CHICAGO -- Ethnic merchandising can be tricky especially if the retailer doesn't really know or understand what motivates his ethnic customers, a panel of retailers said here during a Food Marketing Institute workshop session on improving ethnic marketing and merchandising programs.
"We've been in business nearly 100 years serving a population in southern Texas that's heavily Latino," Scott McClelland, chief procurement officer for H.E. Butt Grocery Co., San Antonio, said, "but as we expanded in Houston, I found there was a lot we didn't know.
"We thought we'd be able to transplant what we were doing in San Antonio to Houston, but we learned Hispanics in Houston were less acculturated, with more recent immigrants from the Caribbean and South America. As a result, we realized we weren't as good as we thought we were, and it required us to make a new commitment to serve those populations as best we can."
In seeking ways to serve African-American shoppers, H-E-B asked one of its category managers to develop a personal care set -- based primarily on supplier input -- then brought in African-American employees to critique it, McClelland said. "We had to redesign it three times and keep adding different items before we finalized the set, because we were missing major items because we just didn't know what we didn't know."
As part of the chain's effort to try to appeal to an ethnic consumer who may be less affluent, H-E-B tried an experiment in which it asked five category managers to try to live for one week like low-income shoppers, limiting their family food budgets to $20 a week to simulate the spending limitations of consumers with incomes of $20,000 a year.
"It proved to be a tremendous learning experience for us about entry-level price points," McClelland said.
"One of the managers thought it would be a good opportunity to save money," he told SN after the meeting, "but she found it was difficult finding inexpensive cuts of meat and choosing whether to buy bananas or apples."
The session used as its taking-off point a study by the Coca-Cola Retailing Research Council of North America, which projects a growth in the ethnic population -- encompassing Hispanics, African-Americans and Asian-Americans -- to 50% of the U.S. population by 2040, compared with 25% in 1990 and 32% today.
Following up on the study's findings, Ric Jurgens, president and chief administrative officer of Hy-Vee Supermarkets, Des Moines, Iowa, said it's important to hire and promote a diverse staff so retailers can tailor merchandise to the needs of local customers.
"We're seeing an influx of Hispanic shoppers in some of the small towns we serve, and they buy a lot of groceries, so we have to learn how to appeal to their needs," Jurgens explained.
According to Bobby Ukrop, president of Ukrop's Super Markets, Richmond, Va., retailers need to be good listeners to develop a successful ethnic merchandising program. "We've rekindled our focus to become good listeners," he said, "but we still have a long way to go."
Pursuing ethnic marketing is "good business, and it's good for society," Ukrop said, "and being proactive can make a store more appealing and make people feel welcome when they shop with you."
In an effort to "fill in the gaps to learn what we don't know that we know," Ukrop said he intends to take the study back to his company and share it with key leadership "so they can talk about it and take action at six of our stores serving heavily ethnic populations."
Jurgens expressed a similar thought. "For us as a company, we're not sure what we will take away from the study," he said. "Our company has a lot of autonomy, so we'll put the report out to our store directors and let them determine the takeaways."
Jurgens said the process of developing an ethnic merchandising program is more than simply event-marketing. "It's not about holding a Cinco de Mayo sale or setting up sections with some signs on the shelves. It's a matter of finding out what customers want and then putting someone in charge to make it an effective section."
Terry Soto, president of About Marketing Solutions, Burbank, Calif., helped conduct the research for the study. In her talk here she outlined six "Best Practices" the report recommends retailers adopt if they hope to merchandise successfully to a multicultural consumer base. Among her suggestions:
Think like your ethnic customers. "Don't rely solely on information from suppliers, and don't rely on your ethnic staffs because they may not have all the answers," she said.
Define the ethnic merchandising look you hope to achieve and then organize to execute it. "Do the strategic research first, before you execute," Soto said.
Tailor your offerings to appeal to your target customers. "How you offer your assortment is just as important as what you offer," she explained.
Create a store culture that enhances the shopping experience and connects with the community. "Nothing will help you deliver a more positive store experience than interaction with the customer," she said. "The language in which you choose to communicate will determine whether or not you make that connection."
Recruit and retain a diverse staff to serve your target customers. "Recognize that developing the strategies for hiring, training and retaining a multicultural staff requires the same insights and disciplines as those required to deliver the right product assortment," Soto said. "Adapt human resources methodologies to meet the needs of the culture, and accept that you are creating the foundation for a whole generation of ethnic supermarket professionals."
Develop a marketing plan to communicate your value proposition at all points of customer contact. "Don't follow the pack when it comes to community events. What you do locally, even on your own parking lot, will speak volumes about your commitment to that community," she said.