Still Making Sense: Timeless Ethnic Merchandising Best Practices, Part 2
Originally appeared on RetailWire.com

June 30,2004

By Terry Soto

Five "best practices" are outlined in the study Grow with America - Best Practices in Ethnic Merchandising and Marketing sponsored by the Coca Cola Retailing Research Council. (Click here to download the study results - PDF format.)

1. Learn about Hispanic consumers so you can serve them better.
2. Define your Hispanic merchandising "look" and organize to executive it.
3. Tailor your offering to appeal to your target consumers.
4. Make your brand authentic to connect with the Hispanic community.
5. Develop a marketing plan that communicates value at all "touchpoints."

In this discussion, we'll address Best Practice #2. (Other points to be covered in future discussions.)

Best Practice #2 - Define your ethnic merchandising 'look' and organize to execute it

The first step in organizing to execute an ethnic merchandising strategy is to take Census information and identify the concentration of ethnic groups in each city where you have stores to get an average concentration. The same can be done for a three mile radius around each store. Compare the city's average concentration of ethnic groups to the average for each store and cluster the stores for which the proportion of ethnic shoppers is at or above the city's average. Stores that are above the city average can be said to over index in their share of ethnic shoppers and would become part of the ethnic store cluster.

Stores that are below are said to under index in their share of ethnic shoppers and would remain as part of the mainstream cluster of stores. This should be done for each major ethnic group that was identified, so custom merchandising plans for each store in your ethnic cluster can be created.

Second, ensure the right assortment strategy by leveraging category management as a foundation, but be prepared to adapt it as necessary. Based on the profile of your ethnic customer base, you should define and use different category management filters to determine what works and what doesn't. You should constantly work to ensure that your assortment is on strategy by following these simple steps:

• Work with manufacturers and brokers to develop category indices and penetration data to define multicultural volume.
• Visit stores often to confirm ethnic syndicated volume data trends
• Visit multicultural competition to identify new product opportunities. Proprietary sales data will only identify what does well in the stores, but it will not identify missing opportunities
• Monitor product movement carefully so product categories can be expanded or contracted to avoid out of stocks or shrink
• Create benchmarks for ethnic movement so monitoring can be more precise

The third step in ensuring relevancy among multicultural shoppers is to consider what your merchandising "look" says to them when they walk through your doors. Does it say you understand what their staples are? Does it say that you understand how staples are used to prepare meals? Does it say that you are delivering value across these staples? How you present mainstream and authentic brands on the floor and on the shelves will communicate your commitment to being relevant to these consumers?

Your willingness to meet ethnic consumers' consumption patterns will drive each of these considerations. It is important that you "look the part" or create the product associations multicultural groups expect to see in the stores where they shop. With savvy use of merchandising, product can appear in seemingly unlikely shelf sets.

Take a product like mayonnaise, a high-consumption product in Hispanic households. Non-Hispanic Americans typically buy mayonnaise in 16-ounce and 32-ounce jars in the condiment aisle, or near products such as bread and tuna. Many Hispanics associate mayonnaise with chicken (for chicken salad popular in many Latin American countries) and other products, such as gelatin desserts, and expect to find them grouped together in the supermarket. They also prefer mayonnaise in 64-ounce jars because mayonnaise, aside from its use as a spread and as an ingredient, is also used as a topping on chicken, meats, pork and vegetables.

Moderator's Comment: One of the challenges is to set the look and execute the ethnic marketing strategy without negatively impacting non-ethnic shoppers. What retailers are doing the best job in this area?

How are retailers leveraging and adapting category management tools to drive the ethnic assortment strategies?

What are some interesting cross-merchandising opportunities you have seen or that retailers should think about? - Terry Soto - Moderator

• Grow with America - Best Practices in Ethnic Merchandising and Marketing - PDF format