Asia Major

CAROL ANGRISANI

Wal-Mart delivered a strong message about ethnic retailing when it launched its first-ever Asian American ad campaign three years ago. And the message is even stronger now that the world's largest retailer operates more than 300 stores whose layout and merchandise mix reflect the population.

Located in areas with large populations of Asian and Pacific Americans, the so-called “Stores of the Community” carry essential products and brands that are staples of the traditional Asian diet and lifestyle.

Wal-Mart appeals to Asian Americans in other ways, including sponsoring the first South Asian Excellence Awards, supporting the achievements of South Asians in the United States, in May.

As of 2006, the Asian American segment numbered 13.1 million people, or 4.4% of the population. They represent about $459 billion in spending power.

The Asian American community may be smaller than the country's 44.3 million Hispanics, the largest ethnic group in the United States. But Asian American households possess the highest per capita income of any ethnic group. More than one-third spend more than $100 a week on groceries.

Wal-Mart's Asian American marketing campaign sought to tap into this powerful group in 2005 with advertising and public relations efforts aimed at the Chinese, Vietnamese and Filipino markets in Los Angeles, San Francisco, San Diego and Houston.

The original television, print and radio ads were developed in Cantonese, Mandarin, Vietnamese and English by IW Group, a Los Angeles-based Asian American advertising and marketing company.

“It featured real customers and culturally relevant consumer insights for each ethnic market,” IW group account director Betty Kao told SN.
The campaign has since grown to include the burgeoning South Asian market in the U.S., and now runs in all of California as well as in New York, Houston, Dallas, Chicago and Hawaii, according to Kao. Cable has also been added to the media mix.

Other retailers should follow Wal-Mart's lead, according to Tanya Raukko, managing director at InterTrend Communications, a Long Beach, Calif., communications agency that helps companies reach Asian Americans. The same goes for consumer packaged goods manufacturers. Despite the size and economic clout of Asian Americans, American food manufacturers, for the most part, don't take the group seriously, Raukko said.

“They're still not talking to Asian Americans yet, for some reason,” she said.
Much of that may have to do with them not understanding the market, Raukko noted. About 67% of Asian Americans are immigrants who have varying levels of acculturation and consumption habits.

Still, food plays a big part in their life, so food marketers and retailers should make more of an effort to use culturally relevant marketing tactics to reach them.

“Food is the way they connect back to their culture,” Raukko said. “It's a huge focus of their lives.”

While Asian Americans prefer fresh meat, vegetables and seafood, and view frozen and packaged products as inferior in terms of taste and nutrition, there's plenty of opportunity for retailers to make the Center Store attractive to the group.

For instance, breakfast food is appealing for unaccultured members of the demographic as they begin to adopt American food customs.

In fact, breakfast foods are the most frequently consumed CPGs among Asian Americans. For instance, more than one-third (38%) of Asian Americans said they eat cereal once a day, according to a 2006 InterTrend study. Similarly, 32% said they eat oatmeal daily; and 31% drink coffee at least once a day.

“As they start to acculturate, breakfast foods are the first things they adopt,” Raukko said.

While many Asian Americans shop ethnic grocery stores about once a week for authentic specialty items and unique produce, they tend to buy most American packaged products at mainstream stores. They are most receptive to products and brands that have aggressive marketing efforts that promote taste or health benefits. Nestlé, Häagen-Dazs, Dreyer's, Breyer's, Yoplait and Campbell's are among the brands that have high awareness among the group.

In terms of their shopping preferences, Asian Americans are very loyal to food brands. If they have a positive experience with a brand, they will continue purchasing it and recommend it to others, according to InterTrend.
While Asian Americans may claim that they are not price-sensitive, the InterTrend study found the opposite is true. Not only do they shop around for price comparisons, they seek out in-store samples and buy-one, get-one-free offers.

“They value discounts and promotions,” said Raukko.

Bret Vitek, international department manager at Jungle Jim's International Market in Fairfield, Ohio, agreed, saying Asian Americans respond well to case discounts. “We buy in large quantities and sell products by the case at a discount,” he said.

Vitek described Asian Americans as a major part of Jungle Jim's business. About 80% of Jungle Jim's Asian food purchases are made by members of the demographic.

“They know exactly what they want,” Vitek said.

To cater to promotion-sensitive Asian Americans, Jungle Jim's includes between six and eight Asian items on special each week, either via temporary price reductions or BOGO offers. Certain frequently purchased items such as coconut milk have everyday low pricing.

Among other promotional efforts, Jungle Jim's frequently samples such Asian items as dumplings, tofu and ethnic sauces.

While Asian Americans seek out fresh products, they also rely on packaged goods as ingredients for recipes made from scratch. So while they may not tend to buy a prepared curry sauce, they'll buy spices, dry powders and other ingredients needed to make the sauce themselves.

And don't forget the rice. That's their staple, and they buy a lot of it, so much so that Jungle Jim's sells between 28,000 and 30,000 pounds a week.

“We have a wide rice variety to cater to all the different [Asian] ethnicities,” Vitek said.

Although they're price-conscious, Asian Americans don't mind spending more and stocking up if it saves them money in the long run. Asian Americans typically buy a four-month supply of rice. Even now, with prices higher due to a rice shortage, they're still stocking up. A 25-pound bag at Jungle Jim's now costs $17.99, below average, but still about 30% higher than what it cost this time last year. Nevertheless, most Asian Americans do not have a problem buying several bags.

“Even now, in light of the world rice issues, they're still buying a four-month supply,” Vitek said.

Asian Americans are also responsive to holiday promotions. That's why Jungle Jim's promotional calendar features several Asian holidays, including Chinese New Year.

“There are so many different cultures in Asia, with their own holidays, so we can't hit every one of them,” Vitek said. “But we try to get the big ones.”
Even authentic Asian food stores rely heavily on promotions.

Lyndhurst, N.J.-based H Mart, a chain of 24 stores (with another slated to open soon and seven more on the way) caters to Asian American consumers — and mainstream consumers who like Asian food — with weekly specials and in-store samples.

“Everyone likes a discounted price,” H Mart's marketing manager, Jimmy Kim, told SN.

Customer demographics vary from store to store, but about 90% of H Mart's base is Asian American.

When asked what mistakes mainstream retailers tend to make when reaching out to the group, Kim said many don't understand that there shouldn't be a one-size-fits-all approach. Rather, retailers need to recognize the differences between Japanese, Chinese, Korean and the many other Asian cultures.
“It's important to understand the different nationalities, because each has a different culture and different foods,” he said. “Because Asian food consumption is based on their background, one Asian group may like a certain type of sauce while another doesn't.”

One way Jungle Jim's accomplishes this is by arranging its Asian department into nine Asian regions, including Korea, Thailand, Vietnam and the Philippines.

“There's a lot of crossover in the products that are carried in each section, but there's a focal point of items directly from the specific region,” he said.

38% of Asian Americans said they eat cereal once a day.
Source: 2006 InterTrend study