October, 2015

Research Perspective and Comments & Analysis

Hispanic Acculturation And Its Impact On The Path To Purchase

By Marissa Romero-Martin, President/Chief Insights Officer And Lluvia Carrillo, Qualitative Group Manager, Senior Moderator & Facilitator

There is growing interest to understand U.S. Hispanic shoppers within their cultural context while uncovering what drives their decisions. The Hispanic population is growing exponentially, but it is also transforming into various shades of acculturation. To obtain a deeper understanding of the U.S. Hispanic shopper, retailers and brands must recognize that segmenting Hispanics on the basis of language and demographics is ineffective, because it does not account for the distinct value systems and cultural identities that shape the U.S. Hispanic mindset.

Culturati Research & Consulting, Inc. developed an attitudes and values-based U.S. Hispanic segmentation model allowing marketers to maximize their Hispanic marketing investments by developing strategies to target these segments. A new collaboration with Nielsen (the Nielsen-Culturati Hispanic Segmentation) combines the power of Nielsen’s Homescan Panel data with Culturati’s attitudes and values-based U.S. Hispanic segmentation model.

Leveraging the segmentation model and additional quantitative and qualitative shopper insights, Culturati developed a framework enabling advanced understanding of the Hispanic shopper by looking beyond the numbers to reveal the values and cultural mindset that drive behavior.

The segments identified include:

Culturally Hispanic (Latinistas) – Driven by a traditional value system and Hispanic-centered cultural mindset; the least focused on blending cultures.

Bicultural Hispanics (Heritage Keepers and Savvy Blenders) – More progressive than Culturally Hispanics and more culturally diverse. Most Heritage Keepers are first generation Hispanics, prefer to speak in Spanish, and are focused on preserving their heritage. Savvy Blenders are bilingual and are focused on preserving their heritage and blending cultures.

Culturally American (Ameri-Fans) – Take most of their values from American culture and have a significantly diluted Hispanic cultural connection. The majority prefers to speak in English.

 

Path-To-Purchase Snapshot

Culturati took an in-depth look at the Hispanic segments along with a Non-Hispanic benchmark sample to uncover insights that represent opportunities for brands and retailers. The result was a Path to Purchase model that reveals how cultural mindset and value system impact shopper behavior. The category purchase behaviors can be tracked by the Nielsen-Culturati Segmented Household Panel data and brought down to the store level through Nielsen Spectra data.

Culturally Hispanic (Latinistas) believe shopping is a form of relaxation and personal reward for their hard work. They are the most likely to buy on impulse, but are also the most loyal of all segments. They look for Hispanic brands, because they “feel” familiar and are the segment that spends more at Hispanic tailored stores, because they value a comfortable Hispanic environment. To be considered, retailers need to offer the right cuts of meats, fresh produce and Hispanic brands that they use.

70 percent - Always buy the same brands they know and trust

77 percent - Seek out stores that sell Hispanic products

Bicultural Hispanics value authenticity, are open-minded and less risk-averse than Culturally Hispanic shoppers, but differences exist between the two bicultural segments.

Heritage Keepers are deliberate in what they take from Hispanic and American cultures and are intent on preserving their heritage. They value social connections and warmth and appreciate store environments that allow them to connect with other shoppers and the store/retailer. Therefore, they are the segment that spends the most at Club stores. They do not necessarily feel that Hispanic or American brands are better; they pick the best of each and shop at multiple retailers to find them.

59 percent - Always buy the same brands they know and trust

60 percent - Seek out stores that sell Hispanic products

Savvy Blenders are the least brand loyal of all Hispanics. They look for new experiences, and if they choose an ethnic product (not only Hispanic) it has to be authentic. They also seek an efficient shopping experience and are the most diverse in how they choose to spend their dollars. They shop at multiple retail channels and are most likely to shop at specialty grocery.

51 percent - Always buy the same brands they know and trust

37 percent - Seek out stores that sell Hispanic products

Culturally American (Ameri-Fans) shoppers are the most similar to Non-Hispanics in their independent nature, practical and price-focused mindset. They value efficiency, so they tend to spend most of their dollars at mainstream grocery and are the least likely to shop at Hispanic stores, because they are not looking to connect with the Hispanic culture.

