Just Style.com Sept 30, 2003
Targeting Hispanics is hot fashion news

In a stagnant economy, there’s one apparel niche that continues to grow in both size and market power: the Hispanics.

Research shows their buying prowess is only at the beginning. The good news for those apparel companies
interested in targeting this group is that few brands or retailers have jumped on the bandwagon just yet, although many have got plans in the works. Stacy Baker looks at why this demographic is creating a buzz in many fashion circles.

In the United States alone, the Hispanics represent the largest minority at 13 per cent of population with 38.8 million people - projections show that number could top 43 million by 2010.

Their numbers aren’t the only aspect of their power that’s impressive. According to Erika Proper, director of client communications for Garcisa360, Hispanics are averaging a household income in the mid $30Ks and continue to make inroads into the middle class in great numbers.

Not only that, their buying power tops $600 billion and is expected to exceed $926 billion in 2007, says Nicki Gondell, an analyst for Trend House Inc. Their power has begun to extend beyond pure dollars and into trends as designers start to respond to the market’s influence. “They can only make your bottom line go up - it’s an untapped market with more consumers and a range of products you can sell,” she says. “It all spells ka-ching!”

Hispanic consumer marketplaces:
2001 population (millions)
1 Mexico 99.6
2 Colombia 43.1
3 Spain 39.6
4 Argentina 37.5
5 US Hispanic market 36.2
6 Peru 26.1
7 Venezuela 24.6
8 Chile 15.4
9 Ecuador 12.9
10 Cuba 11.3
Source: latinworks

Family values

How do they base buying decisions? Hispanics attach more value to family and community than the average, Proper says. Most Hispanic teens cite their parents as role models, while non-Hispanics cite celebrities, experts say. Parents and teens play an important role in each other’s lives, with teens providing information about new products and helping with decision making.

Research shows that Hispanics in general also look to trusted advisors when trying out new products and services, shop in groups more (often with children and extended family) and tend to over-consume in the clothing category, most likely due to larger household size.

A recent story in the Atlanta Business Chronicle reported that Hispanic-Americans spend on average $32,735 a year on goods like groceries, apparel, footwear, furniture, etc, versus $38,045 for all American consumers.

In terms of apparel specifically, Hispanics can be best described as adopters, as compared to Europeans, who are considered to be the fashion trendsetters. “The culture tends to be very fashion-conscious, placing high value on appearances and spends more money than other ethnic groups on apparel and beauty products,” Gondell says.

In 1999, Hispanics spent a total of $12 billion on apparel - the average household spends $1290 annually on apparel compared with $1128 for non-Hispanic households. Most purchases come from women aged 25+, married with children.

The numbers aren’t surprising: Hispanics love to spend time on their appearance. Not only do they want to look good, but research also shows they enjoy the experience of seeing fashions displayed.

“Clothes for them are invariably tied to image,” Proper says. “Strategies that not only show the product but also the lifestyle it is associated with will get a good response from the Hispanic market. It’s not different than what we see for other groups.”

This is also a culture where traditional gender roles still apply, Gondell adds: “Women embrace femininity, though recent advertising campaigns suggest that this is starting to shift (perhaps due to the ‘American influence’).”

Lifestyle message

Brands with a clear lifestyle message that speaks to this group are sure to fare well. Historically, the market has been extremely brand loyal and hesitates to deviate from a label it trusts, but that may change if the temptation for fresh, new and exciting becomes too great.

“Brands are very important to Hispanics mostly because they symbolise quality that they want to have,” Gondell says. “In recent years however, Hispanics have begun to erode the image of them as loyalists and are avidly trying new things.”

In order to effectively design and market to the Hispanic market, Gondell says it’s critical to understand the culture, its values, behaviours, tastes and expectations. For example, preserving their traditions - language, food, music, fashion and art, is important to Hispanics.

In general, there is a cross-fertilisation of cultures happening, she says: the US is becoming “Latinised” while the Hispanic culture is becoming “Americanised,” yet some of the basic lifestyle differences remain separate. For instance, Hispanics prefer strong family interdependence, while their Anglo counterparts value individual achievement.

“Hispanic youths, “Generation Ñ”, are bridging the gap even more, having been raised bilingually and in both cultures, in a period where the Hispanic culture is reaching critical mass, and where they have Hispanic- American success stories as role models,” says Gondell.

A good strategy is also to show apparel on all members of the family, not just the mother, adds Proper: “When they go shopping, Hispanic women shop for everyone and, remember, they often take everyone.”

