Hispanic consumer shapes marketing strategies

Drug Store News,  Feb 16, 2004  

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Latin women who regularly appear on Hollywood red carpets, such as Jennifer Lopez; Salma Hayek, who recently was named spokesmodel for Avon; and Penelope Cruz, have changed Americans' perception of the ideal beauty. Marketers have responded to this cultural shift by replacing blonde-haired, blue-eyed models and actresses with more exotic beauties, often with an ambiguous ethnic look. The explosive growth of the Hispanic population in this country is changing the way companies go to market with product, said trend forecaster David Wolfe of the Doneger Group.

After watching the profile of their typical consumer change over the last several years, chain drug retailers are attempting to go where the market is with targeted multicultural marketing and merchandising efforts.

In 2003, California-based Longs Drugs launched a Hispanic vendor program designed to target its rapidly growing Hispanic consumer base. The program included a comprehensive Hispanic advertising and marketing plan tied into Hispanic television stations, as well as involvement Rile in health fairs and other events sponsored by the Hispanic community. The program also takes advantage of promotional opportunities during key holidays, ranging from Easter to Cinco de Mayo.

This year, national drug chains--namely Walgreens, Rite Aid and CVS--are ramping up targeted merchandising efforts of their own.

Walgreens claims to look beyond traditional ethnic labels and customizes merchandise by recognizing who is walking through its doors. "In Hispanic neighborhoods, we know if our customers are Mexican, Puerto Rican, Cuban or South American. They all speak Spanish, but that does not mean they have the same needs," the company notes in its current annual report.

Walgreens, a chain often recognized as cutting-edge when it comes to multicultural merchandising, rolled out a 1-foot section of the popular Hispanic cosmetics brand Maja last February to 917 of its stores and has since expanded the section to more than 1,100 stores.

As Wolfe explained, Hispanic women tend to be very presentation-conscious and in many cases, wouldn't think of leaving the house without makeup. This mentality has begun to influence the general market, which spells good news for the beauty industry.

"Americans, regardless of ethnicity, are fed up with the ultracool attitude of the '90s--they want fun," Wolfe told Drug Store News. That said, Hispanic preferences seem to be leading future beauty trends, and retailers should begin to see a sales shift in popular shades of both hair color and cosmetics shades to ones that complement darker hair, eye and skin tones. Color has returned in both beauty and fashion. "We are entering a very glamorous period," Wolfe forecasted.

Walgreens stepped up Hispanic beauty merchandising efforts last fall when it rolled out a Hispanic HBC planogram, dubbed "Profit Center."

MAG Beauty, the North American arm of Puig Fragrance and Personal Care, presented Walgreens with the concept last June during the National Association of Chain Drug Stores Marketplace show. The Profit Center, anchored by Puig beauty brands Maja and Heno De Pravia--brands recognized by Hispanic consumers worldwide--offers retailers a simple way to create a destination for Hispanic consumers. Each shelf, showcasing additional brands, represents a personal care category such as splash cologne, explained Frank Trullerque, vice president of sales and marketing for MAG Beauty. The center, generally a 4-foot section with three to five shelves, also can be customized according to store size and market preferences.

After testing the concept in six doors, Walgreens rolled it out to 150 stores in the Southeast and currently is working on building a Mexican version for its West Coast stores.

For their initial effort to court Hispanic consumers, several retailers, regardless of their channel, are teaming up with vendors--such as MAG Beauty and distributors to build Hispanic-specific planograms.

Re-emergence of distributors

Distributors will play an important role once again, just as they did 20 years ago with African-American ethnic planograms, as chain drug stores attempt to make products lining their store shelves more appealing to Hispanic consumers, said Steve Gertz, national broker for a new multicultural hair care brand called Surge. Surge, which provides bilingual product brochures for in-store distribution, debuted in Walgreens in May and will roll out to 400 of CVS' top ethnic stores this month.

Given Hispanics are an extremely fragmented ethnic group, a distributor that specializes in the Hispanic market and imports can pinpoint the 200 hottest items on a store-by-store basis, Gretz added.

Once retailers have committed to ethnic merchandising fully, they then can begin to integrate Hispanic-targeted products in-line, as Wal-Mart began to do last spring after relying on a dedicated Hispanic planogram for years.

However, as many players in the industry point out, multicultural merchandising opportunities are not exclusive to beauty and personal care categories.