Another in a series of previews of the 2005 Food Marketing Institute (FMI) Show…
One of the many challenges facing retailers in 2005 America is how to appeal to multicultural shoppers, who make up an increasingly large and formidable market.
Terry Soto, president/CEO of About Marketing Solutions, a California-based assessment and planning consulting firm that specializes in multicultural marketing, will be on hand at the upcoming Food Marketing Institute (FMI) Show in Chicago for a pair of close-up sessions examining this important issue. To get a preview, MNB engaged Soto in an exclusive e-interview.
MNB: Our sense is that the US supermarket industry has done a much better job catering to Hispanic customers than to other ethnic segments such as African-Americans and Asians. Do you think this is accurate?
Terry Soto: Yes, I believe your assessment is accurate. One reason is that Hispanics have had the limelight for the last several years as such much has been written about the opportunity and how to pursue it. Conferences address this regularly and there is a growing base of information and research (IRI/Nielsen), distributors and wholesalers providing product and the communities themselves are sources for employees that mirror the Hispanic communities in which chain supermarkets are located. This said, chain supermarkets are better at assorting center store and are still quite deficient in perishables areas.
Although the Asian market experienced the fastest growth in the 90’s, chain supermarkets are perplexed by this group because not only are the languages different, the food cultures also vary dramatically. This represents a knowledge (not much being written or researched yet), sourcing and customer service challenge for many retailers. Consider that where perishables are considered important among Hispanics – they are even more so among Asian cultures where freshness of produce and seafood are critical to authenticity and are shopped almost daily.
Merchandising towards African Americans has been improving in recent years, but there are still too many supermarkets that do not recognize that there are differences in African American food culture – not so much in the South but certainly the case in markets where they are not a majority. Here again neighborhood independents; often those that cater to Hispanics (and to a lesser extent Asians) do a much better job at recognizing and filling these needs). Only recently have companies like Glory Foods and Sylvia’s Soul Food been able to achieve distribution in chain supermarkets in Los Angeles, New York and Chicago. And supermarkets are challenged in the areas of perishables here as well with the varying assortment of offals, smoked meats, fresh seafood (catfish, crayfish, etc.) and produce that are specific to African American food culture.
MNB: There probably is a prevailing opinion that to cater to African American customers you have to build inner city stores, but that’s almost certainly an incorrect generalization. Do you think that the industry needs a bit of an attitude adjustment?
Terry Soto: Based on the market tours I have conducted, presence, while somewhat of an issue, is less of a problem than the quality of the stores that are being run by operators in inner cities to cater to African American shoppers. If I were to generalize what I’ve seen, it would be run down exteriors that appear as if the store were abandoned, security guards and cameras and bars around the stores, run down interiors, very poor lighting and bare shelves, meat counters, freezers, old produce. In essence, not the kinds of places you or I would like to shop in. As a result, African Americans often leave their neighborhoods to shop and often they find the next best thing in Hispanic and Asian independents – perishables again being the strongest draws. As a result, inner city stores may not generate expected sales volume and therefore, may not warrant investment – but this is clearly a catch-22 situation.
I saw several examples of this dynamic on a recent trip to Houston where a Fiesta store in a predominantly African American neighborhood was absolutely packed while the two to three other chain supermarkets stores I visited within a one to three mile radius were desolate – I have personally seen this scenario repeated in Detroit, Washington DC, Chicago, Los Angeles and other cities.
MNB: Is there a major grocery chain that you think is doing an exceptionally good job in terms of ethnic marketing? How about a smaller, independent company? Who are they and why are they succeeding?
Terry Soto: I think that Kroger’s Food-4-Less stores in Los Angeles do very well in terms of catering to every ethnic group. Although unusual for warehouse formats, they started opening carnicerias (service meat departments) and they do a great job in produce and in stocking ethnic brands. They also do a great job with staffing according to area demographics.
Rainbow Foods in Minneapolis, Pathmark in New Jersey, Farmer Jack (A&P) in Detroit, and Bi-Lo (Ahold) in South Carolina do nicely among African Americans.
As far as smaller independents, Ranch Markets in Phoenix does a phenomenal job as do several stores in Los Angeles: Vallarta’s, El Tapatio, Gonzalez Northgate, Superior Super Warehouse do fantastic jobs of catering to Hispanics in Los Angeles. Fiesta and Carnival do great jobs in Houston and Dallas. 32nd Market Street in Los Angeles is a fabulous example of an independent that caters successfully to Hispanics and African Americans and Asians. 99 Ranch Markets, Han Kook, Tawa in Los Angeles, Uwajimawa in Seattle, United Noodle in Minneapolis do great in the Asian Communities., Chatham in Chicago is a great example of an independent targeting African Americans. They are succeeding because they understand the food priorities and are authentic in the way they deliver them.
MNB: Is it a question of creating ethnic aisles that cater to these groups in-store, or this there something more profound called for?
Terry Soto: I believe that having an ethnic aisle is far from being sufficient. Retailers will not win these consumers in center store; where most supermarkets are falling down is in assortment and delivery of perishables. Most do not have the assortment and most are going to self service and this is contrary to how first generation immigrants and even African Americans shop.
