SHOPPER MARKETING
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SECTION THREE
It's Time to Embrace the Changing Ethnic Landscape
By Brian Ross
There's no denying that today’s retailers need to be tech savvy to maintain and grow customer traffic.
But the reality is retailers today also need to be demographic-savvy.
Get to know your customers beyond the standard tools―be proactively focused on the types of ethnic communities in your neighborhood, the products those communities are looking for, and how you can present new offerings in creative ways in store. Done right, ethnic product lines can drive significant foot traffic while also growing basket size.
According to figures from Nielsen, by 2050, more than half of the US population will be visible minorities particularly of Hispanic, African American, and Asian descent.
Nearly nine out of 10 ethnic Canadian grocery shoppers in The Modern Grocery Shopper: Attitudes and Opinions Survey conducted by LoyaltyOne, said the selection of ethnic food and ingredients is an important feature in choosing which grocery stores to shop at. Two-thirds say that they have to visit three or more stores―including independent retailers, specialty food stores, and online retailers―to buy everything they need.
While serving this segment of the population will become an increasing priority, ethnic foods will also have a growing importance to the rest of the population who are acquiring a taste for these new flavors. Figures from Nielsen also indicate the economic opportunity in the multicultural CPG space alone is projected to exceed $500 billion in the U.S.
There’s a practical issue to consider in approaching this cross-category assortment opportunity. How do you introduce more ethnic products into stores that are already stocking upwards of 40,000 products?
The solution: Identify and then trial and repeat. Grocers who are exploring new product assortments should take a two-pronged, data-based approach.
First, they should identify low-performing shelf items. When selecting these items, it’s critical to complement traditional item volume/sales metrics with an “item importance” data-driven understanding. In other words, items that are most valued by your best customers. Grocers should cross-check low-performing items against what their most valuable customers buy, to ensure that they can be removed from the assortment with low risk.
The second step would be to use a rigorous trial and repeat approach for each new item introduced into the assortment.
Grocers can use this data to explain the transferability of sales between similar items and how important specific products are to a store’s most loyal customers. Data can also identify who will embrace new ethnic products and those who are already purchasing products that may be similar or complementary to ethnic offerings. In using these findings, grocers can find creative ways of positioning new products into areas other than the ethnic foods aisle.
Overlaying customer data with area demographics can help grocers recognize the full potential of their assortment opportunity.
The bottom line is this―catering to a diverse audience will provide an opportunity to better satisfy the needs of today’s shoppers. An ethnic product mix may not get as much as attention as a marketer’s technological tools, but meeting these needs will cultivate a loyal following of valuable customers that will only continue to grow in importance and profitability.
Brian Ross is president of Precima, a LoyaltyOne company. For more information: www.precima.com.
