Hispanic-Americans are the fastest-growing minority market in the U.S., almost doubling their purchasing power to $951 billion last year, compared with 2000, according to a new study.
The findings of the Selig Center for Economic Growth at the University of Georgia’s Terry College of Business show that the nation’s 46 million Hispanics, along with African-Americans, Asian-Americans and Native Americans, wield “formidable economic clout” and represent opportunities for brands and retailers that understand and can satisfy their needs, said Jeffrey M. Humphreys, director of the center.
In addition to Hispanics, the Selig Center’s Multicultural Economy 2008 report said: 39 million African-Americans had purchasing power of $913 billion; 14 million Asian-Americans, $509 billion, and 3 million Native Americans, $61.8 billion. In 2000, Hispanic-Americans were at $490 billion; African-Americans, $590 billion; Asian-Americans, $269 billion, and Native Americans, $39.1 billion.
The center estimated the nation had $10.7 trillion in total buying power last year, versus $7.2 trillion in 2000.
Forecasts suggest that the importance of the growing minority population will increase. The Selig Center estimated that by 2013 Hispanic-Americans will have purchasing power of $1.4 trillion; African-Americans, $1.2 trillion; Asian-Americans, $752 billion, and Native Americans, $84.6 billion.
“The numbers are impressive,” Humphreys said, noting the Hispanic- and African-American markets alone are larger than the economies of all but 13 countries.
The Selig Center defines purchasing power as the total personal income of residents available for spending, after taxes. It does not include money that is borrowed or has been saved in previous years.
The projections were formulated based on census data and consumer buying estimates.
Although Hispanics may have lower average incomes, they spend significantly on clothing and footwear, the study concluded.
Often ignored by many national retailers and brands, Humphreys said minority consumers could deliver revenue at a time when retailers and brands desperately need it, and marketers would be wise to extend their reach to minority shoppers and tailor campaigns to their specific needs and tastes.
That view was echoed by Michael Solomon, professor of marketing and director of the Center for Consumer Research in the Haub School of Business at St. Joseph’s University in Philadelphia.
Hispanics, who by 2013 will represent one in every six Americans, are “the new sleeping giant” for retailers, Solomon said. “Brands today are waking up to the new demographic majority and realize they offer tremendous purchasing power.”
While the food industry has long succeeded with Hispanic customers, the apparel and retail industry, with the possible exception of Wal-Mart Stores Inc., has missed opportunities, he said.
“Multicultural marketing may be a buzzword today, but there are a lot of pitfalls if you don’t fully know and understand the different markets, their value systems and needs of their individual cultures,” Solomon said.
Marketers are discovering the diversity of minority shoppers — for example, how Latinos on the West Coast differ from their counterparts on the East Coast, said Natalie Weathers Nixon, associate professor in the fashion industry management department of Philadelphia University.
“The misperception that all minorities in America live in the same place and do the same types of things is slowly but surely starting to break down,” she said.
Some brands have succeeded with specialty product, including Miami-based Orange Clothing Co., which introduced a men’s apparel line with hangtags proclaiming it was “Designed by Latinos for Latinos.”
“We now have minority icons like Michelle Obama who are role models,” said Cynthia Cohen, founder and president of Strategic Mindshare, which specializes in retail concepts to Hispanic and African-American consumers.
“In recessionary times like these, you have to look for every advantage you may have, and there definitely is a plus in trying to boost your market share with consumers in minority-dominated neighborhoods,” Cohen said.