CPGmatters (July 2006)
How CPGs Can Help Grocers
Step Up Hispanic Initiatives
By Terry Soto
CPG companies have been investing heavily in Hispanic market intelligence. Also, supermarket retailers have come a long way in their quest to attract and retain Hispanic shoppers. Unfortunately, many of the retail efforts have been hit and miss.
The resources retailers need to make intelligent decisions and implement targeted Hispanic programs are available from CPG companies for the asking. However, little progress can be made unless a retailer’s corporate culture is supportive and receptive to aligning with Hispanic market needs and until a retailer’s infrastructure can support the required alignment across its operations – from corporate to the store.
A couple of years ago, I led a food retail consulting project which resulted in a report entitled Grow with America: Best Practices in Ethnic Marketing and Merchandising. I interviewed the top ten CPG companies with the most progressive and aggressive Hispanic programs, as well as several Hispanic food and beverage manufacturers. Subsequently, I also interviewed and visited over 40 chains and independent retailers across the country.
With the manufacturer interviews, I wanted to:
- Gain an understanding of the types of Hispanic programs being developed,
- Gain an understanding of the type of investment and resources being allocated to Hispanic trade programs.
- Learn about sales experiences when taking these programs to retailers,
- Learn about the challenges CPG companies face when working with retailers to gain support for their Hispanic programs, and
- Identify “best in class” Hispanic-oriented retailers.
Based on extensive research investment in the Hispanic market, CPG manufacturers have the market insight to create integrated Hispanic “pull” programs that have proved very successful in driving volume when implemented correctly at retail. These research tools include sizable Quantitative and Qualitative primary Hispanic market research studies, syndicated Hispanic market research by notable companies such as Simmons, Yankelovich and Scarborough, sales measurement tools by industry standards, AC Nielsen and IRI, and geo-marketing tools such as Hispanic IQ from Spectra and Geoscape.
Yet, while these resources and resulting retail programs represent tremendous upside opportunities for retailers wanting to attract Hispanics to their stores, obtaining retail support for these programs is not always strong.
We learned from manufacturers, trade associations, publication editors, and others close to the industry that retailers are challenged on several fronts when attempting to target Hispanics, including:
- Commitment from top-level supermarket management to make Hispanic marketing a priority is rather limited.
- Management resources dedicated to driving Hispanic programs are relatively scarce.
- Hispanic buyers and merchandisers are often just “consultants” with little power to make decisions to impact the business.
- Efficiency-oriented operational models make it difficult for supermarket chains to customize assortments and promotions to meet the needs and preferences of Hispanic consumers.
- Product assortment and buying decisions are often driven by mainstream category management models rather than by market specific metrics.
- Data mining of Hispanic consumer purchasing patterns is limited and is often relegated to vendors.
- Hispanic programs are often tactical, rather than strategic, and are often driven at the local level rather than integrated into company strategies.
- Hispanic marketing efforts typically lack continuity and are based on short-term, revenue-generating promotions and events often funded by vendors.
- Investment in Hispanic marketing and market research is limited and focus on understanding the culture is limited.
- The industry’s workforce at corporate is still very homogenous, and diversity initiatives related to staffing and working with minority vendors are still uncommon.
CPG companies wanting to gain support for their programs will need to take a step back and create partnerships at the top and establish an ear for taking an objective and methodical look at the Hispanic market opportunity long before bringing Hispanic programs to the table.
By helping retailers take a more strategic approach to their Hispanic business, CPG companies will help retailers:
- Achieve alignment between its value proposition and the Hispanic consumer.
- Truly understand the Hispanic composition and profiles in its trading areas.
- See what they’re up against competitively in their trading areas.
- Identify appropriate minority vendors to fill in Hispanic assortments.
- Create mechanisms to communicate Hispanic programs internally and ensure solid implementation at store level.
- Strengthen their ability to communicate Hispanic programs across touch points, including store-level employees, point of sale, customer service, and retail websites.
That is the only way that CPG companies can help retailers realize what it takes to implement solid Hispanic programs, help them see the advantages of the partnerships and the programs they bring to the table, and ultimately help retailers achieve a more competitive position among a consumer group that has increasing food shopping choices.
The bottom line: CPG companies need to step in and help retailers start taking a strategic and holistic approach to targeting Hispanics. Otherwise, piecemeal efforts by either vendor or retailers will continue to produce piecemeal and suboptimal results.
Terry Soto is a strategy consultant and author of “Marketing to Hispanics – A Strategic Approach to Assessing and Planning Your Initiative.” She can be reached at firstname.lastname@example.org.