4. Define and commit. There is no clear formula
matching level of penetration of a particular
ethnic group to the amount of play a store
should devote to ethnic beverages. But what
is clear is that whatever level is determined
appropriate requires 100 percent commitment
from management on down.
Carnival’s relocation of ethnic beverages is one
successful example of commitment throughout
the chain. Resetting a store to integrate ethnic and mainstream products is a hallmark of a more complete commitment
to embrace ethnic clientele. The move also addresses acculturation by accommodating
the range of beverage tastes in one place.
In the chain’s Minyard and Sackn’ Save banners, particularly those in primarily
African-American neighborhoods, Latino brands remain in an ethnic
aisle and assortments of Dr. Pepper, Coca-Cola and Pepsi are larger.
In three Carnival stores the retailer offers Fruterias mixing custom
blends of fresh fruits – an approach that complements, rather than
cannibalizes, bottled sales. “We would put them in every Carnival if we
could,” says Chavez.
Unfortunately, commitment has been a problem for many mainstream
grocers. “Ethnic budgets are still the first to get cut on an annual basis,”
says Kylee Hall, Nielsen product manager for Spectra’s HispanIQ.
It’s not uncommon for retailers to hire ethnic specialists without giving
them the power to implement changes or to integrate ethnic products
into category management. For example, “Bashas went in the direction
of creating their own division, Food City Stores, in order to bypass the
potential bureaucracy which might have limited their ability to implement
a true Hispanic strategy. That requires customization at a time when the
industry’s direction was achieving greater efficiencies through centralization
and deploying strategies on a mass level,” says Terry Soto, president
of About Marketing Solutions, a Burbank, Cal.-based Hispanic strategy
consultancy. For instance, smaller, minority vendors have limited capabilities
and it can be difficult for buyers and category managers to incorporate
them into day-to-day business processes. “For example, ethnic buyers
and merchandisers and large retailers don’t often see eye to eye on volume
measurement systems so it is difficult for these vendors to make the
case for product authorizations,” Soto adds. Successful ethnic marketing
means finding a way to overcome these barriers.
5. Source authentically. While major U.S. manufacturers have deeper
pockets and more sophisticated information technology, it’s important
to source authentic brands from customers’ countries of origin as well.
Specialty and ethnic distributors can offer expertise here.
“In the past, retailers have welcomed with
open arms the big brands, and still do,” says
ViVA’s Castillo. “But now they’re talking also
to little brands to make a big impact.”
While it’s tempting to dabble in ethnic beverages
at first, that’s not always the best approach,
warns Ross. “We’ve faced a lot of retailers who
were skeptical at first, and wanted one or two
flavors, not ten. But as they add flavors, we’ve
never seen a decrease in the rest of the brand.
Flavors tend to be incremental,” tapping into
their target customers’ desire for variety.
In addition to ethnic brands, ethnic consumers
often prefer the flavor of international
formulations of some global brands. Carnival,
for example, has long stocked Mexican Coke,
a sweeter formulation.
6. Price correctly. Some retailers make the
mistake of pricing ethnic goods as specialty
products, failing to understand the role some
play as a staple of the diet. According to the
Coca-Cola study, for example, Hispanics typically
have larger families and often drink signifi
cant amounts of juice in a day, so selling a
wide variety of tropical flavors in gallon sizes and
pricing them for purchase in large quantities is
essential to winning that customer’s loyalty.
“Chains need to understand that when it
comes to the perimeter of the store, the Hispanic
opportunity is in volume, not margin – that’s one
thing independents understand well,” says Soto.
Stepping Up
Knowing best practices is one thing; reaching
them can be quite another. Retailers must overcome their reticence to extend ethnic marketing
past ethnic aisles and the occasional holiday
and commit at the level dictated by their customer
base.
“If your supermarket is in a trading area where
the ethnic population is at least twenty percent
higher than in the total market,” then it’s probably
time to step up efforts, says About’s Soto.
Retailers often start with ethnic sections and
specific events, but as the program grows and
ethnic traffic picks up, these strategies help take
them to the next level:
• integrating products with mainstream
categories
• bilingual signage
• hiring ethnic workers
• extended programs/events/tie-ins
• ethnic advertising, promotions
• resetting the store to emphasize qualities
the dominant ethnic group favors
• sponsoring community events and
supporting local ethnic organizations
Changing the feel of the store can be a hurdle
for many retailers. “This is where they shy off
because they don’t want to offend” mainstream customers, notes Linda Gonzalez, CEO and
president at ViVA Partnership.
Retailers who “get it” and make broad changes,
such as HEB, Carnival and Food City, are
winning business from those who do not.
Embracing Ethnic Opportunity
The need for ethnic marketing can no longer be
ignored. The good news is, many of the changes
retailers make to accommodate the preferences
of ethnic consumers will please the gamut of
customers, from broader assortments to fresh
juice bars to increased customer service. Some
beverages can help span the range; when Bookoo
Beverages created Jugo with 99 percent juice, for
example, they knew energy drinks were trending
well across most ethnic groups, and formulated
and named the drink accordingly.
“Jugo means juice, but it appeals to a number
of people,” says Paul Herrera, advertising manager.
“Even if you don’t know Spanish, it seems
like a word you should know.” Separate English
and Spanish advertising and promotional programs
are driving both groups to Jugo. Similarly,
Pepsi first introduced its Manzanita Sol in Mexico,
then brought it into the U.S..
Do ethnic marketing right, and it can boost
ethnic sales while pleasing mainstream customers
as well. “Retailers who compete effectively
for these customers will be in a position to profit
from this growth,” according to the Coca-Cola
report. “Those who ignore the changing makeup
of the marketplace—or make only token efforts—
will not find success.”