Is Donald Trump the reason Latinos are spending less at retail?

Discussion
Photo: RetailWire
Jul 19, 2017
George Anderson

Latino consumers are cutting back on purchases, and the consequences are real for retailers. That was the message delivered to an audience at the Fortune Brainstorm Tech event yesterday by Target CEO Brian Cornell.

“The Hispanic consumer in the U.S. is shopping much less,” Mr. Cornell said. “They are staying home. They are going out less often.”

People who identify as Latinos make up 20 percent of the population in the U.S. For years, marketers have talked about the growing importance these consumers have when it comes to retail’s bottom line performance. So, what has caused the pullback on spending? One explanation could be Amazon.com, which offers a Spanish language shopping option on its site. Another, may be the election of Donald Trump as president.

While Mr. Cornell did not mention Mr. Trump by name as a factor in falling sales numbers, he did say that towns around the Mexican border have seen some of the biggest declines. Consumers who used to travel across the border to purchase in U.S. stores aren’t doing so in the same numbers and with the same frequency as before.

“There’s almost a cocooning factor,” Mr. Cornell was quoted by the Star Tribune. “They are staying at home.”

Marshall Cohen, the chief retail industry analyst for NPD Group, said that the election of Donald Trump as president has had a chilling effect on purchasing. NPD reports spending by Latino consumers in the U.S. is down eight percent this year.

“There’s clearly been a pullback,” Mr. Cohen, told Bloomberg. “There’s concern about going out in an environment where you could be deported.”

DISCUSSION QUESTIONS: Why do you think Hispanic consumers are reducing the number of shopping visits and purchases they make at retail? How should retailers affected by this situation address it?

Braintrust
"When people fear for the welfare of their families, they're less concerned with buying shoes. "
"Considering the negative rhetoric coming out of the White House, why wouldn’t they want to keep a low profile? "
"The biggest issue: It always bugs me when “Hispanics” are discussed as a homogeneous group. They’re not."

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16 Comments on "Is Donald Trump the reason Latinos are spending less at retail?"

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Max Goldberg
BrainTrust

It’s the fear factor. Hispanics are being targeted by the federal government so they are hunkering down, afraid to venture out unnecessarily. Retailers can address this by offering free delivery of products, making their websites friendlier and easier to navigate and offering curbside delivery. Retailers should also vocalize their concerns with the current administration. This situation is not going to improve in the short-term.

David Livingston
Guest
1 month 1 day ago

Saw the same thing happen in Oklahoma City and Atlanta during the Obama years. If there is a crackdown, the undocumented won’t drive. Taxis aren’t cheap. A quite a few Hispanic stores went dark. Another opportunity for Amazon. Smart Hispanic retailers will make out well with home delivery.

Kai Clarke
BrainTrust

Yes. The simple fact that we can see the economic effects of declining spending around border towns in a confined area, in a defined time only adds credence to the obvious. With fewer people going to the border because of fear for their current status in the U.S., they are spending less money. This directly impacts Latino spending, Latino commerce and Latinos at and around the border towns.

Paula Rosenblum
BrainTrust

I don’t know. It’s no secret that I’m not a fan of our current president, but I have some issues all the way around with this thesis.

The biggest issue: It always bugs me when “Hispanics” are discussed as a homogeneous group. They’re not. I had a rather passionate argument with the CEO of Nielsen over this topic a few years ago. Living in Miami, it’s very easy to see that they are not the same. It’s sort of like grouping all Semites into one cluster. You can’t do it.

Sure, I would not be surprised to see Mexicans avoiding the U.S. Heck, I would avoid it if I were them with all the noise out there. But what does that have to do with Venezuelans, Cubans, Puerto Ricans, etc.? Nothing.

So I think I have to say the data is based on an erroneous assumption, and therefore isn’t telling me much of anything. And I’ll say it again. I am no fan of 45 so there is zero prejudice here.

Lee Kent
BrainTrust

Yes, Paula, I agree Latinos are not all one. Let’s take a look at the numbers when we are only talking about illegals, then this scenario is a better fit. And I don’t think that number represents 20% of the population. But that’s just my 2 cents.

Doug Garnett
BrainTrust

I agree with the danger of seeing “Hispanic” as a monolithic culture — we must always be cautious about lumping groups. One key that makes me suspect truth in the argument, though, is the particular change in border communities. That suggests the downturn could well be more from a west and southwest Hispanic history and less in the more internationalist Hispanic world of, for example, Miami.

Another key is the fear we’ve observed among the large hispanic community at my son’s high school in Oregon. And the fear my brother has observed in Colorado.

Wish there was more data.

Dick Seesel
BrainTrust

Xenophobia and protectionism have proven in the past to be the enemies of long-term economic development. The impact of current policies may be clouded today by high stock prices and low unemployment, but it’s a matter of time before history repeats itself.

