Hispanic shoppers are doing a lot of their grocery buying in the mass market and club shopping channels, according to a recent quantitative survey. National manufacturers who do a big business with mass market players like Walmart and Target, as well as club retailers like Costco and Sam's Club, need to keep this top of mind when targeting Hispanic audiences — particularly if they wish to ramp up sales and achieve economies of scale within this sector.
The survey, which polled more than 3,800 Hispanic shoppers and more than 500 non-Hispanic shoppers, was designed to understand more clearly what these shoppers are thinking when they shop for groceries. Where do Latinos shop? How much do they spend? What do they buy? We sifted the information via an acculturation screen and benchmarked it against general market shoppers.
Hispanics are perceived as a niche market, but a large one, comprising some 17% of the U.S. population. Granted, there are cities (e.g., Los Angeles, Miami, Dallas) where these numbers skew much higher — some refer to these as "minority majority markets" — but if you look at this purely through a national lens, it comprises a cultural segment that still qualifies as a niche.
The “pain points” for Hispanic shopper marketers are diseconomies of scale, i.e., factors that add cost. The issue is simple: with a smaller population (and corresponding budgets), yet a similar fixed cost structure, Hispanic shopper marketing programs on a per store cost basis can sometimes be significantly higher than in the general market. When you start looking at 17% of a large national retailer like Walmart, however, suddenly those are quite impressive numbers. It's no longer 17% of a market that represents perhaps 10% of your volume but 17% of your total volume. That's huge.
Moreover, if you know that Hispanic shoppers over-index in your store (79% of Hispanics shopped at Walmart vs. 73% of non-Hispanics, according to the survey), then you should invest more of your dollars developing targeted Hispanic programs. In hard numbers, if you assume that 17% of Walmart's 4,281 U.S. stores have a majority of foot traffic that is Hispanic, that percentage works out to more than 700 stores, which is by no means a small shopper program. By comparison, a chain like Publix has 1,080 stores.
If you are a large manufacturer that seeks scale with Hispanic shoppers, think first about national chains. Think about developing custom programming in Hispanic stores. Start by looking at data from these stores (e.g., by category, brand, SKU) to determine if there are notable differences that call for alternative strategies.
Manufacturers may decide that rather than national shopping marketing campaigns, they prefer a more regional, focused approach that reflects retailer priorities, private label preferences, even weather patterns. The survey revealed that while mass market and club channels are the big sticks, when judged by specific regions the playing field tilts and grocery opportunities gain new significance. The reasons are partly structural, i.e., many retailers have regional dominance, which enables them to capture more shopper trips and dollars.
Beyond structural factors, there is an overlooked reason why grocery chains gain importance with Hispanics at the local level: deal-seeking. As Hispanics become less acculturated, they shop more for deals and consequently make more store visits. The survey found that Hispanics visit nearly three stores a week on average vs. 2.3 store visits a week by non-Hispanics. The survey also revealed a trend that pivots on shopping for perishables vs. non-perishables. With acculturation, the behavior of buying perishables at one store and non-perishables at another is more pronounced. A surprising 63% of non-acculturated Hispanics agreed that they tend to buy perishables at one store and non-perishables at another, more than double the 30% of general market shoppers who do the same.
Grocery buying among Hispanic shoppers at mass market and club channels is far more substantial than many shopper marketers realize. It's a phenomenon that's sure to continue to grow. If you are planning campaigns targeting this segment, enticing economies of scale can be achieved by ensuring that some combination of Walmart, Target, Costco, and Sam's Club are high on your shopping list.