THANKS TO THE INTERNET, A DIVERSE AMERICA GETS IN TOUCH WITH ITS ROOTS.
It's December, but for Devi Mohanty, head of Namaste.com, the big holiday rush is already over. In fact, it's been over for two months. Unlike other dot-coms that are struggling to figure out how to grab market share this holiday season, Namaste.com is an e-commerce site that peddles everything - from DVDs to jewelry - specifically to Indian American consumers. And for this target market, December doesn't necessarily signify "buyfest." That's because in Indian culture, the big gift-giving event is Diwali, a festival of lights, which happens in late October. "To suggest gifting to Indians around Christmas time doesn't make sense," says Mohanty. "It's the wrong marketing message. Diwali is the Indian `Christmas.'"
Marketers, take note: If you think the holiday season comes but once a year, you haven't met the new, diverse, Web-surfing holiday shopper. As the percentage of consumers born in countries without a Judeo-Christian tradition increases, and as native-born Americans continue their nostalgic return to their roots, one-size-fits-all holiday celebrations are becoming a thing of the past. Increasingly, these consumers are turning to the Internet - not just as a way to replace an expedition to the mall, but also as a replacement for a trip to the corner bodega, or a journey to the ethnic corridors in the nation's urban centers. And whether shoppers need samosas or latkes to create an authentic holiday, the fixings are now just a click away. "E-commerce allows for diversity in holiday celebrations like there's never been before," says Lee W. Frederiksen, CEO of the Frederiksen Group, a direct response marketing firm in Falls Church, Virginia.
Of course, the trend toward diversity in holiday celebrations hasn't escaped the attention of national brick-and-mortar retailers. Take Macerich, a Santa Monica, California-based mall management company that oversees 50 malls around the country. "We have to have respect for the people in our marketplace," explains Susan Valentine, senior vice president of marketing. So in its mall in Los Angeles, where Macerich serves a sizable Jewish and Muslim population, it will pass on the traditional symbols of Christmas and focus instead on a glacier theme, which will include icy decorations and an event with Seaworld's penguins. Santa Claus will be at the mall, but only during certain hours, so parents who don't want their kids to sit on that jolly old man's lap can avoid being there when he's open for business. However, a few thousand miles east, Macerich's mall in Des Moines, which serves a far less diverse market, will be decked out in traditional Christmas trees, wreaths, and open-to-close Santa Claus coverage.
But while brick-and-mortar stores are limited to tweaking their decor, an e-tailer can laser target individual consumers. That's an advantage that will become more important as America's immigrant population expands. Today, the United States is home to the largest number of foreign-born individuals in its history - 26 million people - according to the U.S. Census Bureau. In fact, the number of foreign-born residents in the United States exceeds the population of all but 36 countries, and is larger than every state in the nation except California. Thanks to a projected baby boom among immigrants as well as increased immigration, the number of Asian and Pacific Islanders will increase by nearly 270 percent by 2050, while the number of Hispanics will grow by almost 260 percent. During the same period, the number of non-Hispanic whites will increase by only 7 percent. This will mean that gift-giving holidays such as the Chinese Lunar New Year, Cinco de Mayo, the end of Ramadan, and Eid - a Muslim festival - will rise in importance.
Amid this growth, the digital divide is fading into history. Although Caucasians still outnumber most ethnic households online, the gap is decreasing. According to the U.S. Department of Commerce, the percentage of African American households with Internet access jumped from 11.2 percent in 1998 to nearly 24 percent in 2000. The percentage of Hispanic households online also rose, from 13 percent in 1998 to 24 percent today. Asian household Internet penetration still leads all other ethnic groups: A whopping 57 percent of these households are wired this year.
These newly wired immigrants are technologically prepared to connect with their traditions during the holiday season - and they have an achingly deep need to do so. A survey conducted exclusively for American Demographics by WorldByNET.com, a Houston-based e-commerce company that targets expatriates, shows just how pressing that need may be. The company, which monthly attracts 150,000 visitors born in countries such as India, Ireland, Mexico, Romania, and Vietnam, surveyed its customers about their holiday traditions. A full 37 percent said they combine U.S. and native traditions, while more than 30 percent said that they celebrated the holidays by following the traditions of their native countries alone. Just 10 percent said that they only followed U.S. traditions. "Anything marketers can do to get authentic and help these consumers to capture what they're missing back home can fill a void," says Laura Young, director of marketing communications for WorldByNET. "And holidays are a time when that void is very acute."
Even highly acculturated immigrants feel the resonance of "old country" traditions around holiday time, says Sandeep Krishnamurthy, manager of business development for International Channel Networks, which provides in-language television programming to more than 8 million U.S. households. The influence extends even to the very American children of the foreign-born: "Grandparents and people who come from the homeland still have a very strong influence over their behaviors," he says.
Given this strong consumer demand, why haven't more companies stepped in to capitalize on the opportunity? According to Mohanty of Namaste.com, many companies don't have a good understanding of the market potential that exists in the ethnic niches. This is not necessarily a case of naivete, but a case of missing information, he says. "Trying to market to Indians with traditional marketing tools will be very difficult. We don't have segmentation data, we don't have historical data about how Indians react to direct marketing," he says. "It's much more an art than a science at this point, and that's very uncomfortable for a marketer from a Procter & Gamble, or a Kraft, that's grown up marketing in a very analytical way."
