Today's Trend: It's Time to Think Latino

"Experts in the Latino market are made not born. I don't think anybody has come up with the magic formula," says Earl de Berge, principal of the Phoenix-based Behavior Research Center, a 40-year-old firm that's been tracking Latino patterns for the past 15 years. "I think that everyone's at the front end of this wave and I don't think anybody's hit a home run yet."

It's no surprise that Southwest retailers and developers are at the forefront of finding ways to mine the wealth as the pendulum swings to a majority minority in many of their cities and a product like salsa easily outsells catsup. According to de Berge's Latino Track studies, Latino spending has gone from $504 billion in 2000 to a projected $778 billion projected this year. The research firm reports the Top 10 markets and what's projected to ring up at the register this year are California, $189 billion; Texas, $113 billion; Florida, $81 billion; New York, $55 billion; Illinois, $30 billion New Jersey, $25 billion; Arizona, $20 billion; Colorado, $14 billion; New Mexico, $13 billion; and Georgia, $10 billion. As a result, Hispanic spending habits can no longer be ignored, industry experts tell GSR.

"Basically, we're a secondary market in the majority, but we're treated as a second-class market," says Liz Topete-Stonefield, president and CEO of the 20-year marketing firm, Topete-Stonefield Inc. of Phoenix. "We spread the word more than Anglos, which really makes us a prime market and not a second-class market."

The experts say it's critical to understand the culture before trying to pitch to a segmented population with a first generation of Spanish-dominant families, second generation of bilinguals and a third generation that's English-dominant and upwardly mobile--each layer with vastly different needs and bound by their heritage. When it comes to the approach, even the pros are divided. Topete-Stonefield, who also trains other marketing firms for Hispanic campaigns, believes it's imperative to have Spanish-speaking clerks, bilingual signs and a multi-cultural marketing approach while de Berge says the best bet is to recognize that the majority of the nation's Hispanic population is now acculturated--an upwardly mobile, college-educated, English-speaking segment of big spenders that respects its roots as much as its first-generation parents. He says the Spanish-dominant sector, using the media to learn English, represents just 24% of the Hispanic population.

"It's no more complex than the Anglo market," de Berge says. "You've got to shake off your old biases of low-income, sombrero-wearing immigrants. There is no one message for all." His best advice: think Latino. "It's what's happening now in style and fashion," he says. "Today being Latino is a matter of pride. There are icons in sports, entertainment and the art community who are greatly admired. They didn't have that 20 years ago."

From a statistical standpoint, the Latino/Hispanic market "really looks a lot more like the general market than people guessed," de Berge says. Hispanic families spend $5,648 per year on food while non-Hispanics spend $5,288. Hispanics also outspend non-Hispanics in apparel and personal services, $1,857 versus $1,732 per year. But, de Berge cautions, the number could be misleading because Hispanic families tend to be larger.

The experts agree misperceptions and misconceptions are the pitfalls for developers and America's mainstream retailers. "The issue is being culturally sensitive to them," de Berge stresses. "Get rid of the Hispanic market notion. There are huge segments in this market than need to be understood."

Research also shows Hispanics aren't any more brand-dedicated than the average consumer. "Hispanics are very experimental in their orientation, which means to the marketplace that you can get them if you reach to their market," de Berge says.

Topete-Stonefield says brand names are big sellers because "that's who advertises. It's not because we're focused on the brands."

Topete-Stonefield also says the race's values and cultural differences are the underpinnings that mandate different sales strategies. "We're in touch with our culture through the radio, print, TV, all the time. We will adapt and we will assimilate to a certain extent, but we will never melt," she says. "We're the nation of the future. If you don't get us right now, you might not get us in the future. Smart corporations are talking to us in both English and Spanish....If you get me, you get my mother, my father and my brother." And, she cautions mainstream retailers against believing the answer is to hire two marketing agencies--Hispanic and Anglo. The message can often get lost or distorted in the translation, she forewarns.

Natan and Tzipora Bar-Yadin represent one of the success stories in Hispanic retailing, immigrating in 1960 from Cuba and opening their first women's fashion store 16 years later in the border town of McAllen, TX. Today, there are 76 Melrose stores in malls, shopping centers and freestanding units in four states...with more on the way in a larger format.

"We as a company do better and better the less American they are," says Reuben Bar-Yadin. "The more American they are, the more mainstream they are and they go to the Gap and Kohl's." The heightened interest in all things Hispanic these days has Melrose riding a crest of favoritism in the development community. "The owners of properties in Hispanic areas look at us as a very viable tenant," he says.

But even the successful Sans Antonio-based Melrose has had to adapt. There are fewer dresses on the racks than there were three years ago, Bar-Yadin admits, citing the push for casual as the cause. But, the flair of the merchandise still remains firmly rooted in the Hispanic culture. "It's tight fitting, fun and lively," he says. "It's trendy and at the same time it's very price conscious."

Aside from merchandise, Bar-Yadin says there are several key elements to the Melrose strategy. Models are Hispanic; staff and signs are bilingual. Holidays on both sides of the border are recognized. There are even two Mother's Day sales to accommodate the May 10 celebration in Mexico and US' second Sunday in May. If the days fall close enough together as they did this year, the sale is simply extended by a few days, he explains.

David Watson, principal of Dallas-based Direct Development Co., has spent two years studying the intricacies of the Hispanic marketplace in anticipation of building a center in southeast Dallas. The groundbreaking is rapidly approaching for the $17.5-million Sierra Vista, an estimated 175,000-sf community shopping center bringing the first new retail space in nearly 40 years to the sector.

Watson likens the 26-acre project to 1970s-era development because it's a well-rounded lineup of apparel, footwear, banks and entertainment that's attracting some of the biggest national names in retail. The roster runs the gamut from a Foot Locker to a Chinese buffet. Also coming is a 13-screen theater with first-run movies and Spanish films. The cinema's name is being kept under wraps, but Watson says it will be a Dallas-first for the California company. Even Wachovia and Washington Mutual have jumped at the ground-floor opportunity of Sierra Vista.

Watson says his firm's foray into the Hispanic market is being governed by the community's needs for basic family-oriented retail. And, it's the shop owners who get to decide if signs will be bilingual. "We believe our market is Mexican-American and more of our community speak English," he says. "Our goal is to create a market that's comfortable for them to shop. I really believe if it's done right, you're going to end up with what becomes a part of the fabric of the community."

Sierra Vista's exterior will be bright colors and sharp geometric angles. "We're going to skin it and brand it in keeping with the culture so it's going to look very Hispanic in its orientation," Watson stresses.

As for the rents, they are equal to that of suburban communities. Watson says shallow-bay spec is running $20 per sf to roughly $30 per sf and deeper spaces in the mid- to high teens.