59 percent - Agree price is more important than brand names

17 percent - Seek out stores that sell Hispanic products

 

 

Deeper Dive Needed Into Hispanic Produce Shopping

This piece leaves us in a quandary as to what produce retailers should do. It is, of course, true that as immigrants acculturate they behave differently, which means they shop differently and eat differently. And certainly in marketing and retailing, one should be aware of these differences. So this segmentation is useful. But the difficulties abound.

To start with, the importance of segmentation into broad buying groups may pale before the importance of knowing what countries the Hispanic shoppers come from. So, while it is useful for a retailer to know that the culturally Hispanic cohort overwhelmingly looks for Hispanic brands and always buys well known and trusted brands, those brands can be very different if the customer is Mexican, Cuban, Puerto Rican or Guatemalan. So even knowing the segmentation, a retailer needs to know a lot more about the customer to be able to effectively use the specific knowledge to procure and merchandise effectively.

Another important consideration is income. Surely even within these segmentations, behavior differs by income. And what about geography? Individual behavior can be reinforced or deemphasized based on community. An immigrant from Mexico may pass the psychographic test as a “Latinista,” but his behavior is likely to be very different if he lives in a border town filled with first generation immigrant Mexicans or if he is in rural Maine without another Mexican — or Mexican food store — in sight.

Then comes the fact that people know how to protect their interests. Just as highly acculturated Jews might shop at Costco year-round and then circle back to a store that sells Jewish ethnic foods at Passover, Hispanics are perfectly capable of buying at Aldi, and then going to a store with broad ethnic offerings when preparing a feast for friends and family on Cinco de Mayo.

Indeed one of the things that distinguishes the present day from days gone by is that consumers have such an array of choices that they do not have to ally themselves with one store. It is easy to imagine Hispanic consumers using the long tail of Internet shopping to buy difficult-to-find ethnic foods and then stocking up on more standard fare at the local Aldi.

Oddly enough, all the focus on ethnic merchandising and marketing plays out in produce in an unusual way. Stores focused on Hispanics will carry special grocery brands that are not familiar to Anglos or Asians, so these stores probably won’t be the primary shopping venues for non-Hispanic shoppers. Yet, most produce departments are perfectly acceptable to Hispanics and non-Hispanics. There may be a few Hispanic specialties, but Hispanics of all segments enjoy many fruits and vegetables eaten by people of different ethnicities, so the produce departments of mainstream retailers and Hispanic retailers have similar assortments.

Hispanic-oriented grocery stores may not be much of a threat to mainstream grocers when it comes to pulling Anglos and Asians into their stores for grocery items, but these retailers often buy produce at value prices off terminal markets and, as a result, can be very powerful competitors when it comes to fresh produce. Mainstream supermarkets may find produce sales vulnerable in areas with many ethnic specialty stores, as non-Hispanic consumers who won’t buy groceries at Hispanic stores will happily buy fresh produce from stores focused on the Hispanic clientele. Equally, of course, without the assortment of Hispanic grocery items necessary to attract Hispanics, conventional supermarkets can still compete on fresh produce and draw Hispanics in with a dynamic produce offering.

These types of segmentations are good to keep in mind, but they are often difficult to turn into powerful merchandising strategies. After all, if a store is located in a very homogenous area, say a border Mexican town filled with mostly recent immigrants, then segmentation is not necessary, because the store is mostly going to tailor to its local community — as stores always have. On the other hand, if one is in a highly diverse community, then how is a retailer to segment out shoppers?

And for shippers, what precisely is an apple shipper supposed to do with the knowledge that Hispanics have varying degrees of interest in ethnic foods and Spanish culture?

Another issue is that within marketing for every action, there is a reaction. While it is great to know “Bicultural Hispanics” may prefer to speak in Spanish, this tells us little about whether offering signage in Spanish and having bilingual employees will boost business. Even if the “Bicultural Hispanics” are attracted by this marketing, many Hispanics offended by being identified as just off the boat or over the border will be repelled by such efforts, and who knows what Anglos or Asians will think?

Ethnic retailers are often successful because of a razor sharp focus on a specific group. It is often not obvious to an outsider, but shoppers know the store is targeted toward Hondurans from a particular city or Peruvians from a port district. Segmentation data is important background, but chain retailers looking to be successful with ethnic minorities need to allow stores the opportunity to micro-market and focus on the segment within 3 miles of the store. That is the winning segmentation when marketing today.