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Ikea, Home Depot, JCPenney Change to Court Lucrative Market

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NEW YORK ( -- -- In what appears to be a major expansion of their marketing programs as well as their attitudes, many big U.S. retailers are spending more to target Hispanics and doing serious research to identify and develop Hispanic-designated stores.
Major retailers are making large-scale moves to customize individual stores in terms of the density of the Hispanic communities those facilities serve.

Retailers ranging from home-improvement chain Home Depot and electronics giant Circuit City to department stores like JCPenney and discounters such as Target Stores are adding bilingual signage, collateral materials and staff and tweaking merchandise to appeal to a growing Latino community that accounts for 14% of the U.S. population but shops disproportionately in certain areas.

Spanish signage
“We just felt it was the next level of communication for us,” said Rich D’Amico, Ikea’s regional marketing manager. In September Ikea broke its first original Hispanic TV commercials -- and added Spanish-language signage in stores in five markets: Chicago, Los Angeles, New York, San Francisco and New Haven, Conn. At the same time, Ikea did its first Spanish-language catalog, and its “How to shop Ikea” video will get a Spanish-language version shortly, Mr. D’Amico said. Anita Santiago Advertising, Santa Monica, Calif., did the ads.

Aggressively courting Hispanic shoppers, JCPenney used U.S. Census data and its own market research to identify

Created by Bromley Communications, Circuit City's Hispanic ads strive to make high-tech gear family-friendly.
The latest arrival in this Hispanic household is a Circuit City video camera.
several Hispanic-designated stores. Changes there include bilingual signage, gift cards and credit applications, plus stocking more colors and sizes Hispanic consumers want, said Manny Fernandez, manager for multicultural and specialty marketing. “It’s about providing merchandise that’s relevant,” he said. He noted some stores stock jewelry appropriate for quinceaneras, the 15th-birthday celebration Hispanic families throw for their daughters.

In Hispanic marketing, a little can go a long way, experts said.

“You get great credit for saying ‘This store’s for you,’” said Randy Curtis, market strategist at consultancy Bueno Curtis Behavioral Marketing and a former Wal-Mart Stores marketer.

'Talking money' in Spanish
“There’s a story going around here that a Hispanic customer said: ‘I speak English quite well, but when I’m talking money, I talk Spanish,’” said Justin Lewis, vice president of marketing at Circuit City Stores.

Combing Census data and proprietary research, Circuit City gives any store that is 40% Hispanic or more the full package of bilingual signage, collateral materials and circulars. Below 40%, it varies by store, down to just bilingual bathroom signs and return-policy signage near cash registers. All stores also keep handy a Spanish glossary of electronic terms, compiled by Bromley Communications, San Antonio, the Hispanic agency Circuit City hired in January 2004 for its first foray into the Latino market. The first ads, showing a Hispanic family happily shopping in a bilingual Circuit City store, broke in October.

“Obviously, it’s a by-market issue,” Mr. Curtis said. “If you’re looking at return on investment, you’re not going to go to the expense of redoing signage for 2% to 3% of the population."

Careful choices
Besides, stores risk alienating other customers who may want their languages represented. So choosing carefully is key. Geography also matters. In Los Angeles, a store in an area where 70% of the population is Latino might be considered Hispanic, but not 20%. In a less heavily Hispanic area, 25% might merit designation as Hispanic.

CVS classifies all its drugstores at one of four different levels that determine the degree of Spanish-language store signage and communications. The levels, based on the Hispanic population in a store’s neighborhood, go up to a high of 85%.

Singling out stores with high Hispanic potential has gotten easier with more powerful, cheaper software and detailed Census data, said Marco Vega, head of planning at Ole, New York, Target’s first Hispanic shop. It can be as easy as running Microsoft’s MapPoint software on a laptop to reveal Hispanic markets a client never knew it could tap. Hispanics will also drive longer to reach a store, on average 15 minutes compared to 10 for the general population, he said. “If you crunch your numbers right, you’re going to find some nice surprises,” Mr. Vega said. For example, a detailed look at not-very-Hispanic Cleveland found a cluster of 300,000 Hispanic consumers in one area, he said.

Fine tuning
The fine tuning is important, Mr. Lewis said. He noted Circuit City targeted its stores with input from store managers, who provided key intelligence.

Marketers can also compare the performance of Hispanic and non-Hispanic stores, or set different targets. JCPenney’s Hispanic-designated stores, working with Hispanic agency Dieste Harmel & Partners, Dallas, were supposed to grow 2% faster than others. In fact, the those stores grew sales by 11.2% from February through September 2004, compared with 6.6% for all JCPenney stores.

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Laurel Wentz contributed to this report.


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