If they don’t deliver the service departments, they can’t deliver the ambiance and the social- cultural aspect inherent in shopping situations back home - and if they can’t deliver the ambiance they can’t deliver the language and the cultural connection between consumer and the store.
MNB: What one thing do you think the industry does not know about each of those three demographics – African Americans, Hispanics, and Asians?
Terry Soto: With the orientation towards automation and efficiencies, the industry continues to ignore the degree of importance of in-culture and in language social interaction during a shopping trip. This is critical in these communities. So many retailers get caught up with ethnic aisles, and product integration and ethnic brands and that’s only half of the equation – I say it’s how the offering is delivered is just as important as the offering itself.
MNB: Is there an ethnic segment that at the moment is not on the radar screen, but should be? What is it and what do you expect from it?
Terry Soto: On home territory, I think that retailers who start doing a great job recognizing the food culture and diversity of the African American community and who deliver on store environments that demonstrate respect and recognition of this community will be well-rewarded. It is a rich food culture – it is the foundation of Soul Food, Southern, Creole and Cajun cuisines.
Separately, retailers need to start paying attention to the Asian communities in their trading areas otherwise they will lose them to independents just as they did Hispanics. Although Asians are a small proportion of the US population, it is the fastest growing and there are pockets that represent sizable business opportunities throughout the country.
Interestingly, independents that are already catering to certain ethnic groups are quicker to recognize emerging communities and are quick to source distributors to help them adapt their product mix – they are also quick to adapt their employee mix to help make those new groups comfortable in their stores. One such example, is a retailer that has catered almost exclusively to the Armenian community in Burbank and Glendale for the last 10 years and for the last 3 has successfully been catering to the growing Hispanic community around its stores through product assortment and employee mix.
The ethnic food opportunity is much bigger than what can be purchased by the growing ethnic populations. It is estimated that by 2007, the ethnic food category will be worth $75 Billion dollars and that three quarters of the spending will be driven by non-ethnic or mainstream consumers (that) are increasingly looking for new ethnic flavors.
Retailers who begin to think of the ethnic food opportunity in broader terms will benefit from the significant sales volume this sector represents - increasing interest from the mainstream consumer and satisfying a growing ethnic food consumer should be a top priority for retailers.
Terry Soto’s Close-Up sessions on ethnic marketing at FMI 2005 will be conducted on Sunday, May 1, from 11 a.m.-12 p.m., with a separate session taking place the same day from 12-12:45 p.m.
For more information about FMI 2005, go to:
http://fmishow.com
One of the many challenges facing retailers in 2005 America is how to appeal to multicultural shoppers, who make up an increasingly large and formidable market.
Terry Soto, president/CEO of About Marketing Solutions, a California-based assessment and planning consulting firm that specializes in multicultural marketing, will be on hand at the upcoming Food Marketing Institute (FMI) Show in Chicago for a pair of close-up sessions examining this important issue. To get a preview, MNB engaged Soto in an exclusive e-interview.
MNB: Our sense is that the US supermarket industry has done a much better job catering to Hispanic customers than to other ethnic segments such as African-Americans and Asians. Do you think this is accurate?
Terry Soto: Yes, I believe your assessment is accurate. One reason is that Hispanics have had the limelight for the last several years as such much has been written about the opportunity and how to pursue it. Conferences address this regularly and there is a growing base of information and research (IRI/Nielsen), distributors and wholesalers providing product and the communities themselves are sources for employees that mirror the Hispanic communities in which chain supermarkets are located. This said, chain supermarkets are better at assorting center store and are still quite deficient in perishables areas.
Although the Asian market experienced the fastest growth in the 90’s, chain supermarkets are perplexed by this group because not only are the languages different, the food cultures also vary dramatically. This represents a knowledge (not much being written or researched yet), sourcing and customer service challenge for many retailers. Consider that where perishables are considered important among Hispanics – they are even more so among Asian cultures where freshness of produce and seafood are critical to authenticity and are shopped almost daily.
Merchandising towards African Americans has been improving in recent years, but there are still too many supermarkets that do not recognize that there are differences in African American food culture – not so much in the South but certainly the case in markets where they are not a majority. Here again neighborhood independents; often those that cater to Hispanics (and to a lesser extent Asians) do a much better job at recognizing and filling these needs). Only recently have companies like Glory Foods and Sylvia’s Soul Food been able to achieve distribution in chain supermarkets in Los Angeles, New York and Chicago. And supermarkets are challenged in the areas of perishables here as well with the varying assortment of offals, smoked meats, fresh seafood (catfish, crayfish, etc.) and produce that are specific to African American food culture.
MNB: There probably is a prevailing opinion that to cater to African American customers you have to build inner city stores, but that’s almost certainly an incorrect generalization. Do you think that the industry needs a bit of an attitude adjustment?
