DON'T FORGET THE DATA

MICHAEL GARRY

As in most things, a retailer's ethnic marketing efforts can be helped considerably by technology and, perhaps more important, by the data that drives that technology.

Data, if it's good, can tell quite a bit about the demographic trends concerning ethnic populations. For example, according to ACNielsen, Schaumburg, Ill., Hispanics represent the fastest growing slice of the U.S. population, having grown from 8% in 1990 to 13% in 2000, and expected to more than double to 27% by 2060.

On a basic level, this data points to the considerable opportunity in the Hispanic market, an opportunity that many food distributors like Nash Finch, Albertsons and H.E. Butt Grocery are recognizing by opening stores catering to that population while expanding selections and marketing efforts geared toward Hispanics.

But to take these actions with confidence and precision, retailers need to employ more detailed demographic data and tools, which some are beginning to do. Take Spartan Stores, Grand Rapids, Mich., which opened a new corporate Family Fare store last month in Wyoming, a suburb of Grand Rapids with a 36% Hispanic population. Spartan employed a mix of technology and personal contact with consumers to determine the optimal product mix for the store, noted Sally Lake, vice president of sales and marketing for Spartan's corporate stores.

The overall approach, she said, was to talk to consumers in the community about their product needs and preferences, and then support that with research data and analysis, and finally corroborating point-of-sale movement data.

Initially, Spartan employed data from Hildalgo and Devries, Grand Rapids, to find Spanish-speaking households, who were called and queried in Spanish. (Others were interviewed in English.)

From there, Spartan conducted focus group interviews, again in Spanish and English. From the Spanish panel, the company organized a "Latino Consumer Council" consisting of six women representing different cultures within the Hispanic community, including Mexican, Puerto Rican, Dominicans and Cubans.

The council helped Spartan not only with the merchandise mix but also store layout, hiring, training, purchasing and signage, said Jeanne Norcross, Spartan's corporate communications director. As a result, the store has had "a phenomenal public reception," she said. The plan underscores the need to not treat Hispanics as a uniform community. "The only thing the different groups had in common was language," she said.

Pure data and technology also helped Spartan with the Wyoming store, as well as with other stores in recent months as the company has begun to step up its use of these tools, said Lake. For example, Spartan used software from MapInfo, Albany, N.Y., to develop maps delineating the ethnic make-up of the trading area, which helped with merchandising the store, said Lake. The MapInfo tool also "looks at which quadrants of the trading area are most important to reach with different ads," she said.

Spartan also uses MapInfo, along with internal resources, for site selection, Lake said, adding that Spartan is training more executives on the system.

In addition, over the past six months, Spartan has "unleashed" the use of data and tools from Spectra Marketing, Chicago, which enabled the company to "drill down" into the trading area of the Wyoming store, for example, to understand customers' product preferences and lifestyles. Spartan plans to incorporate POS data from ACNielsen to "maximize the value" of the Spectra data.

Spectra can also be linked to Spartan's space management tool, Spaceman, also from ACNielsen, for developing planograms for shelf sets and allocation. Spectra analytics are also applied to remodels of underperforming stores that have not been "reaching out properly to the community," said Lake.

Spartan, which breaks down its 100 corporate stores into eight geographical ad markets, is now beginning to group the stores into four non-geographical "cluster" groups based on "common bonds" such as lifestyles, demographics and product preferences, said Lake. These groups could have an impact on merchandise assortment.

Paul Sobolak, president of FKS, Clarkston, Mich., a consultancy that specializes in using demographics to support retailers, described a scenario highlighting the need for accurate demographic data that occurred at a major mass merchant a few years ago. The merchant "received complaints that it was not stocking enough African-American dolls in a Cleveland area store," said Sobolak. It turned out the area was 20% African-American, not 10% as originally calculated.

The demographics -- and inventory of African-American dolls -- was determined by a third-party system used by the merchandising department that was different from the approach taken by the chain's own market research staff, explained Sobolak. The market research staff, by contrast, looked at where shoppers lived by ZIP code and the composition of those ZIP codes in determining the ethnic make-up of the market. By plugging both sales and demographic information into a GIS (geographical information system), the chain could develop maps depicting correct demographics and ultimately inventory mix.

The chain eventually switched to the market research staff's data, validating the "worth of the market research department" in not only helping with site location but merchandising as well," Sobolak said.

The Marketing Side

In addition to product and site selection, demographics are playing a greater role in marketing-oriented systems. For example, Catalina Marketing, St. Petersburg, Fla., known for its ubiquitous coupon checkout printers, is beginning to use its technology to target the Hispanic market, said Trish Brynjolfsson, vice president, marketing.

Employing its frequent shopper database, Catalina is looking at 52-week purchase history, focusing on 4,000 key UPCs in over 170 categories to identify shoppers who fall into the "Hispanic lifestyle." To that list Catalina is overlaying demographic data obtained from third-party companies. The result is what Brynjolfsson called "buy-o-graphics."

Valassis Communications, Livonia, Mich., is engaged in "block group" (about 100 homes) marketing of Hispanics via its database of subscribers to Hispanic newspapers, overlayed with demographic information from Geoscape International, Miami. In one recent case, Valassis orchestrated a four-page coupon insert for a large Southeastern supermarket chain and three packaged goods companies, two mainstream, one Hispanic-oriented, combined with in-store display activity.

The insert appeared in May and June in targeted Hispanic newspapers, and was considered a success, said Joseph Lampertius, director of global business development, Valassis.