The nation's No. 3 retailer last week hired Amko Advertising, New York, to develop a new retail strategy to target that burgeoning demographic segment.
"Today we have Hispanic and African-American marketing efforts," said Senior Exec VP-Marketing John Costello. "Now we're studying the Asian-American market, which is emerging as a potent customer group, particularly in California."
Tapping into this segment becomes increasingly important for Sears as the retailer struggles to maintain the impressive comparable-store sales growth it has registered in the past year. Same-store sales were up only 4.8% in September vs. a year ago, following a disappointing 5.2% in August. Equivalent September sales grew 9.3% at rival J.C. Penney Co.
Asian-Americans are the fastest growing U.S. ethnic group. Census data show that between 1980 and 1990, the Asian-American population more than doubled to 7.3 million, 3% of the total U.S. population. That number is projected to grow by more than 60% to 12 million by the year 2000.
Asian-American consumer spending totals about $120 billion, said veteran adman David Chen, managing partner of Muse Cordero Chen, Los Angeles.
Average income for Asian-American families is $41,583, 18% higher than the national average, according to the most recent census figures. And 38% of Asian-Americans had graduated with a bachelor's degree or higher by 1990, vs. 20% of the total population.
Amko, a 9-year-old, $30 million agency, said Asians now make up 8% of urban populations.
"If the Asian-American population is 8%, that means 8% of a marketer's budget should go toward that segment," said Elcid Choi, strategic planner at Amko.
Sears initially, however, will direct far less than 8% of its $450 million annual media budget toward Asian-Americans; it's expected to allocate no more than $1 million next year.
Nordstrom and The Gap have used outdoor and point-of-purchase ads to attract Asian-Americans in San Francisco and Los Angeles, said Isaac Lagnado, publisher of newsletter The Tactical Retail Monitor, New York. And Penney's and department store Liberty House have tailored their merchandising and marketing in Honolulu.
But Sears could raise that attention to a new level.
Mr. Costello said Sears' in-house research team is in the early stages of analyzing Asian-American consumers to determine purchasing patterns. "We first have to provide the right products, displays, personnel and credit options," Mr. Costello said. "Then we'll develop the right marketing."
Offering appropriate apparel sizes is particularly important when targeting Asian-Americans, Mr. Lagnado said. "This is a much bigger petite business-Asians are shorter waisted and have smaller shoulders," he said. "Price resistance is much less important because this is one of the most affluent segments."
It may prove difficult for any retailer to develop a faithful Asian-American audience. Mr. Choi said Asian-Americans are highly loyal to brands but not particularly to stores. And as with many ethnic groups, brands in the Asian-American community succeed on good word-of-mouth, a difficult hurdle for any marketing program.
Amko's Mr. Choi pointed out that the Asian-American market is as diverse as the Hispanic-American market. His agency creates ads in a number of languages to target the unique buying behavior of each group. Marketers that have already sought Amko's services include "cornerstone" AT&T, a multimillion-dollar client that has been with the agency since 1990; Bank of America; Prudential Insurance Co. of America; and Kia Motors America.
Christy Fisher and Leah Rickard contributed to this story.