Hispanic consumers are target in reshaping of drug's food offering

Drug Store News,  Oct 10, 2005  by Barbara White-Sax

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As drug chains expand their consumables aisles, many are considering how their mix appeals to the growing Hispanic market.

The Latino market, which has been growing at a rate four times that of the general population since 2001, is becoming increasingly important to retailers. In key markets, these consumers can be crucial to the success of a drug store's consumables department.

A recent Food Marketing Institute report revealed that Hispanic consumers shop more frequently for groceries than members of other ethnic groups. Drug stores are finding that when they stock fill-in grocery items at sharp prices, they can become a routine food destination for Hispanic shoppers.

Terry Soto, president and chief executive officer of About Marketing Solutions, has worked with national drug chains to increase their food profile to the Latino consumer.

"We believe that in key markets, retailers should be stocking products that appeal to the Latino consumer," Soto said. The first step is understanding what that consumer wants. "Hispanic families consume 6 to 7 gallons of milk in one week, so they aren't filling in with quarts," said Soto. "Since fruit juices are a beverage of choice, Gatorade and other beverages may not be as important as having 100 percent fruit juices in the cooler section."

Adding staple categories that are frequently used by Latino consumers is one way drug chains have attracted this consumer's attention. "Rite Aid has done a great job of bringing in key staple categories to stores with a large Latin consumer base," said Burt Flickinger, managing director of the Manhattan-based market research firm Strategic Resource Group. "Products like brand name cooking oils, sugar, flour, rice are all represented at very sharp prices."

Happy Harry's currently is testing 8-foot sections targeted to Hispanic consumers. "We realized that there are different types of products that appeal to different ethnic backgrounds, such as Mexican, Puerto Rican and Guatemalan," said buyer Laurie Mauragas. "Each region has different tastes and needs and we've begun testing different types of products to satisfy all." The chain uses signage provided by wholesalers in the section.

Even though the program is in test phase, Mauragas said she sees an increase in customers to that section of the store. "It's helpful that we are able to communicate with our Spanish-speaking customers in the few stores testing these sections," she said. "We want to make these customers feel welcome and let them know we have the products they are looking for."

Attracting Hispanic consumers is the first step, keeping them is the second. Because these consumers are value-oriented, as well as brand-conscious, sharp pricing can keep them coming back to the store.

"This is a price/quality value shopper, and retailers who have compelling prices on the first Sunday of every month when P&G runs its branded FSIs will do well with this consumer," Flickinger said. "CVS and Walgreens have done a super job tying in their promotions to those ads. The strategy is encouraging a lot of Spanish shoppers to shift their fill-in shopping trips from supermarkets to drug stores."

Impulse merchandising, especially when targeted to children, can play a huge part in attracting this consumer. FMI research indicates that Hispanic shoppers view grocery trips as a family affair, and 58 percent of Hispanic consumers do their shopping on weekends.

"There is usually a child along on a shopping trip, even if it's at 10 p.m., so high-impulse, kid-friendly products become extremely important," Soto said. "Products that appeal to kids don't have to be Hispanic brands. Kraft Macaroni and Cheese and Kraft Singles do really well with Hispanic consumers."

When it comes to Hispanic brands, chains should think local, as well as national. "Goya is great, but it's not the only answer," Flickinger said. Indeed, smaller brands carried by independent bodegas have been picked up by some drug chains to attract Latino consumers.

"We recommend that in freezer cases where retailers are selling ice cream, they might want to devote more space to fruit bars carried by independent Hispanic bodegas," Soto said. She also stressed how important liquid yogurt products were to this consumer.

" Hispanic consumers have a high consumption of drinkable yogurt, so adding brands represented in Latin American dairy cases can be very important," she said.

Packaged facts found that sales of Hispanic foods and beverages grew on average 9.2 percent each year from 1999 to 2004, totaling $4.4 billion. The marketing firm predicts that Hispanic foods will grow annually an average of 9.9 percent through 2009, when the category is expected to realize sales of $7 billion.

Consumers need to know that drug chains carry the product they want, so promotion can be just as important as product when it comes to reaching this consumer.