RETAILERS FIND HISPANIC MARKETING KEEPS GETTING TRICKIER

LUCIA MOSES

NEW YORK -- Terry J. Soto has lived most of her 41 years in the United States. She attended college and business school here, and of course, speaks fluent English. Yet when she cooks, she turns out dishes from her native Ecuador.

Soto, a marketing consultant whose recent clients include Coca-Cola, Kraft Foods and Hy-Vee supermarkets, is a living example of the complexities of marketing to Hispanic grocery shoppers.

"There is a belief that when Hispanics acculturate, [supermarkets] can approach them and service them and deal with them as they would any other consumer," she said.

Soto's observations, along with new research, indicate that general assumptions regarding the rate of Hispanic acculturation are more complicated than first believed. There are lessons that retailers who want a place at the table and in the pantry of the booming Hispanic population will have to learn fast.

Retailers with a history of serving Hispanic shoppers know that doing it right requires more than just putting in an ethnic section. It takes knowing the shopping and consumption habits of their market and emphasizing fresh, authentic products throughout the store, and not just on special holidays like Cinco de Mayo.

"You have to treat Hispanics just like your mainstream market," said Frank Gonzales, owner of the Fiesta IGA chain of seven stores in southeastern North Carolina, where the market is 70% Hispanic.

Because of the popularity of outdoor cooking, Fiesta will cross merchandise Spanish meats for fajitas and tortillas, and jalapeno peppers, with charcoal and other outdoor cooking products all summer long. High-quality fruits and vegetables that are common fare in Mexico and Central and South America also will be in ample supply.

At Cardenas Markets, with 12 locations in California's Inland Empire, with a 75%, mostly Mexican-born, Hispanic customer base, shoppers will find large produce aisles, 60- to 100-foot meat counters, and sit-down restaurants where they can eat hot dishes prepared on-site, said Steve Vallance, general manager.

The perimeter reigns at Hispanic-format markets supplied by Unified Western Grocers, a wholesaler for independent retailers, said Luis de la Mata, president of the Southern California division of Unified, based in Commerce, Calif. The hot food sections are popular with unacculturated Hispanics, who have a tradition of shopping as a family.

"It would not be unusual for a family to go to the supermarket and be there two or three hours," he told SN. What's more, "your financial level does not necessarily identify the cultural level you have."

Even acculturated Hispanics "never really lose their family ties and taste for a lot of traditions."

New research supports this thinking. In a recent study that examined Hispanic grocery shopping habits, direct-mail giant Advo, the Food Marketing Institute, Washington, and the New American Dimensions consulting firm segmented Hispanics into four groups, ranging from least to most acculturated. Subjects were weighed by the amount of life spent in the United States, age at immigration, and proficiency in English and Spanish.

In a phone survey with 1,650 consumers, they found that relatively unacculturated shoppers were big coupon users, a trait also associated with the most acculturated, and that many highly educated, high-earning Hispanics still maintained a strong cultural identity.

"There are acculturated people in all these segments, so if you just look at acculturation, you miss a lot," concluded David Morse, president of New American Dimensions, Los Angeles.

Consider the retro factor, too. Young, acculturated Hispanic adults are discovering their roots.

"You're not going to be able to assume that acculturated Hispanics are part of the mainstream," said Sharmila Fowler, director of new business development, Cultural Access Group, an ethnic marketing service also in Los Angeles, whose client list includes Albertsons, Pick 'n Save and Wal-Mart Stores.

That may help explain another finding of the study: Bilingual grocery advertising had the highest recall among Hispanic shoppers. Rather than being turned off by bilingual signs as they acculturate, as retailers might fear, researchers found that shoppers continue to appreciate it.

"What this really tells us is that as long as you're bilingual, you're reaching the broadest audience," said Joella Roy, senior marketing research manager for Windsor, Conn.-based Advo.

Food retailers have a lot at stake in getting the formula right, because the opportunity before them is huge. U.S. residents counting themselves as Hispanic represented 13% of the population in 2003, and are expected to account for 24% by 2050, according to the most recent U.S. Census.

Thirty-nine million strong, an increase of 74% since 1990, Hispanic consumers are a supermarket retailer's dream: They wield more than $652 billion in annual buying power, by one estimate, and spend more on food than non-Hispanic shoppers.

Having awakened to this opportunity, traditional-format retailers are expanding their Hispanic product selections, introducing bilingual or Spanish-language signs, or rolling out new formats targeting the Hispanic shopper.

Retailers are growing aware of the importance of brands like Goya and La Preferida, while manufacturers are latinizing their brands and launching new Hispanic-aimed ones. Haagen-Dazs' Dulce de Leche-flavored ice cream and SC Johnson's Glade Cleaner air fresheners, which it's looking to expand to home cleaners for the Hispanic market, are just two examples.

Yet for those new to the game, convincing an ethnic population that they "get it" can be difficult. Consider Nash Finch Co. The Minneapolis-based chain just announced it would abandon its Hispanic format after two years, shutting down three of its Avanza stores and seeking a buyer for three others. Observers speculated that a lack of understanding by Nash Finch of the ethnic population in Chicago, home to two of the ailing stores, contributed to Avanza's demise there.

Whatever the problems Avanza had, knowing the market is critical. But Soto worried that supermarkets' organizational structure could be hampering their efforts to reach Hispanics.

Just when they need to be doing more to target ethnics, she said, retailers are discouraging manufacturer-driven seasonal promotions that could help them do so. Retailers prefer to execute them chainwide, rather than in select stores, but manufacturers aren't willing to pay the cost of doing so. As a result, manufacturers are diverting those promotional dollars into advertising, she said.

As retailers increase their efforts to cater to Hispanics, do they risk alienating the rest of their market? That remains a big concern among operators, but one some consultants believe is unfounded.

"People who object and complain are typically in the minority, and are older," Soto said. "We have to train our staff and give them ammunition with which to respond."

Some companies have found a solution in "positioning [their ethnic sections] to their customers as an enhancement." Kroger, for one, tells its employees, essentially, "It's a new world out there, and we are there to be inclusive and serve our community," she said.