Hispanic purchasing power increasing - East Valley Tribune: Business

Hispanic purchasing power increasing

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Posted: Saturday, August 11, 2007 11:08 pm | Updated: 5:52 pm, Fri Oct 7, 2011.

Arizona’s Hispanic residents will have more than $28 billion to spend this year on everything from burritos to back-to-school backpacks.

That’s according to a study on U.S. minority groups’ buying power, just completed by the Selig Center for Economic Growth at the University of Georgia.

It’s only 18 percent as much as the projected buying power of the state’s non-Hispanics, but it’s nearly six times that of Blacks, Arizona’s second largest minority.

And the Hispanic spending clout is going to get even bigger as the fast-growing minority group’s chart-topping birth rate in Arizona and around the country changes the future population mix.

In fact, according to the Selig report, Hispanics will keep the economy humming, providing an especially big benefit for states popular with the minority group.

That includes Arizona, seventh out of the 50 states in projected Hispanic spending for 2007.

“The immense buying power of the nation’s Hispanic consumers continues to energize the nation’s consumer market,” according to the Selig report.

“Census 2000 showed that more than one person in eight who lives in the United States is of Hispanic origin, and the U.S. Hispanic population continues to grow much more rapidly than (the) non-Hispanic population.”

By 2012, nearly one person out of every six living in the United States will be of Hispanic origin.”

In Maricopa County, the Hispanic population is growing even faster. According to Census information released just days ago, the number of Hispanics in the Valley soared 48 percent between 2000 and 2006, while the rest of the county population increased 14 percent.

That’s good news for retailers and service providers that tap into their burgeoning buying power, said Jeff Humphreys, who authored the Selig study.

“Hispanic buying power will continue to outpace the growth in population,” Humphreys said.

“The Hispanic population is young and overly represented in the early stages of the career ladder, while more non-Hispanics have plateaued at their peak earning years. And a smaller number of Hispanics are retired, a time when income decreases.”

That means Hispanic per-person spending will continue to climb, while non-Hispanic spending slows, he said.

Tom Swanson, general manager for Food City, Chandler-based Bashas’ fastest growing grocery chain, labels the demand growth for Hispanic-favored products “explosive.”

Bashas’ bought Food City, a small central Phoenix supermarket that caters to Hispanics, in January 1994.

Now the company has 62 Food City stores and big plans to keep expanding the brand, Swanson said.

The company stocks Food City stores with lots of fresh produce and fresh meats — the same stuff that goes to Bashas’ stores but proportionally more of it, Swanson said — plus lots of Mexican brands many non-Hispanics wouldn’t recognize, fresh tortillerias and scratch bakeries that turn out Mexican favorites as well as standard American pastries.

Food City hosts soccer tourneys and other grass-roots events aimed at winning over target customers and advertises in Spanish-language publications.

Swanson probably knows the local Hispanic market even better than the national number crunchers.

He knows, for example, that there are more Hispanic teenagers than non-Hispanic teenagers, and he pegs them as his future customers.

“They will change the whole distribution of buying power,” he said. “(Hispanics’ share) will grow by leaps and bounds in Arizona.”

Other minority groups will grow their pieces of the Arizona spending pie, too, said Tom Rex, associate director of the Center for Competitiveness and Prosperity Research at Arizona State University’s W.P. Carey School of Business. But this growth will come at a much slower rate.

Around the Valley, American Indians’ disposable income has mushroomed since the opening of casinos, Rex said, but their numbers are so small that the total dollar impact is hardly noticeable.

The Selig report found Arizona is the fourth biggest state for American Indian spending power, but the $3.8 billion projected for 2007 is still less than that of every other minority group in the state. Even Blacks in Arizona have more to spend, even though the state is only 30th out of 50 for Black buying power.

Asians are big spenders nationwide — they wield nearly half as much national buying power as Hispanics and Blacks. But Arizona is only 19th biggest for Asian spending.

The group is a tough market to target, Rex said, because it really isn’t a group. Different Asian countries of origin have vastly different tastes in food and products, he said.

Ming Truong, manager of Lee Lees Oriental Supermarket in Chandler, agreed. The store imports products from several countries and about 70 percent of the customers are Asian, Truong said.

For many, the breakdown of buying power figures by ethnicity is more a matter of curiosity than actionable information, but businesses need to take note of changing demographics and spending patterns, Humphreys said.

White Americans still wield the biggest chunk of buying power by a huge 85 percent margin, according to the Selig report.

But ignoring the minority market, especially the fast-growing Hispanic component, would be short-sighted, Humphreys said.

“There was a time when corporate America believed the one-size fits all message was effective,” he said. “But companies need to target their messages more, narrow their niche.”

The Multicultural Dollar

Minority groups often spend a higher percentage of their household income on some categories of items/services compared with the total U.S. population

Where Hispanics spend more

• Groceries

• Phone services

• Furniture

• Gasoline

• Children’s clothing

• Footwear

Where Asians spend more

• Food

• Housing

• Major appliances

• Telecom services

• Education

• Personal insurance

Where blacks spend more

• Phone services

• Utilities

• Apparel

• Footwear

• Groceries

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