Hispanic market trends

Following are general market trends of the Hispanic community.

•The Hispanic population is young, and growing. 38.8 million Hispanics live in the US, a 58% increase since the 1990 census, and 3.8 million in Puerto Rico, according to the latest census reports.

•A third of US Hispanics are under the age of 18. In the next 20 years, the US Hispanic teen population will grow by 62%, compared to 10% growth for teens overall.

•Hispanic advertising expenditures reached over $2.5 billion last year, up from $2.22 billion in 2001; spending was up in every medium, particularly in television.

•Hispanic households have a low unemployment rate compared to the population at large. Households are larger, on average, and younger. This means more kids and teens - markets that drive spending.

•Hispanics exert even more influence in a number of key US markets. They make up half of Miami and San Antonio populations, nearly half of Los Angeles, about a third of Houston and one quarter of New York.

•3/4 of Hispanics in the US reside in six states: Illinois, New York, Texas, Florida, California, Arizona.

•Between1979 and 1999, the Hispanic middle class grew 71.2% to 9.5 million, according to Census data. At the same time, Hispanics achieved impressive gains in terms of household income, educational attainment, and homeownership.

•According to Hispanic Business magazine, Hispanic households earning between $40,000 and $140,000 annually reached 2.5 million in 1999, or about one-third of all Hispanic households nationwide.

•30 million Americans speak some Spanish at home. The US Hispanic population is expected to top
43 million by 2010.

•While other TV audiences are shrinking, Hispanic TV viewers keep growing. Each week last year, according to Nielsen Media Research, an average of 3.7 million viewers watched Spanish-language movies or telenovelas on either Telemundo or Univision. Both networks recorded double-digit adsales growth for the current season, even though TV ad sales dropped elsewhere.

•Hispanic households watch more TV, on average, than other viewers. Their average prime time viewing per week - 17 hours - is 30% more than the average of all US households, at 13 hours. They are twice as likely as non-Hispanics to make purchasing decisions based on advertising (25% vs 13%).

•Hispanics are also more likely to look to magazine ads for ideas than the general population (38% vs. 22%). They also say purchasing decisions are equally influenced by friends, neighbours and celebrities.

•Hispanics are extremely brand loyal: 52% swear they are loyal to a particular brand, and 39% look for quality before checking price.

•62% say once they’re loyal to a brand they find it difficult to switch brands.

•80% of Hispanic shoppers say they have a preference for “products from companies they know.”

•61% of Hispanics expect to retain their language and culture in the US, vs completely assimilating.

Source: Dr Roger Selbert, VP, Trends Analysis, LatinWorks Marketing, www.latinworks.com

Opportunity knocks

While most of the market seems wide open for opportunity, specific niches are particularly appealing.

The plus-size market, for instance, isn’t just booming for non-Hispanics, but Hispanic women as well, who Proper says average size 12 and up. She also recommends up-selling - introducing a brand that’s affordable but also nice and graduating the consumer to more expensive brands as children age or the family's economic situation improves.

The brands and retailers best reaching Hispanics right now are JCPenney, Mervyn’s, Macy’s, Wal-Mart, Tommy Hilfiger and Wilke Rodriguez, say experts. Proper believes JCPenney is successful because it not only gets coverage for its fashion variety and family-oriented strategy, but offers scholarships and employee initiatives to the Hispanic community.

Recently, however, Charley Heaney, JCPenney’s head buyer of men’s underwear, reported that the one major Hispanic label it sells, Papi, accounts for just 1 per cent of the retailer’s business, while JCPenney represents 25 per cent of the label’s sales. He also said that the percentage of Papi inventory that moves weekly is at or below average for the department.

This isn’t stopping other retailers from giving the market a shot. In September, Sears launched its new Lucy Pereda apparel collection, which will debut in 227 of its stores around the country. Sears reported that it expects the label to sell well as Pereda - Hispanic fashion model, journalist and author - tends to influence the market.

Kmart is also trying to revive its image with strong brands and has just launched Thalia, a line from the Latin Grammy-award winning singer and former Mexican soap opera star, who has great name recognition among Hispanics. The line - apparel, accessories and home - will be sold in boutiques within one-fifth of Kmart’s 1,500 US stores, primarily in areas with large Hispanic populations like Chicago, Miami, San Diego and New York.

Brands and retailers offering apparel for the Hispanic market need to take into account design aesthetics and fit issues.

