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Busting the Private-Label Myth About Hispanics

Busting the Private-Label Myth About Hispanics

When retailers discuss Hispanic marketing best practices, they inevitably raise a number of points that haven't changed much over time.

They say things like, “Don't assume all Hispanics have the same buying behaviors,” and, “Make sure to focus on fresh and authentic products.”

All of these points still hold true, but at least one often-raised observation may be worth rethinking. Retailers have long assumed that Hispanics are so brand loyal that they are least likely to seek alternate choices, especially private label. But now cracks are forming in that assumption, and retailers see openings to attract Hispanics to store brands. This development may also have significance beyond the Hispanic sector.

First a bit of background. This topic was discussed at a recent Hispanic retailer roundtable I moderated, which was held in Houston during an ECRM (Efficient Collaborative Retail Marketing) event. Click here for the complete discussion and background.

At this forum, sampling was cited as a tool to boost Hispanic private-label buying. Many Hispanics are risk-averse in shopping because they have limited incomes and can't afford to make bad choices. Sampling can prove to these shoppers that alternate products match up to expectations in taste and quality, said one panelist.

Another route is to lessen the risk by initially attracting Hispanics with less expensive private-label items to gain their trust. According to this logic, draw them in with an item like chips, and afterwards they will move to pricier categories.

Yet another direction is to integrate Hispanic foods with the rest of a store's offerings, rather than segregating this segment in one section. One retailer pointed out that integrating leads to more Hispanic buying of store labels because all of a sudden those products are more apparent to them on the shelves.

Are there larger implications for this discussion? In my opinion, some of the tools that lead Hispanics to consider private label, such as sampling and initially highlighting less costly products, can also help retailers boost private-label trial with the general population. After all, if hardcore brand loyalists like Hispanics can be swayed in this way, then why can't everyone else? And by the way, national brands that feel under siege from all of this might consider taking some pages from the same playbook, because it can work for them as well.

It's also crucial to understand that while much of Hispanic merchandising is geared to first-generation shoppers, “the biggest opportunity lies with second and third generation,” noted one panelist. That's helpful to know because more acculturated Hispanics are often less focused on scratch cooking and more likely to be drawn to quick recipes or carry-out items.

Somehow the smartest marketing and merchandising decisions always come down to a simple truth: You really need to know your customer.

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