August 09, 2017

By Ozzie Godinez - CEO and Co-Founder at PACO Collective

Target is worried. Latinos, one of its key demographics, are shopping less. The news alarmed CEO Brian Cornell so much that at the July Fortune Brainstorm Tech conference in Aspen, he told an audience that “there’s almost a cocooning factor” among Latino shoppers. “They are staying at home. They are going out less often, particularly along border towns in the United States. You’re seeing a change in behavior.”

Cornell’s comments echo those of Robert Kaplan, the president and CEO of the federal reserve bank in Dallas. He recently told USA Today that Latinos are staying home out of the anxiety that emerged from the Donald Trump campaign where Latinos were vilified from both the podium and in the media. Immigrants “are not going out and shopping, they are staying home, they are afraid if they go out they may not come home,” he said. “If we do things that limit sensible immigration, we’re likely to slow GDP.”

There are some numbers to back this up: The NPD Group reports that there was an 11 percent drop in shopping visits among Spanish-dominant households in November and December last year. Secondly, the same firm reports that Latino numbers are dropping in several sectors such as sneakers — In 2016, Latinos accounted for about 23 percent of U.S. sales; since the start of 2017, the firm says that there has already been a “high-teens percentage decline in sales. By the same time last year, those sales increased by a percentage in the mid-teens.

If these numbers play out during Trump’s first year, or even his first term, Target, Walmart, and other big box retailers should be worried. Hispanics spend more money on a daily basis than any other ethnic or racial group and they are on track to have greater buying power than the rest of the U.S.

Target has responded by direct outreach in its advertising messages. Last Christmas season the retailer announced it was increasing its spend on Spanish-language ads by 67 percent compared to the previous year. That meant more spots airing on both Telemundo and Univision that were not only in Spanish but were populated primarily by Latinos, such as Kylie Cantrall, an 11-year-old Venezuelan-American actress. This is similar to other campaigns by retailers such as Macy’s and Kmart that revamped their approach to Latinos by focusing on clothing lines aimed at Hispanics and promoting them primarily through Spanish language media.

While these efforts are sincere, more can be done. As we know, Latinos are no longer a monolithic group. There are significant differences between recent immigrants and those born here, for example. Probe a little deeper and there are increased differences by generation, even by region, such as urban versus suburban. As you peel away the layers of this richly diverse group you uncover different values and beliefs that will very often intersect with the values and beliefs of the wider culture. It is within these shared spaces that targeted marketing of Latinos will have the most relevance.

Maybe the most impactful way Target and other retailers can make Latinos feel welcome — and even safe — in their stores is through marketing that reflects the reality that they are no longer a subset of the mainstream but are instead a driving force in the majority. That means a heavy presence in English-language media as well, as well as portrayals that reflect their interest in styles and activities that are not exclusively from their own culture.

That kind of inclusivity is important now more than ever. Moody’s Analytics reports that the Trump administration’s crackdown on immigration, both illegal and legal, will reduce net immigration to the U.S. from about 1 million to about 750,000 each year. Numbers like that will likely have a ripple effect on the economy, which is something every retailer needs to prepare for in coming years.



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