
African Americans drive sales in HBC mainly because of their need for specific products that cater to their physiological differences, Wisner said. He also said that from a cultural standpoint, there is a greater emphasis placed on the importance of style and grooming.
"That appears to mark more of a cultural difference more than anything else for women in particular. The whole notion of beauty care is very important and very significant," Wisner said. "How you look and dress for certain occasions, and make yourself up and the color of your hair tends to be a more culturally important issue than it is in other communities, and it's reflected in the sales."
The GMDC Multicultural Marketing study found that although African Americans represent 13% of the population, they account for 30% of hair care sales in the country, White said. Ethnic-specific products are a $1.6 billion market with ethnic skin care products accounting for $118 million in annual sales, according to the GMDC study.
"These categories are starting to show some renewed energy," Wisner said. "One driver is when you get into skin care, certainly aging baby boomers are going to drive a lot of these categories, but what you also have from a demographic shift is that the three fastest-growing segments of the population over 50 are Hispanics, Asians, then African Americans."
Retailers are perking up their ears to this segment more now than ever before, analysts said.
"Based upon the response we got from the multicultural study, retailers are recognizing this growth and responding to it with their offerings," White said. "There seems to be a high interest in multicultural marketing, and the numbers are driving it."
"These numbers show the strength of African American women, who in many ways are still a growing, yet underserved market," Ebanks said.
Analysts expressed the same sentiment that retailers should be paying attention to this section because of the growth in numbers. "It's getting so large that it's not that they should just be paying attention to it, it's an absolute necessity at this point," White said, referring to the statistics from the Selig Center.
It's a demographic segment retailers can look to for HBC growth, said Todd Hale, senior vice president, ACNielsen Consumer Insights, Schaumburg, Ill. "Just the sheer opportunity in terms of population growth from that segment of the population is much greater, so in the long term, catering to African American consumers gives them the opportunity to fuel growth into the next several years," Hale said.
Tom Tyree, president of TWT Distributing, Charlotte, N.C., a prominent supplier of ethnic products, agreed. "There are more African Americans today than there ever have been. They have more money than they've ever had before." Tyree said he believes if business is down in this segment, retailers need to reconsider the selection of products they're carrying.
"I think the biggest issue is retailers identifying they actually have that customer and allocating the amount of space they need for that customer," Tyree said.
According to Dan Spears, director of HBC and GM, Ingles Markets, Black Mountain, N.C., African American HBC products have been in Ingles' stores for about 20 years now with its biggest sections in Atlanta stores. Relaxers and oil sprays have proved to be popular.
Family Dollar stores, headquartered in Charlotte, N.C., has been carrying African American HBC products for the past 15 years. Rick Siliakus, vice president and general merchandise manager, said the stores have seen healthy growth over the past year with hair care products being the most popular.
Siliakus told SN that Family Dollar stores dedicate 4 to 12 feet of space to ethnic HBC, depending on store location, assortment and amount of products. Promotions involve advertising in coupon books and circulars.
Many retailers, like Ingles and Family Dollar, depend heavily on distributors like TWT Distributing, not only for a selection of products, but also for merchandising and promoting.
"Being in that business and that being their focus, [TWT has] more time to be in tune with what is in demand in that arena, so we rely on them a great deal for planogram suggestions and product mix," Spears told SN. "They pretty much have their fingers on the pulse."
Walgreen Co., Deerfield, Ill., recently rolled out a new exclusive ethnic beauty care line called Dr. Jan Adams Women of Color. The line was launched at the end of September and, according to spokeswoman Tiffani Bruce, Walgreens has promoted the product through a media campaign, public relations outreach and its national Sunday newspaper circular.
For a major Southeastern chain, a nonfood executive said that promotions work extremely well around key events and holidays throughout the calendar year, with people wanting to look their best.
"Its all about knowing your consumers, their needs and when," he said. "Retailers should be paying attention to this section because it is an opportunity to engage your consumers while building loyalty, increasing basket size and improving profitability."
Skin Care for Men of Color
Skin care is becoming increasingly important to African American men as well, according to the findings of the Multicultural Marketing report from the New York-based Educational Foundation of GMDC, Colorado Springs, Colo.
Combined sales of personal care products to African American, Hispanic and Asian American men are expected to increase nearly 20% in the next four years, bringing the value up to $1.7 billion by 2008. Because of physiological differences, African American men are a strong market for specialty men's skin care products, GMDC found.
"There has been a lot more focus on men's products, which I'm happy to see now," said Tom Tyree, president of TWT Distributing, Charlotte, N.C., a prominent supplier of ethnic products.
Manufacturers are also targeting men with their products, using male celebrities in advertising. Sources believe this will be a trend in African American HBC for the coming year.
"In this market, as well as across the market, there's a trend towards having a more affordable or a more mass market availability for these spa-like types of treatments such as the facial treatment, microdermabrasion and the light replenishing cream that you've seen in other product lines," Tiffani Bruce, spokeswoman for Walgreen Co., Deerfield, Ill., told SN. -- AMY SUNG