Steve Montgomery
BrainTrust

Something not addressed that is very applicable to the U.S. retail stores along the Mexican border is the declining value of peso. In 2013 the peso was worth about $.075 and has been declining ever since. Today a peso is worth $.056/$.057. This is about a 25 percent decline. This represents a very small increase over its low point early in 2017.

Jasmine Glasheen
BrainTrust

When people fear for the welfare of their families, they’re less concerned with buying shoes. People spend less in times of political discord and this presidential term has been so polarizing that USA Today reports one in five Americans are spending less since Trump’s win.

Jerry Gelsomino
BrainTrust

It is understandable that as a group, Latinos are cautious about their future. Considering the negative rhetoric coming out of the White House, why wouldn’t they want to keep a low profile? Interestingly though, CBS News this morning reports that U.S. homes being bought by immigrants are up 50 percent from last year making 2017 a very strong housing market year.

Doug Garnett
BrainTrust
My sense is that there is tremendous fear in the Hispanic community in general. This is a community which has tremendous history with unwarranted action against them by authority — dating back over a hundred years. It’s so bad in the current climate that my brother, in his role as DA for Boulder, CO, has participated in a great number of public meetings with minorities to assure them that crimes against immigrants are crimes and will be prosecuted as such. (There are some in society who are taking advantage of anti-immigrant ideas to prey criminally on anyone they feel looks like an immigrant.) Perhaps the way I’d put it isn’t cocooning. Rather many in the Hispanic community have returned to “keeping their heads down.” Historically they’ve had to do this often. It’s also sad that we, as a society, underestimate how important their full participation in the economy has become. That said, I don’t “blame Trump” for this — he is merely the symbol for an unrest that has led to both legal changes and a new vigilantism. How much of the downturn relates? Evidence in this area is very difficult to gather — because “heads down” also makes changes… Read more »
Brian Kelly
Guest
1 month 2 days ago

All generalities are false. Not all folks who identify as Hispanic are the same. LA, San Antonio, Miami and Chicago are all very different markets.
No doubt the immigration policies are disproportionately affecting Hispanic residents. And Hispanics also tend to have lower household incomes and reside in economically challenged rural/agricultural areas. These macro issues must be considered as well.

Cornell’s comments were stunning. This is an interesting issue for Target to flag in light of their challenges over “l’affaire bathroom.” While he claims it affected Target, it would follow that the dollar stores and other discount stores will experience similar decomping.

This is a consumer issue and retailers should know who resides in the trading areas of their stores. Those stores with over-indexing Hispanic shoppers need to be identified and a deeper understanding of the issues should be accomplished. The response should address the issues to solve shopping goals.

Brian Kelly
Guest
1 month 2 days ago
Craig Sundstrom
Guest

Amazon? I mean, really. Amazon — is that the response to EVERYthing?

I think it’s reasonable that a hostile environment is at least partly responsible, but I’d need to see more data on income, and the spending in other demographically similar groups.

Ricardo Belmar
BrainTrust

I agree with many of the comments here — the assumptions are a bit dubious, and the idea of lumping all Hispanics into one demographic for this purpose is challenging at best. Shopping habits within the Hispanic community vary greatly, and certainly vary by region around the country.

More data would be useful here, but let’s focus on what Cornell is not only saying, but implying. His words would lead you to expect more challenging sales numbers as the year progresses and he’s certainly attempting to lay blame on White House policy and rhetoric. One would expect he’s speaking based on reading into the sales figures he has in front of him, so it will be interesting to see where this goes for Target as well as other discount retailers. It might be most interesting to see what’s happening with dollar stores in similar regions as well as fast fashion and off-price apparel brands to see if they experience a similar effect.

Even so, all of that discussion is based on generalities which are still too broad to draw definitive conclusions.

Janet Dorenkott
BrainTrust
18 days 23 hours ago
I do believe this is happening and I asked this question of my brother, who lives in Miami, and my sister-in-law, who is Venezuelan and has been a US citizen for about 8 years now. Their response was that illegals are staying home, so it is logical that those cities with high percentages of illegal immigrants would be experiencing a slow-down. They also note that they are having friends do their shopping for them and that they are buying online. But they aren’t necessarily eating less. With the stock market at an all time high, e-tail sales growing rapidly and unemployment at its lowest rate in 16 years, people are shopping and spending is up. As for Target, they should look to themselves to understand what they are doing wrong. Target has done some very unpopular things recently that cost them significantly. Specifically the transgender bathroom policy, cost Target significant revenue loses and resulted in a boycott that cost Target an estimated 6% in sales. In addition, with the general migration from brick and mortar stores to online sales, Target needs to play catch-up. The migration has been going on for years and many traditional retailers are not being very… Read more »
wpDiscuz
Braintrust
"When people fear for the welfare of their families, they're less concerned with buying shoes. "
"Considering the negative rhetoric coming out of the White House, why wouldn’t they want to keep a low profile? "
"The biggest issue: It always bugs me when “Hispanics” are discussed as a homogeneous group. They’re not."

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