U.S. Hispanic growth showcased coast-to-coast

DSN Retailing Today, June 27, 2005 by Debbie Howell

Retailers seeking insight into effective marketing to the Hispanic population need look no further than the top metropolitan markets for this ethnic group, where both mainstream retailers and specialists such as ethnic grocers have become experts at catering to the unique product and service needs of this increasingly powerful buying group.

The top 10 Hispanic markets in the United States in some cases mirror the top markets for the population in general, with Los Angeles, New York, Miami, Chicago, Houston and Dallas all making the list. Markets with large Hispanic populations that aren't necessarily large in terms of total population include San Francisco, Phoenix, San Antonio and San Diego.

A study of the top U.S. Hispanic markets published by Chain Store Guide, a research division of Lebhar-Friedman and affiliate of DSN Retailing Today, provides detailed analysis of the top 50 Hispanic markets and significant retail players in these markets. CSG data showed the average per capita income of Hispanics living in these top markets is $11,949 and that the average household size is 3.6 persons, versus 2.6 for Anglo families.

Los Angeles, the second-most populous region of the United States, is the top Hispanic market, with 6.6 million Latinos, equating to about 19% of Hispanic-Americans. The New York City area, ranked first in general population, is the second-largest Hispanic market, with 3.8 million Hispanic residents in the greater metropolitan area. Miami, Chicago, the San Francisco Bay area, Houston and Dallas-Fort Worth all boast a Hispanic population base of between 1 million and 1.5 million, with Phoenix, San Antonio and San Diego rounding out the top 10 Hispanic market list.

The ratio of Hispanic residents in these markets varies, from a low of 16.4% in Chicago to a high of 51.2% for San Antonio. Nationally, Hispanics account for 14% of the population.

Smaller cities that drop off the radar in total population are surprisingly some of the highest in Hispanic population growth. The CSG report showed Raleigh, N.C., as the fastest-growing Hispanic market, with only 72,580 Hispanic residents in 2000 but experiencing 1,180% Hispanic population growth from 1980 to 2000. Other fast-growing Hispanic markets with population gains of 300% or more during that 20-year period were Atlanta; Las Vegas; Nashville, Tenn.; Orlando, Fla.; Portland, Ore.; Greenville, S.C.; Indianapolis; Minneapolis-St. Paul; Providence, R.I.; and Tulsa, Okla., among others.

In Los Angeles, 75% of Latino residents are of Mexican descent. Albertsons chose this market to test its first Hispanic grocery format, Super Saver, which offers an expanded assortment of high-demand perishable food preferred by Mexican-Americans along with bilingual employees and signage. Among other retailers given credit for Hispanic efforts are Rite Aid, the leading drug chain in L.A., and Wal-Mart, which has been marketing Hispanic food based on neighborhood preferences for years in states such as Texas and Florida.

The demographics in Miami, the No. 3 Hispanic market, are quite different from L.A., with the majority (44.9%) of Hispanic residents of Cuban descent. A large Cuban population translates into very different food preferences than those of Mexicans, such as high demand for the seasonings garlic, coconut milk and adobos and root vegetables such as yucca. Hispanics in Miami are more affluent, too, with the second-highest income per capita among Hispanics at $16,483. The most affluent Hispanic market is Washington Baltimore, where average Hispanic per capita income is $16,673.

While Publix is Miami's leading grocer, ethnic supermarket chain Sedano's gets a fair share of Hispanic grocery dollars by catering to Cuban preferences. Another retail innovator is Anna's Linens, a housewares chain still new to the market that attempts to cater to ethnic tastes with a mix of higher-end aspirational labels and everyday value merchandise.

New York represents yet another unique Hispanic market, me that is skewed toward Puerto Ricans at 34.4% and Dominicans at 14.5%. One of the newest ethnic initiatives in New York comes from Sears, recognized as a leader in catering to Hispanic, African-American and Asian consumers. Sears remodeled 97 stores last fall in markets with a heavy ethnic shopper base that included New York City, Miami, Los Angeles and Chicago. Among changes were the hiring of more bilingual associates and emphasis on ethnic-inspired apparel labels such as Lucy Pereda.

San Antonio, the most heavily concentrated major U.S. city for Hispanics at 51.2%, is similar in many ways to the Dallas and Houston markets, all major Hispanic population centers. In each city, Mexican immigrants dominate the Hispanic population at 70% or more due to the state's border proximity. Ethnic supermarkets such as Fiesta Mart, Carnival and Ole Foods cater to Hispanic needs, with stores that often feature additional services or goods such as wire transfer, passport photos and a market-like atmosphere. Texas-based grocery chain HEB, while not targeting Hispanics specifically, is also considered a trend-setter in catering to Hispanic tastes based on neighborhood demographics, as is Wal-Mart with its large portfolio of supercenters in these markets.