"The typical Hispanic female shape is thinner in the waist and wider in the hips than the average Euro-American shape," Gondell says. "In terms of design, it is necessary to consider the cultural tastes of the market, but regardless of specific colour, fabric and styling trends, the brand positioning must always be 'pretty' as Hispanic women place a high value on beauty and femininity.

"Also keep in mind that the market is "very large and diverse," with people coming from a variety of nations, but often only sharing a common language - which means a huge disparity in their income levels and standards of living.

"While wealthier Hispanics [such as those who emigrated from Cuba and are living in the Miami area] might favour European designers, many Hispanics are very price-sensitive and are looking for value," she adds.

"And many groups come from very traditional, conservative and/or Catholic cultures which require more modesty in dress."

Apparel drivers

What are the factors that drive an apparel purchase for the Hispanic consumer? Putting clothes up front helps, say analysts. Target has had success by displaying kid’s clothes at the entrance, while JCPenney has had similar good fortune with juniors. Other drivers are quality, size, availability and price - which sounds strikingly familiar to the way non-Hispanics shop.

“Brand just helps to weed out which rack of clothing to go to first,” says Proper.

Other factors that make a sure-sell when targeting this market: the “cool” factor and fit. “If the lines are created to actually have you fit in the clothes, then they will do well if the design is nice. But if it is just designed to be Hispanic for the sake of standing out...it will tank like anything that does not fit or is of bad quality. Let's face it, it's not like Hispanics are suddenly going to put up with ill-fitting clothes because they were especially made for the culture.”

Analysts point to specific pop culture factors that affect this market’s buying behaviour as well. Jennifer Lopez, for example, influences how young women would like to dress (her new line is evidence of her cachet), as well as Britney Spears and Beyonce with their low-riding, hip-hugging denim looks. Proper says another big influence are Puerto Ricans, who she says really influence a lot of the Latin pop culture drive. The trends go back to culture and the role it plays in Hispanic fashion.

“It lets you be more daring,” Proper says. “You were brought up to be a strong woman and mostly to love your curves, so the culture lets you seek styles that not only make you look good, but have feminine touches that play up your body-shape. And yes, it also affects the colours you buy.”

Brands wanting to deliver such styles, colours and messages should start with a brush-up on tradition, lifestyle and culture, and go from there. Her biggest advice? “Everybody wants them, so hurry up.”

By Stacy Baker.

The Hispanic urban youth market and how to reach it

•Hispanics comprise 13.5% of the American population, but 17% of the US teenage population. Over the next 10 years the number of Hispanic teens will grow by 25% (from 3.3 to 4.1 million), and will by then comprise 20% of all US teens.

•Hispanics under the age of 20 number more than 12 million, or 38% of the total US Hispanic population. They comprise 58% of all youth in Los Angeles today, but will account for 80% within a few short years.

•Hispanic teens live in two worlds. They embrace the American way of life, but are proud of their heritage (54% define themselves as Hispanic only). Multiculturalism is pervasive and embraced, but so is pride in one’s roots. Peers are a major influence, but so is family. Group identity is important, but so is individuality. And most Hispanic teens are fully bilingual.

•Hispanic teens are big spenders. According to Teenage Research Unlimited they spend an average of $375 a month, 4% more than the average for non-Hispanic teens. In 2000, Hispanic teens accounted for $20 billion in consumer expenditures, or 14% of all spending by US teens.

Keys to keep in mind when targeting:

•Hispanic urban teens live in and embrace a multicultural world.

•Attitude and personality are more important than race and ethnicity.

•Hispanic urban teens believe in authenticity and in being “real.”

•Face-to-face interaction is both an urban and a cultural value.

•School is the epicenter of their social lives.

•They are influenced more at the peer level (micro) than by mass media (macro).

•Brands carry a lot of weight, used as a way to express both group identity and individuality.

•Hispanic urban teens want to be spoken to as individuals, not as members of a mass audience.
•Spanglish speaks to their dual worlds, both of which are sources of pride.

•Growth in advertising aimed at US Hispanics has outpaced overall advertising growth. Total ad spending of the nation’s 50 top advertisers dropped 10% last year, while their spending on advertising to Hispanics rose 23%.

•Despite the increase, Hispanic ad budgets still fall well short of what is needed to reach the nation’s 40 million Latinos, who account for 13% of the US population and aggregate disposable income of more than $600 billion.