Hispanic Shoppers: Influencing Retail Channel Preferences & CPG Category Performance

   On any given weekday, millions of households head out to the Grocery Store to replenish on essentials. Hispanic households and shoppers are no different. Regardless of whether the shopping occasion occurs at an independent Hispanic chain, a major national mass merchandiser, a convenience store stop or a dollar store visit, the story is essentially the same. In the past, we were able to acquire some fairly accurate insights on Hispanic shopping habits which to an extent enabled retailers and CPG brands to project when and where this consumer group would buy at least from a topline level. These information blocks became irrelevant and obsolete as the 2008 economic downturn dramatically altered long standing shopping habits and the frequency of retail channel visits in part due to the unprecedented urgency in value driven buys that catered to broader cross cultural consumer groups and the unforeseen expansion of the dollar retail channel. In this time frame we have seen some important changes in the detail of qualitative information methods obtained from Hispanic shoppers but are often dependent on face to face in-store product interaction a/o store intercepts which are usually limited on timing constraints and content depth.  Another disadvantage is that this information typically needs to be cross referenced with quantitative exercises to validate the insights. This is especially true in the context of a more diversified Hispanic Consumer ecosystem fueled by demographic factors.  

     So what happens when Shopper information detailing the frequency of retail channel visits overlaps with product specific purchasing information vital for effective Category Management practices begin to appear in the world of Latino shoppers? Let’s take a look at some top-level changes of how Hispanic Shoppers will significantly influence the growth or decline of specific retail channels and how this will affect how key CPG categories assess, plan and execute their future go to market execution.

 What key conclusions can we extract as takeaways? In my view, they’re 6 basic ones to consider and are:

• Supply Chain Efficiency: A key driver is to effectively juggle supply and demand variables is to be in a better position to operate in cost efficient scenarios where innovative inventory management practices maximizing value and profitability are in place. This is a crucial point for both brands and retailers where their interdependence and ultimate mutual success have never been more evident regardless of the channel.
• Digital and Mobile Influence: While this point was not extensively analyzed in this writing, it remains a crucial element because of the extensive interaction Hispanic audiences and shoppers have every day with these mediums.  It’s crucial for retailers to engage with Hispanic consumers because of the frequency they register in online behaviors including         pre-purchasing behavior, mobile usage at retail and big ticket buys made online in various product categories.
• Brand & Retail Media Strategy focused on Segmentation and Locality: Most Mass Merchandisers and CPG Brands have missed a golden opportunity by insisting on National media messaging rather than taking more regional and local data driven decisions in approaching their Hispanic communication strategies and customizing their efforts. As segmentation starts happening in regional a/o local scenarios, efficiency in costs are often obtained and are usually accompanied by better balanced media performance measurements that benefit both brands and retail partners.
• Convenience, Dollar, and Drug Channels will continue to grow: As Hispanic Millennials and Generation “Z” take center stage in the world of Shoppers because of their larger numbers; they will also be a crucial factor in the growth of these channels as they shop for the fulfillment of the “On-The-Go,” “Value-Driven” and “Health, Beauty and Lifestyle” aspirations. 
• Ethnic Independents, Carnicerias & Bodegas. Consolidation Trends? Driven by the realities of rising operating costs and reduced margins in key Center Store categories, the Independent Hispanic Chains, Carnicerias and Bodegas in many markets will need to consolidate and merge in order to remain competitive and survive vs. Mass Retailers and Dollar Stores. A key advantage for these retailers is that they have much better differentiated peripheral store areas that include authentic produce, meat, bakery and seafood sections and have been successful in retaining Hispanic shoppers over the years. 

• Mass Merchandisers & Local Grocery Chains. At a crossroads? There is no question that these retail chains have been successful in gaining traction with Hispanic Millennials shopping for price values in several Center store categories. However, as Dollar Stores have also gained traction with Hispanic shoppers, the question these larger organizations have is how to remain relevant and attractive to Hispanic shoppers. A key learning could come in understanding why some major and highly respected National and Regional retailers who attempted to start Hispanic themed banners  failed to achieve any significant Hispanic shopper franchising.

DISCLAIMER:  The views and positions stated in this article are only the author’s and do not necessarily reflect the positions and the opinions of Vilore Foods Company.