TARGETING ETHNIC SHOPPERS

CHRISTINA VEIDERS / Additional reporting: JOEL ELSON, MATTHEW E. EVANS

The acquisition of ethnic beauty care companies by the big cosmetic giants such as L'Oreal and Revlon signals the potential that ethnic health and beauty care holds for retailers.

Charles Todd, HBC buyer at C.B. Ragland, Nashville, Tenn., echoes what many retailers are saying. "The category is big business, and booming."

The demographics alone tell a compelling story. The proportion of African-Americans is expected to grow at a moderate rate from 12.6% of the total U.S. population in 1995 to 15.4% in 2050. As of Nov. 1, 1997, there were an estimated 34 million African-Americans in the United States, according to the latest U.S. Census Bureau figures.

The ethnic-HBC-buying household spends more annually per shopper across all outlets, between $4,766 and $4,907, than the average U.S. household, according to ACNielsen, Schaumburg, Ill.

According to Geri Duncan Jones, executive director of the American Health and Beauty Aids Institute, a Chicago trade organization, African-American income is expected to hit well over $450 billion this year. She said that 10% of all African-American shopping dollars are spent on HBC, vs. 8% of the general market.

Examining the buying power of Hispanics, Jeffrey Humphreys, director of economic forecasting for the Selig Center for Economic Growth at the University of Georgia, projected $383 billion in buying power for a population that is already 11.4% of the total U.S. population. From 1990 to 1999, Hispanic buying power soared 84.4%, from $208 billion in 1990. This group spends a higher proportion of its after-tax income on housing, personal care products and services than the general public, he said.

Therefore, major chains such as Kroger Co., Pathmark Stores, Publix Super Markets, Albertson's and American Stores Co. as well as other retailers such as Wal-Mart and Walgreens are reaching out to these diverse groups in their merchandising efforts and product offerings.

Pat Bailey, vice president of marketing for Pro-Line Corp., Dallas, said a strategy supermarkets can use to effectively reach ethnic HBC consumers is to better understand their shopping motivations.

Pro-Line publishes a newsletter that points out that "urban African-American shoppers place a special premium on their hair and appearances, and are constantly in search of answers and solutions."

These shoppers, said the publication, also tend to engage sales persons in questions 65% of the time compared with 54% for their white counterparts.

The newsletter went on to say that "African-Americans equate shopping with a major entertainment experience. The exhilaration of shopping means they over-index the general-market population in purchasing bath and shower gels, cologne/body sprays, nail polish, body powder, dental products and deodorants."

Bailey said supermarkets that target the ethnic customer must position ethnic HBC products in ways that make them more accessible to customers in their stores.

For example, a display of ethnic items can be set up on a front endcap during the major holidays when ethnic shoppers are usually at the supermarket. These time periods are Easter, Mother's Day, Memorial Day, Fourth of July, Labor Day, Thanksgiving and Christmas.

Supermarkets also need to reposition the back-of-the-store ethnic section and move it forward to a front-end aisle so that the consumer can access the products more easily.

Stores with a 16-foot set should carry the top-selling 224 ethnic HBC items. A store with a 4-foot section should carry about 100 of these items from hair care, shaving and skin care, Bailey said.

"The biggest challenge in selling these products is letting people know that we have that section set aside," said Sam Richardson, HBC director at Harps Food Stores, Springdale, Ark. Harps has small ethnic sets in three of its stores. Todd of C.B. Ragland said the biggest challenge is keeping up with the many new entries in the market. "A lot of different hair styles require different chemical products, and finding the space for these means pulling out slower-selling items and filling the space with newer introductions," he said.

Tammy Rowe, HBC supervisor at Wade's Supermarket, Christianburg, Va., agreed that there has been a proliferation of new ethnic HBC products. In choosing products, Rowe said, Wade's relies on its Fleming distributor.

"Our biggest challenge is keeping up with the trends," said Verdie Henderson, HBC buyer for Minyard Food Stores, Coppell, Texas. "It's kind of faddish," she added.

Many of the retailers SN interviewed on the growth of ethnic HBC are managing these departments through their distributors.

"A big advantage of working through a distributor is the supplier knows what is selling well in different areas. There are different areas that an item may be strong in, and it may come from a local pocket. The distributor is familiar with those areas," explained Jim McCarty, HBC buyer at Brookshire Grocery Co., Tyler, Texas.

For McCarty, the biggest challenge is getting merchandisers to give the category the amount of space needed to do a better job. It's also important to have a strong presentation in the best area of the store, he added.

Bailey of Pro-Line agreed. "In terms of cultural diversity it's important for food retailers that carry ethnic HBC to give the products high visibility, especially during the dominant times ethnic shoppers are in the store."

She further stated that expanding into urban markets is very lucrative, and tapping into this requires a sensitivity to, and understanding of, the urban consumer.

Retailers such as Shaw's Supermarkets, East Bridgewater, Mass., are beginning to realize the importance of understanding ethnic shoppers. When the chain opened its New Haven, Conn., store earlier this year, executives met with 45 different ethnic community representatives to find out what customers expected to find in the new store, said Bernie Rogan, a spokesman for Shaw's.

Pathmark Stores, Carteret, N.J., also has discovered this through its new Harlem Pathmark store, opened this spring. The shopper demographics of the store are 50% Hispanics, mostly Puerto Rican, and the remainder mostly African-American.

"You may want to categorize a group of people as Latin American, or Caribbean, but, in fact, each of the subgroups within that category has certain product-buying patterns," said Rich Savner, Pathmark director of public relations.