Another reason for the e-tailers' indifference may be that they are underestimating the buying power of the market. "It's a bias that you see everywhere - that Hispanics don't have money and that they won't buy online," says Effie D. Silva, e-commerce manager for Soloella, a Manhattan-based bilingual portal that targets Latinas. "But you have a large percentage of Hispanics who are in the higher-income markets and are willing to shop online, and if you don't hone in on this lucrative market, you're missing a big chunk of sales," she says.
And, in fact, the spending power of the ethnic market is on a steep climb. In 2001, minority spending will reach above the $860 billion mark - nearly twice what it was just a decade ago, according to the Selig Center for Economic Growth at the University of Georgia. Using a different measure, the U.S. Department of Commerce recently released estimates that make Selig's projections look conservative. According to the federal government, minority disposable income added up to $1.3 trillion in 2000, and is projected to reach $4 trillion by 2045. The figure will represent 70 percent of the total increase in spending power in the United States during that time period.
To be fair, major marketers aren't exactly ignoring these statistics - they just haven't progressed further than putting their foot in the door. Take direct mail giant Fingerhut, for example. The company "wants to get in on the ground floor of the growing Hispanic market," says Ben Saukko, spokesperson for Fingerhut Incorporated. This holiday season, its efforts will include a special catalog, "Fingerhut en Espanol" with an accompanying Spanish Web site and Spanish-speaking customer service representatives. Fifteen percent of the company's entire sales come from Hispanics, and company executives believe that a mix offering credit and providing education about the mail order and e-commerce shopping experience will help it to gain a foothold in the market. "We have found that Hispanics are very loyal customers," says Saukko. Brand names become intimately associated with products, he says. Cell phones, for example, are "Motorolas" to many Hispanics. "We're hoping that e-commerce will become `Fingerhut' to Hispanics."
But while bilingualism is necessary to reach many Hispanics, it's not sufficient, says Silva of Soloella. For its first holiday season online, this dot-com plans to target Latinas with a strategic approach. Since the vast majority of Hispanics are Christian, the holiday that Soloella will focus on is Christmas. But it's not the same kind of Christmas that Anglos celebrate. For Latinos, the holidays run from December 24 to January 7, Silva explains. The season kicks off with Noches Buenas (Christmas Eve), when families gather for a party and to open presents late at night. On its site, Soloella will feature articles on how to plan for Noches Buenas, including suggestions for Latin American wines, available through their merchant partner Wine.com, for example. In early January, the holiday season ends with the Dias Reyes celebration, which typically includes a parade and another period of gift-giving, says Silva. This holiday is a lot like Easter, she says, because children usually get a new set of clothes for the occasion and are showered with gifts. At this time, Soloella will feature merchants that specialize in children's wear or toys. They will also feature merchant partners that spotlight a different kind of gift for adults. "These gifts will be smaller and more symbolic," she says - for example, jewelry or fragrances.
Of course, Asians and Latinos - the fastest-growing ethnic groups - don't represent the only marketing gold mine. There's also a vast untapped market in smaller immigrant groups with specific holiday needs. Beatrice Ughi, president of Esperya USA, believes that the Italian American market has great potential: While just 17 percent of Americans born abroad come from Europe, that equals 4.3 million consumers. Add that to the 15 million Americans of Italian descent, and you've got a substantial market to tap. Esperya.com/USA offers fine Italian foods, not "industrial, commercial products" but products that you can only get from specialty stores in small towns in Italy. This includes a special bitter honey from Tuscany, biscuits, cookies, and specialty cheeses, including Parmigiano Reggiano delle Vacche Rosse, a cheese made from the milk of a rare red cow. Gift baskets, which will allow consumers to create a traditional Italian feast, range from $50 to $150. Ughi plans to drive traffic to her site through media buys in Italian-focused publications, such as La Cucina Italiana. She's also reaching out to upscale Italian Americans and aficionados through the New York Times Magazine and Bon Appetit. Since the company opened in July, it has served "thousands" of customers, according to Ughi, "but like most retailers, we place a lot of hope in this holiday season. As everyone else, we're expecting two-thirds of our annual revenue between October and December," she says.
Regardless of which holidays foreign-born consumers celebrate, they will inevitably begin to adopt some of the customs of their American counterparts. With time off from school and work during the traditional American holiday season, many will gather in the homes of new-found friends. And that, say the experts, marks still another selling opportunity. Namaste.com's Mohanty, for one, plans to "create" a holiday by bundling a number of smaller Indian festivals that take place in late November and December to "try to make our customers get into the mainstream." Next year, they will encourage their users to send Indian gifts to their friends who celebrate Christmas and to party Indian style during the December holidays. (There is an established precedent for such a concept. Hanukkah is a fairly minor Jewish holiday that's been elevated in the United States because of its proximity to Christmas.) Eventually, as America becomes more diverse, the calendar could provide a year-round excuse for parties and gift-giving. For marketers in search of new pockets of consumer demand, nothing else would make a better holiday gift.