Three years ago, when apparel retailer Bench opened its doors at Serramonte Center in Daly City, Calif., most Americans had never heard of the chain.
But the Philippines-based Bench is very popular in its home country, often drawing comparisons to Gap. The 1,257-square-foot store at Serramonte Center marked its foray into the U.S. market with more than 4,000 visitors on its first day, according to Carol Sullivan, regional marketing director with Jones Lang LaSalle Retail, an Atlanta-based firm that is the property manager for the 847,063-square-foot mall. The leasing team at Jones Lang LaSalle targeted Bench to cater to the largest Filipino population in the United States. Approximately 180,000 of the residents living within a five-mile radius of Serramonte are of Asian descent, primarily hailing from the Philippines.
“The managers at Serramonte did a lot of consumer research to understand not only what their ethnic mix was, but to understand the differences among their Asian customers,” says Jeff Green, president and CEO of Jeff Green Partners, a Mill Valley, Calif.-based consulting firm. “A Filipino customer, a Vietnamese customer and a Chinese customer all have their own shopping patterns, important nuances in terms of how they shop.”
As U.S. demographics change, the retail industry will have to pay more attention to such nuances. Not too long ago, developing a successful marketing strategy aimed at American consumers was simple. It involved envisioning the needs and aspirations of a white, Christian, American family. In today's multiethnic world, however, such a narrow approach is no longer viable. Across the country, the majority of American consumers are no longer white or Christian or even U.S.-born and have distinctly different traditions and shopping habits from the consumers of yesterday. And the numbers of ethnic shoppers are growing. By 2050, minorities will make up 54 percent, or approximately 236 million out of an estimated total U.S. population of 439 million, according to the U.S. Census Bureau.
So far, the industry has been making some concessions to that fact by catering to African-American and Hispanic consumers, the two largest minority groups in the U.S., at 13 percent and 15 percent of the total population, respectively. But it will need to do more to attract other ethnic shoppers.
For example, Filipinos, while known to be fashion- and brand-conscious also tend to be price-sensitive, notes Sullivan, which is why they prefer stores, like XXI, that sell cutting-edge apparel at low prices. The Chinese and Japanese, on the other hand, tend to shop at more upscale stores, says Green, which is why they gravitate toward General Growth Properties' Stonestown Galleria, a 862,000-square-foot mall located several miles away in San Francisco. Its tenants include Nordstrom, Guess? and Lucky Brand Jeans. Approximately 290,751 people who live within Stonestown's trade area are of Asian descent.
Dollars and cents
There are four major ethnic groups in the U.S., including African-Americans, Hispanics, Asian-Americans and European-Americans, with the entire U.S. multicultural marketplace possessing purchasing power of more than $1.5 trillion, according to the Selig Center for Economic Growth at the University of Georgia.
While African-American consumers with median household incomes of $33,916 possess more than $845 billion in purchasing power, they present less of a challenge for retailers and retail property owners because most were born in the U.S. and have shopping habits similar to those of mainstream consumers, notes David Morse, president and CEO of New American Dimensions LLC, a Los Angeles-based multicultural marketing research firm. (The U.S. median household income is $50,233.) Meanwhile, Hispanics, who possess $862 billion in purchasing power, have relatively low median household incomes, at $38,679 a year, according to the Census Bureau.
There are some retailers that are trying to cater to these communities. Secaucus, N.J.-based Ashley Stewart, for example, targets primarily full-figured African-American women. Meanwhile, in markets such as California, Texas and New Mexico, with high concentrations of Mexican-born Hispanics, Wal-Mart Stores Inc. devotes space at some of its stores to Mexican food products, says Stephen Palacios, executive vice president of the consumer goods business at Cheskin, a Redwood Shores, Calif.-based consulting and market research firm.
However, less attention is being paid to smaller ethnic populations that wield greater individual purchasing power, including East Asians, South Asians and Central and Eastern Europeans, says Monique Tapie, communications director with Global Advertising Strategies, Inc., a New York City-based multicultural marketing firm. With a U.S. population of 14 million, Asian-Americans' median household income of $66,103 results in the collective purchasing power of $453 billion. What's more, because of their higher incomes, they tend to spend more on food, furniture, appliances and clothing than the average U.S. consumer, reports the Selig Center.
