BrainTrust Query: How is the recession changing Hispanics as consumers?
By David Morse and Maria Gracia Inglessis, New American Dimensions, LLC
How is the economy affecting the Hispanic market? The answer, at this time,
may be inconclusive. In a recent article by Terry Soto, president & CEO
of About Marketing Solutions, she cites data from Experian and concludes
that Hispanics may be “recession proof” or at least “recession
aloof.” For example, 34 percent of Hispanics are optimistic about their
finances in the coming year (compared to 25 percent of non-Hispanics), and
29 percent of Hispanics are more positive about the U.S economy (compared
to 21 percent of non-Hispanics).
Hispanics may also be less burdened with financial difficulties because
they are not as involved in some of the most problematic areas. According to Packaged Facts’ analysis of Experian Simmons Summer 2008 National Consumer Survey data, 46 percent of Hispanics use credit cards compared
to 72 percent among non-Hispanics, and only 15 percent of Hispanics own investments
(compared to 43 percent of non-Hispanics). The Simmons data also highlight
that Hispanics are more likely to rent their homes than non-Hispanics. This
makes them less likely to be affected by the mortgage foreclosure.
There are some categories in which Hispanics are spending more than their
non-Hispanic counterparts. According to the Packaged Fact Study,
Hispanics spend more in:
- Food at home (8.3 percent vs. 6.8 percent – of total annual expenditure)
- Poultry (0.5 percent vs. 0.3 percent)
- Fresh vegetables (0.6 percent vs. 0.4 percent)
That Hispanics spend more in food is not surprising. They have bigger households
and like to cook from scratch. But interestingly enough they are also spending
more in less expected areas, for example, in apparel and services (4.8 percent
vs. 3.7 percent). What is more, Hispanic men are more likely to keep up with
the latest fashion (25 percent vs. 17 percent). Also…
- They like to experiment with new styles (26 percent vs. 14 percent)
- Buy the latest fashion every season (17 percent vs. seven percent)
- Enjoy any kind of shopping (28 percent vs. 13 percent)
More Hispanics say they buy recycled paper products (men 40 percent vs.
34 percent and women 45 percent vs. 39 percent). Also, Hispanics are more
likely to claim that they would pay more for environmental friendly products
(men 42 percent vs. 35 percent and women 47 percent vs. 40 percent).
But additional data from the Nielsen Homescan Hispanic Panel present a less
positive view on how Hispanics perceive that the current downturn is affecting
their lives. The data show that about half of Hispanics feel that their household
is somewhat or much worse financially now than a year ago, and 37 percent
feel that their or their spouse’s job is not too secure or not secure at
all. More than 70 percent feel that their level of savings to deal with potential
disasters is not secure.
According to this study, not only do Hispanics have a less positive outlook,
they have changed some of their consumer habits; for example, in the past
three months they are eating at fast food restaurants less often (64 percent
vs. 47.9 percent of non-Hispanics), and close to 45 percent are bringing
lunch to work more often (compared to 36 percent of non-Hispanics).
Discussion Questions: Based on the data that’s been cited, what advice
would you have for marketers trying to reach Hispanic consumers at this
time? What surprises you most – and least – about the data?
[Authors’ Commentary] It is only natural to think that Latinos are feeling
the effects of the global recession. On the other hand, it is also true that
they are mentally and socially well equipped to go through economic difficulties.
Their philosophy of living within their means, and staying away from credit
is working as a buffer for their finances. They can also rely on their families
and friends to create support networks. Finally, let’s not forget that for
many of them this is not the first time they’ve face economic difficulties.
Most likely, Hispanics who grew up in Latin America have lived through economic
hardships in their countries. Many of them came to the U.S. having very little,
but with the determination for a better life. That aspiration does not seem
to be changing. But to answer the question of how the recession is changing
Hispanics as consumers, marketers need to keep their eyes open. The opportunities
may arise from less expected categories such as green products and men’s