American Melting Pot
Nov 1, 2008 12:00 PM, By Elaine Misonzhnik
Three years ago, when apparel retailer Bench opened its doors at Serramonte Center in Daly City, Calif., most Americans had never heard of the chain.
But the Philippines-based Bench is very popular in its home country, often drawing comparisons to Gap. The 1,257-square-foot store at Serramonte Center marked its foray into the U.S. market with more than 4,000 visitors on its first day, according to Carol Sullivan, regional marketing director with Jones Lang LaSalle Retail, an Atlanta-based firm that is the property manager for the 847,063-square-foot mall. The leasing team at Jones Lang LaSalle targeted Bench to cater to the largest Filipino population in the United States. Approximately 180,000 of the residents living within a five-mile radius of Serramonte are of Asian descent, primarily hailing from the Philippines.
“The managers at Serramonte did a lot of consumer research to understand not only what their ethnic mix was, but to understand the differences among their Asian customers,” says Jeff Green, president and CEO of Jeff Green Partners, a Mill Valley, Calif.-based consulting firm. “A Filipino customer, a Vietnamese customer and a Chinese customer all have their own shopping patterns, important nuances in terms of how they shop.”
As U.S. demographics change, the retail industry will have to pay more attention to such nuances. Not too long ago, developing a successful marketing strategy aimed at American consumers was simple. It involved envisioning the needs and aspirations of a white, Christian, American family. In today's multiethnic world, however, such a narrow approach is no longer viable. Across the country, the majority of American consumers are no longer white or Christian or even U.S.-born and have distinctly different traditions and shopping habits from the consumers of yesterday. And the numbers of ethnic shoppers are growing. By 2050, minorities will make up 54 percent, or approximately 236 million out of an estimated total U.S. population of 439 million, according to the U.S. Census Bureau.
So far, the industry has been making some concessions to that fact by catering to African-American and Hispanic consumers, the two largest minority groups in the U.S., at 13 percent and 15 percent of the total population, respectively. But it will need to do more to attract other ethnic shoppers.
For example, Filipinos, while known to be fashion- and brand-conscious also tend to be price-sensitive, notes Sullivan, which is why they prefer stores, like XXI, that sell cutting-edge apparel at low prices. The Chinese and Japanese, on the other hand, tend to shop at more upscale stores, says Green, which is why they gravitate toward General Growth Properties' Stonestown Galleria, a 862,000-square-foot mall located several miles away in San Francisco. Its tenants include Nordstrom, Guess? and Lucky Brand Jeans. Approximately 290,751 people who live within Stonestown's trade area are of Asian descent.
Dollars and cents
There are four major ethnic groups in the U.S., including African-Americans, Hispanics, Asian-Americans and European-Americans, with the entire U.S. multicultural marketplace possessing purchasing power of more than $1.5 trillion, according to the Selig Center for Economic Growth at the University of Georgia.
While African-American consumers with median household incomes of $33,916 possess more than $845 billion in purchasing power, they present less of a challenge for retailers and retail property owners because most were born in the U.S. and have shopping habits similar to those of mainstream consumers, notes David Morse, president and CEO of New American Dimensions LLC, a Los Angeles-based multicultural marketing research firm. (The U.S. median household income is $50,233.) Meanwhile, Hispanics, who possess $862 billion in purchasing power, have relatively low median household incomes, at $38,679 a year, according to the Census Bureau.
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