The American landscape and the ethnic landscape are fast becoming one and the same.
It's a trend long borne out by Census findings, and retailers, forever fine-tuning their product assortments to appeal to the broadest range of consumers, are taking steps to ensure that what is on their shelves meets the needs of an increasingly diverse customer base.
For supermarkets, perhaps no part of the store is more strategically important in reaching out to ethnic shoppers than the health and beauty care department. The HBC aisle, said Geri Duncan Jones, executive director of the American Health and Beauty Aids Institute, a Chicago trade organization representing the African-American HBC industry, is where the ethnic consumer answers the question, "Does this retailer care about me?"
And retailers should care. As of Nov. 1, 1997, there were an estimated 34 million African-Americans in the United States, representing 12.7% of the entire population, according to the U.S. Census Bureau. Since July 1, 1990, the African-American population has risen by 11%, while the non-Hispanic white population has grown by 3%.
The African-American population is expected to grow at more than double the rate of the white population through the year 2050. If the Census Bureau's projections are accurate, after 2016 more African-Americans than non-Hispanic whites will be added to the overall U.S. population each year.
The size of the Hispanic population is expanding even more rapidly -- Hispanics are the fastest-growing demographic segment in the United States. For example, the Hispanic population in California, now the third-greatest population-gaining state in the nation, is expected to double between 1995 and 2025 and account for one-third of the entire Hispanic population. By the year 2000, the Census Bureau projects, Hispanics will make up 33% of California residents.
Total African-American income is expected to hit $459 billion this year, Jones said in a speech during the AHBAI's Mid-Year Business Conference last month in Naples, Fla. Ten percent of all African-American shopping dollars are spent on HBC, vs. 8% of the general market's. On an average shopping trip, she added, 30% of African-Americans tend to buy at least one item on impulse.
According to ACNielsen, Schaumburg, Ill., the ethnic-HBC-buying household spends more annually per shopper across all outlets -- $4,907 to $4,766 -- than the average U.S. household. And the ethnic-HBC shopper, when actually purchasing an ethnic-HBC product in a supermarket, will spend more on that trip than when buying an ethnic-HBC item in a drug store or mass merchandiser.
"This consumer is definitely one you want to reach," Jones said.
To do this, retailers are finding, requires equal parts science -- the effective use of sales data and supply-chain technology was an issue that dominated the AHBAI conference -- and more informal means, like talking frequently with suppliers to get a better handle on trends.
"In the past, the assistance we requested from the manufacturer was basically nothing," said Lisa Foster, also speaking at the AHBAI conference. At Salt Lake City-based American Stores Co., where she is a national products manager, Foster is responsible for the ethnic-toiletry category. "Now I think we're working together a lot more closely. It's very important that there is communication between the retailer and the supplier."
American Stores uses Census data to determine whether a store's market area should be classified as ethnic -- 15% African-American and 30% Hispanic are two of the company's criteria, she said -- and so whether a specially tailored planogram should be used. "We also rely heavily on the information we receive from our district and market managers.
"In our stores that are predominately African-American, we can offer basically everything that's out there," she added.
Foster said American Stores units often hold seminars, put on by distributors, to educate staffers about different lines and new products. The retailer is also quite willing to try new products in untested markets, she said.
"There are so many items that started off as a test in certain districts, and the next thing you know, they're at a number of our stores," she said.
Assessing American Stores' overall performance in reaching African-American shoppers, Foster said, "I think we do an especially good job on the food side, and a good job in cosmetics and hair care, too. I think probably where we need to expand is in skin care. I don't think everyone realizes that there is a difference [between what African-American and general-market consumers need] in skin care, not just hair care."
Foster also echoed a common refrain in the ethnic HBC industry: out-of-stocks are a pressing problem.
"If manufacturers can put together floor displays, that helps us a lot, especially when we're doing a promotion, so we have some kind of backup," she said.
"In-stock positioning and promotions are going to be critical with this consumer," said Patricia Bailey, vice president of Pro-Line Corp., Dallas, a leading manufacturer of hair care products for African-American women. "Impulse plays a big part."
Earlier this year, Pro-Line launched a $1 million TV, print and radio ad campaign, backing its Soft & Beautiful line with the theme "I am always soft and beautiful." The company is also using direct mail and consumer ads featuring the popular singing group Destiny's Child to promote its Botanicals line to young women ages 18 to 25.
Industry observers expect advertising and promotional activity to increase at two other African-American HBC suppliers, A.P. Products, New York, and Soft Sheen Products, Chicago, which were purchased earlier this summer by beauty-care giants Revlon and L'Oreal, respectively.
Ethnic HBC manufacturers are "committing a lot more dollars to advertising," noted Chris Hartmann, president of Houston-based Midway Importing, a distributor that works with Mexican HBC manufacturers, as well as internationals operating in Mexico, to place their products in stores serving heavily Mexican or Central-American markets in the United States.
In business 10 years, Midway now has 18 offices and supplies such retailers as H.E. Butt Grocery Co., San Antonio; Furr's Supermarkets, Albuquerque, N.M.; and Fiesta Mart, Houston; as well as wholesalers Fleming Cos., Oklahoma City; and Grocers Supply Co., Houston.
"We've been growing at a fast clip," Hartmann said, adding that Midway's first five years of existence were mainly spent convincing retailers of the viability of ethnic HBC. "Now that people see it as a real money maker for them, it's pretty easy to go in and get distribution. The grocery-store opportunity is huge in this category.
"But you've definitely got to pay attention to the niche characteristics of this market," he said. "You don't go chainwide very often."
By the end of the summer Midway will launch an 80-product line of herbal supplements aimed at the Hispanic market. H-E-B, Furr's and Southwest Supermarkets, Phoenix, have committed to carrying it, Hartmann said. Supporting the line will be Spanish-language point-of-sale materials and educational brochures, he said.
"The mix is different [than in a general-market assortment], and the pricing is competitive or a little better than their U.S. counterparts'."
Average Total Spent Annually Per Shopper Across All Outlets
Average U.S. Household: $4,766.
Ethnic-HBC-Buying Household: $4,907.
* Supermarkets with more than $2 million in annual revenue.
Source: ACNielsen, Schaumburg, Ill.
Average Total the Ethnic HBC Buyer Spends Per Shopping Trip, by Outlet
* Food -- $20.20
Drug -- $14.68
Mass -- $28.12.
Average Total the Ethnic HBC Buyer Spends Per Shopping Trip When Purchasing an Ethnic HBC Item, by Outlet