Terry Soto: Based on the market tours I have conducted, presence, while somewhat of an issue, is less of a problem than the quality of the stores that are being run by operators in inner cities to cater to African American shoppers. If I were to generalize what I’ve seen, it would be run down exteriors that appear as if the store were abandoned, security guards and cameras and bars around the stores, run down interiors, very poor lighting and bare shelves, meat counters, freezers, old produce. In essence, not the kinds of places you or I would like to shop in. As a result, African Americans often leave their neighborhoods to shop and often they find the next best thing in Hispanic and Asian independents – perishables again being the strongest draws. As a result, inner city stores may not generate expected sales volume and therefore, may not warrant investment – but this is clearly a catch-22 situation.
I saw several examples of this dynamic on a recent trip to Houston where a Fiesta store in a predominantly African American neighborhood was absolutely packed while the two to three other chain supermarkets stores I visited within a one to three mile radius were desolate – I have personally seen this scenario repeated in Detroit, Washington DC, Chicago, Los Angeles and other cities.
MNB: Is there a major grocery chain that you think is doing an exceptionally good job in terms of ethnic marketing? How about a smaller, independent company? Who are they and why are they succeeding?
Terry Soto: I think that Kroger’s Food-4-Less stores in Los Angeles do very well in terms of catering to every ethnic group. Although unusual for warehouse formats, they started opening carnicerias (service meat departments) and they do a great job in produce and in stocking ethnic brands. They also do a great job with staffing according to area demographics.
Rainbow Foods in Minneapolis, Pathmark in New Jersey, Farmer Jack (A&P) in Detroit, and Bi-Lo (Ahold) in South Carolina do nicely among African Americans.
As far as smaller independents, Ranch Markets in Phoenix does a phenomenal job as do several stores in Los Angeles: Vallarta’s, El Tapatio, Gonzalez Northgate, Superior Super Warehouse do fantastic jobs of catering to Hispanics in Los Angeles. Fiesta and Carnival do great jobs in Houston and Dallas. 32nd Market Street in Los Angeles is a fabulous example of an independent that caters successfully to Hispanics and African Americans and Asians. 99 Ranch Markets, Han Kook, Tawa in Los Angeles, Uwajimawa in Seattle, United Noodle in Minneapolis do great in the Asian Communities., Chatham in Chicago is a great example of an independent targeting African Americans. They are succeeding because they understand the food priorities and are authentic in the way they deliver them.
MNB: Is it a question of creating ethnic aisles that cater to these groups in-store, or this there something more profound called for?
Terry Soto: I believe that having an ethnic aisle is far from being sufficient. Retailers will not win these consumers in center store; where most supermarkets are falling down is in assortment and delivery of perishables. Most do not have the assortment and most are going to self service and this is contrary to how first generation immigrants and even African Americans shop.
If they don’t deliver the service departments, they can’t deliver the ambiance and the social- cultural aspect inherent in shopping situations back home - and if they can’t deliver the ambiance they can’t deliver the language and the cultural connection between consumer and the store.
MNB: What one thing do you think the industry does not know about each of those three demographics – African Americans, Hispanics, and Asians?
Terry Soto: With the orientation towards automation and efficiencies, the industry continues to ignore the degree of importance of in-culture and in language social interaction during a shopping trip. This is critical in these communities. So many retailers get caught up with ethnic aisles, and product integration and ethnic brands and that’s only half of the equation – I say it’s how the offering is delivered is just as important as the offering itself.
MNB: Is there an ethnic segment that at the moment is not on the radar screen, but should be? What is it and what do you expect from it?
Terry Soto: On home territory, I think that retailers who start doing a great job recognizing the food culture and diversity of the African American community and who deliver on store environments that demonstrate respect and recognition of this community will be well-rewarded. It is a rich food culture – it is the foundation of Soul Food, Southern, Creole and Cajun cuisines.
Separately, retailers need to start paying attention to the Asian communities in their trading areas otherwise they will lose them to independents just as they did Hispanics. Although Asians are a small proportion of the US population, it is the fastest growing and there are pockets that represent sizable business opportunities throughout the country.
Interestingly, independents that are already catering to certain ethnic groups are quicker to recognize emerging communities and are quick to source distributors to help them adapt their product mix – they are also quick to adapt their employee mix to help make those new groups comfortable in their stores. One such example, is a retailer that has catered almost exclusively to the Armenian community in Burbank and Glendale for the last 10 years and for the last 3 has successfully been catering to the growing Hispanic community around its stores through product assortment and employee mix.
The ethnic food opportunity is much bigger than what can be purchased by the growing ethnic populations. It is estimated that by 2007, the ethnic food category will be worth $75 Billion dollars and that three quarters of the spending will be driven by non-ethnic or mainstream consumers (that) are increasingly looking for new ethnic flavors.
Retailers who begin to think of the ethnic food opportunity in broader terms will benefit from the significant sales volume this sector represents - increasing interest from the mainstream consumer and satisfying a growing ethnic food consumer should be a top priority for retailers.
Terry Soto’s Close-Up sessions on ethnic marketing at FMI 2005 will be conducted on Sunday, May 1, from 11 a.m.-12 p.m., with a separate session taking place the same day from 12-12:45 p.m.
For more information about FMI 2005, go to:
http://fmishow.com
- KC's View:
