CHICAGO -- Retailers who embrace Hispanic shoppers now are poised to reap tremendous benefits in the ensuing years, a Target Corp. executive said.
Roberto Estrada, the retailer's senior group manager, marketing, said manufacturers and retailers alike should begin taking steps to understand the "Hispanic paradox," a series of mistaken impressions Anglo operators have of this fast-growing ethnic market.
"Don't think that one particular appeal to a category or a preference for a particular product applies to all," Estrada said.
He noted that most Hispanics in the United States are straddling two worlds. This realization has helped Target develop a system that classifies stores by the number of ethnic customers they draw.
For example, units with a heavy percentage of Hispanic shoppers are called AAA stores and stocked with the largest selection of products that appeal to targeted shoppers.
The ratings go on to include AA- and A-level units, which have the fewest ethnic shoppers, and therefore, the least amount of product, signs and merchandising materials aimed at a particular ethnic group.
"Hispanics want the same product attributes as the general market, but they respond better to cultural cues," Estrada said, referring to the importance of in-store programs as part of an umbrella ethnic strategy.
One important misconception that retailers have yet to remedy is the relative wealth of Hispanics today. Estrada said statistics show that as a group, all Latinos spent $690 billion in 2004 and had an average household income of $44,300. Individual earnings hovered near $40,000, he added.
Communicating marketing or product messages may not be as complicated as it seems. Estrada said conventional wisdom maintains that each Hispanic subgroup requires its own program. He disagreed, saying that using language common to all is adequate to speak to shoppers.
"There are actually no Spanish dialects," he said. "Spanish is a language."
Estrada acknowledged that the subgroups retain much of their cultural heritage after immigration but are bound by common elements such as language.
"Overall, 70% of Hispanics identify Spanish language as one of the most important cultural aspects that they want to retain," he said. "Four out of 10 Hispanics prefer to use English."
While this might seem like a contradiction in the making, it reveals an opportunity for retailers and manufacturers to communicate in either language, he added.
"Advertising in Spanish might have a higher retention rate, but they do enjoy watching [television] programming in both English and Spanish," Estrada said, citing statistics indicating that 54% of Hispanics watch English-speaking programs.
In order to decipher the mixed signals the Hispanic marketplace sends out, Estrada recommended that companies speak with one voice. In other words, they should rely on a single department, preferably in-house, to create materials not only for Hispanic consumers but the company itself.
Estrada recalled from his long retail career one case of mistaken translation, in which a response from a human resources office regarding a healthcare option -- "You have enrolled in a default plan" -- was literally translated into "You are participating in a rebellion," a sentence that has very special implications for many Hispanics.
Even Target's own value proposition can be translated five different ways, Estrada said. By focusing on Latin influences already in the United States, in song and fashion, for instance, American retailers can build a relationship that engenders trust and warmth.
"Translate the idea, not the words," Estrada said.
He addressed an industry gathering at the fifth annual Shopper Insights In Action conference, sponsored by the Institute for International Research.