But while there are similarities among the various subgroups of Asians, such as a strong focus on family and an emphasis on brand names, there are also differences. South Asians, for example, who come from countries including Pakistan, India, Bangladesh and Sri Lanka, have the highest median household income at approximately $75,000 a year, says Tapie. They tend to be fluent in English, since many are taught the language in their home countries, are heavy Internet users and feel very comfortable shopping at mainstream U.S. stores, according to Morse. East Asians, on the other hand, often come to the U.S. with limited knowledge of English and, to some extent, favor local retailers that offer bilingual services.
“There are at least 13 dominant language groups within the Asian cohort, and there are different forms of Chinese, Thai and Filipino languages,” says Palacios. “Therefore, to target Asians on the basis of their ethnicity you have to have a very niche offering.”
Central and Eastern Europeans, primarily immigrants from the former Soviet Union and Soviet Bloc countries including Poland, Hungary and the Czech Republic number approximately 20 million, according to Global Advertising Strategies, and have total purchasing power of more than $800 billion. Their median household income varies greatly depending on country of origin. Russian-Americans, for example, have a median household income of $67,181 a year, while Polish-Americans have a median household income of $58,207 a year. However, they tend to have similar shopping habits. Many go to local grocery stores for ethnic food but to big boxes like Home Depot, Costco and Target for non-consumables.
U.S.-based businesses often think that they have to change their entire operating model to court these customers, Tapie says, when all that's needed are small, inexpensive touches like bilingual signs or a section of the store devoted to ethnic products to make people from other cultures feel welcome. The Macerich Co.-owned 963,041-square-foot Queens Center in Elmhurst, N.Y., for example, caters to customers that come from hundreds of different countries with mall translation services that include Spanish, Russian, Mandarin, Farsi, French, German, Italian and Greek, among others.
When it comes to advertising, U.S. businesses would do well to use foreign language newspapers, TV channels and Internet sites. The cost is often a fraction of what it is to place an ad in mainstream media, and the outreach effort yields better results, says Tapie. She notes a large percentage of Asian- and European-Americans are regular Internet users and tend to forgo popular English language sites, opting instead to visit sites in their native language such as www.mail.ru for Russians. And many Asians subscribe to Direct TV's World packages, which include Chinese, Filipino, Korean and Vietnamese channels.
There are several ways in which a multi-ethnic consumer can be made to feel comfortable at mainstream shopping venues, some more expensive than others. Since Filipinos tend to shop as families, Jones Lang LaSalle invested in the expansion of the common areas at the Serramonte Center and incorporated Asian design elements, including bamboo trees. “Our focus group said our center was a lot warmer and more friendly,” as a result, says Sullivan. But though culture-specific design might be a nice touch, product selection, targeted advertising and bilingual services carry much more weight, according to Morse.
Research is also key, according to Green. Jones Lang LaSalle figured out how to successfully cater to its Filipino base by conducting numerous surveys, both by phone and at the mall. It also makes sense to hire a consulting firm that specializes in multi-ethnic consumers, adds Tapie.
Some touches work well everywhere. At the very basic level, U.S.-based retailers in areas with large concentrations of ethnic consumers should strive to devote a portion of their stores to popular ethnic products, the way Wal-Mart does. Additionally, property owners should consider bringing in local chains and mom-and-pop operators that focus on the ethnic population exclusively, the way La Curacao does.
It's also critical to bring in salespeople who can speak the language prevalent among local customers, and speak it well, says Dr. Andy Erlich, of Erlich Transcultural Consultants, a North Hollywood, Calif.-based consulting firm. Even if the customer speaks English, they will appreciate the sound of their native tongue. And if salespeople are not fluent, the availability of a translator can make the difference in completing a transaction.
When a customer comes into one of the stores at Queens Center and has trouble communicating, employees have the option to call the mall's guest services desk, which will send someone who speaks the customer's language, says Susan Valentine, senior vice president of marketing at Macerich.
That philosophy should also extend to signage and ethnic holiday celebrations, for example, the Chinese New Year or Diwali, the Indian festival of light, according to Morse. Macerich-owned Desert Sky Mall, an 893,457-square-foot property in Phoenix, regularly holds events such as La Fiesta de la Familia Hispaña to attract the 70 percent of the mall trade area who are of Hispanic descent. The mall also features a 100,000-square-foot La Curacao store as well as Cinema Latino, a movie theater that shows films with Spanish subtitles. “In many ways, it's simply symbolic,” Morse says. “I am a third-generation Eastern European Jew and I am not very religious, but if a retailer would have a sign saying ‘Happy Jewish New Year!,’ I would appreciate it.”