Hispanic population boom creates sales opportunities
By Kay Anderson -- Furniture Today, December 26, 2004
High Point — The rapid growth of America's Hispanic population means meeting their needs and desires is a sure way to gain valuable customers. The nation's 41.3 million Hispanics are the largest ethnic minority in the United States. And for the furniture industry, it's more than sheer numbers in the population that makes the emerging Hispanic population a desirable group to capture.
Furniture/Today's extensive survey of consumers, conducted early in 2003, shows that Hispanics are buying furniture and decorative accessories at rates even higher than their percentage in the population. Furniture/Today's Consumer Buying Trends survey shows that Hispanics are buying nearly every category of furniture at rates ranging from 1.3 to 2.5 times their percentage of the population. That may be, in part, because so many Hispanic households are in their prime household formation years. Almost four-fifths of Hispanic households are headed by someone under 35. Those are prime years for forming households and buying furniture. The national average for homes with heads under 35 is 23%.
Today, the United States has the world's fifth-largest Hispanic population, after Mexico, Colombia, Spain, and Argentina. By 2050, according to the most recent Census Bureau projections, Hispanics will make up nearly one-fourth of the nation's population.
The buying power of Hispanics is growing even faster than their population. The Selig Center for Economic Growth at the University of Georgia's Terry College of Business put the buying power of Hispanics at $686.3 billion in 2004. That's projected to reach $992 billion in 2009, a 45% increase. By way of comparison, non-Hispanic buying power is expected to increase by 27% during the same time period.
Another indication of the power of the Hispanic community is the strength of the Spanish-language network Univision. Now the No. 5 network in the United States, behind ABC, NBC, CBS and Fox, Univision stations overtook their English-and Spanish-language competitors, claiming the No. 1 spot during primetime in Los Angeles, Miami (tie), Houston, Dallas, Phoenix and Fresno and Bakersfield, Calif., among all adults 18 to 49 during the July sweeps.
"As the Hispanic market keeps growing both in size and buying power, companies in a wide variety of industries will enjoy significant marketing opportunities," said Lynn Franco, director of The Conference Board's Consumer Research Center.
The Conference Board has just released a new study of the burgeoning market, "The Hispanic Market in 2010."
"But since this young, burgeoning market is extremely diverse, marketers should be aware of extensive demographic and economic differences among the Hispanic household population," Franco added.
The potential of the Hispanic market has not been lost on some of the nation's largest companies. General Motors increased its spending on advertising to Hispanics from 13% of its ad budget in 2003 to 17% this year.
In April, Hershey announced a multi-year partnership with Thalia Sodi, the Latin singer and actress. The partnership includes sponsorship of her U.S. tour, a Spanish-language advertising campaign, consumer and retail promotions, and a new, co-branded Thalia line of Hershey products designed to appeal to Hispanic tastes. La Dulceria Thalia (Thalia's Candy Store) items debuted in September.
Gottschalks, the regional department store chain with 63 department stores and 10 specialty apparel stores in six western states (California, Washington, Alaska, Oregon, Nevada and Idaho), announced plans for in-store and marketing initiatives designed to cater to the large and growing Hispanic customer base in the communities it serves.
Proctor and Gamble, with more than 300 products marketed to consumers in 140 countries, has a separate corporate-level Hispanic marketing department.
Closer to the furniture industry, The Home Depot has an increasing focus on serving and marketing to the rapidly growing Hispanic community. In addition to its local and national mass media advertising to Hispanic consumers, the company's expanding multicultural marketing includes the official sponsorship of the Mexican National Soccer Team's 2004 tour in the United States and local cultural events, including Cinco de Mayo and the Calle Ocho festival in Miami. The Home Depot has also focused hiring efforts on bilingual associates in key Hispanic markets. In large Hispanic-market stores, The Home Depot offers "How-To" clinics and Kids Workshops in Spanish. The Home Depot stores in these markets also provide Spanish-language signage and promotions to reach this increasingly growing market segment. According to figures compiled by the Association of Hispanic Advertising Agencies, Home Depot spent $30.7 million in Hispanic TV and print advertising in 2003.
Home Depot isn't the only furniture-industry player advertising heavily to the Hispanic community. Rooms To Go spent $6.6 million on Hispanic print and TV advertising in 2003, 13% of its total print and TV spending, according to the AHAA. AHAA's analysis shows that in 2003, Levitz spent 2.2 million, and Sleepy's, nearly three-fourths of a million, advertising to Hispanics in print and on TV.
According to figures compiled by the AHAA, all home furnishings and appliance retailers (the category that includes furniture stores) spent $84 million last year on Hispanic TV and print advertising. That compares with $171 million spent by apparel retailers and $306 million spent by consumer electronics retailers.
| Projected change in population and buying power, 2004–2009 | ||
|---|---|---|
| Hispanic | Non-Hispanic | |
| Source: Selig Center for Economic Growth, Terry College of Business, University of Georgia |
||
| Change in population | 19% | 3% |
| Change in buying power | 45% | 27% |
| High on Hispanic shopping lists | ||
|---|---|---|
| Products bought by Hispanics at rates at least 1.5 times their presence in the population | ||
| Plan-to-buy index | ||
| Hispanic | Non-Hispanic | |
| A plan to buy index of 100 indicates that a demographic group is planning to buy a product in the same proportion as their presence in the sample. Any number over 100 indicates that the group plans to buy a product at a rate higher than their presence in the sample. For example, Hispanic households plan to buy infant furniture at a rate 1.92 times higher than their presence in the population, while non-Hispanic households plan to buy infant furniture at a rate that matches their presence in the population. Source: Furniture/Today Consumer Buying Trends Survey, 2003 |
||
| Youth bedroom | 254 | 99 |
| Entertainment centers | 221 | 99 |
| Futons | 208 | 97 |
| Wall décor | 208 | 100 |
| Infant furniture | 192 | 100 |
| Curio cabinets | 188 | 99 |
| Decorative pillows, throws | 179 | 99 |
| Outdoor furniture | 179 | 100 |
| Other adult bedroom | 175 | 96 |
| Motion sofas | 167 | 102 |
| Master bedroom | 163 | 100 |
| Dining room | 163 | 100 |
| Occasional tables | 158 | 101 |
| Other decorative accessories | 158 | 101 |
| Mattresses/boxsprings | 158 | 100 |
| Other home office | 154 | 101 |
| Lamps | 150 | 99 |
| Reaching out to Hispanics | ||
|---|---|---|
| The Association of Hispanic Advertising Agencies identified furniture retailers spending substantial sums to reach the Hispanic market | ||
| TV and print spending in Hispanic media | ||
| in millions | % of total TV and print advertising | |
| Based on media spending in 2003 These advertisers were selected from a group of the Top 500 advertisers, ranked by total TV and print media expenditures in the general market and Hispanic markets for 2003. Source: Association of Hispanic Advertising Agencies |
||
| Sears | $119.1 | 21% |
| Wal-Mart Stores | $31.8 | 9% |
| Home Depot | $30.7 | 8% |
| JCPenney | $22.8 | 7% |
| Target Corp. | $17.6 | 4% |
| Federated Dept. Stores | $7.0 | 2% |
| Kmart | $6.9 | 6% |
| Rooms To Go | $6.6 | 13% |
| Office Depot | $2.9 | 4% |
| Rent-A-Center | $2.3 | 10% |
| Levitz Furniture | $2.2 | 8% |
| May Dept. Stores | $2.1 | 1% |
| Sleepys | $0.7 | 4% |
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