“Multicultural populations will reach a position of dominance in the United States within the next couple of decades,” with the Hispanic population set to grow 6.8 million in the next five years, trailed by an increase of 2.3 million Asian Americans, 1.8 million African Americans and 1 million non-Hispanic whites in the same time period, Nielsen notes in the study, “A Fresh Look at Multicultural Consumers” published Feb. 16.
While five years may seem like a long runway, Nielsen argues retailers cannot wait to tailor their product lineups for multicultural consumers in part because they already account for the fastest growing segment of the US population – driving 94% of the population growth between 2000 and 2014.
In addition, multicultural consumers tend to spend more money than their mainstream counterparts on food – and in particular, on higher margin fresh foods.
According to the report, multicultural shoppers make 3% more trips to stores with fresh items and spend 4% more per year on fresh items than other mainstream shoppers – representing a $2.2 billion opportunity for retailers.
In addition, if a store doesn’t have the cultural foods they prefer they will go elsewhere – even if it is less convenient, Nielsen found. For example, it notes that Asian Americans, who on average spend 10% more on food to cook at home than the general population, will travel further and spend more than other consumers for fresh and organic foods.
Strategy: Offer at least a few choice brands
That said, it doesn’t take much for retailers to tip the scales in their favor, according to Nielsen. It explains: “Convenience can win their business if a local retailer has curated a leading brand or two or an authentic variety of the multicultural shopper’s most frequently purchased fresh ingredients.”
But in order to do that, retailers must understand the subtle differences between each multicultural population’s preferences.
Strategy: Understand difference between populations
Nielsen’s research shows that African Americans, Asian Americans and Hispanics all over-index in seafood, representing a significant opportunity – especially if retailers offer value added items, such as pre-seasoned seafood that reflects consumers’ cultures.
Similarly, Nielsen found that Asian Americans and Hispanics also over-index in the deli and bakery – two more sections that are relatively easy to tailor for cultural preferences.
Strategy: Maximize multicultural cuisine’s ‘halo effect’
Offering a broader selection of ethnic and multicultural foods also will expand retailers’ and manufacturers’ appeal to mainstream shoppers, who Nielsen says increasingly are mirroring the purchasing habits and tastes of their more globally influenced counterparts.
“A ‘halo effect’ is noticeable here, where other shoppers follow the multicultural consumers’ lead, frequently purchasing food that is reflective of a variety of influential cultures. This effect has caused multicultural flavors to become alluring for everyone and enter the new mainstream,” according to the report, which points to the popularity of sriracha as an example.
As a result, catering to multicultural consumers’ demands is “resulting in tremendous opportunities” across categories, channels and even into the mainstream, Nielsen concludes.