Although America has traditionally perceived itself as a melting pot of cultures, the truth is people have often self-segregated themselves into ethnic neighborhoods with nicknames like Chinatown or Little Italy. Danah Boyd (@zephoria), founder of Data & Society, writes, “It’s a fact: while Americans have countless tools with which to connect with one another, we are also watching fragmentation, polarization, and de-diversification happen en masse. The American public is self-segregating, tearing at the social fabric of the country.”[1] On a basic level, it’s easy to understand why people with a shared cultural, religious, ethnic, or linguistic background feel more comfortable associating with people similar to them. People like to feel they belong. Whether self-segregation is good or bad for the country, is a discussion best carried on by social commentators in another forum. Business people, including grocers, must deal with the realities of life — and real-life is complicated.

One area in which multiculturalism is alive and well is the food industry. You don’t have to be Asian to enjoy Chinese, Thai, Filipino, or Japanese food. You don’t have to be Latino to enjoy Caribbean or Mexican flavors. You don’t have to be European to love French or Italian cuisine. You get the picture. In the food and drink sector, Americans enjoy food from around the globe. Nevertheless, neighborhood grocers must understand local tastes if they are going to cater successfully to their most important customers. The staff of sales and marketing agency Acosta, concludes, “As the US population becomes increasingly diverse, the preferences of multicultural consumers will have a significant impact on the future of grocery retail.”[2]

Multicultural tastes and multicultural customers

Terry Soto (@TSoto), a multicultural marketing expert, observes, “The multicultural population is indeed quite large at 133,200,000 people and making up more than one-third (37.5 percent) of the population. They are expected to grow by an additional 60 million people over the next four decades. Importantly, in 2020, these shoppers will have a purchasing power of $3.9 trillion, and they spend a disproportionate amount of their total yearly expenditures on groceries.”[3] As noted above, large multicultural populations often don’t translate into multicultural neighborhoods. Often neighborhoods are more homogeneous. However, even within those neighborhoods, complexity can be found and grocers must understand that complexity. Soto explains this complexity by discussing two large ethnic groups: Hispanics and Asians. She writes, “Knowing how to effectively create authentic assortments that are appealing and relevant to Hispanics and Asians is key [to winning their business] because Hispanics and Asians in the U.S. hail from or have heritage from 21 and 48 countries, respectively. Understandably, this diversity can seem overwhelming.” John Clevenger, senior vice president/managing director for Acosta Strategic Advisors, observes, “The growing multicultural population will drastically impact the grocery industry, and we have already noticed key differences between shopper groups. Understanding these unique values and preferences is vital for manufacturers and retailers to win with these consumer segments.”

The Acosta staff notes, “When it comes to the food shoppers are putting in their carts, multicultural shoppers’ typical grocery cart includes a larger percentage of organic items compared with the total population of US shoppers. In the shopper survey, multicultural consumers were more likely to agree they buy natural/organic products because they know they are better for them. … In addition to health, another attribute multicultural shoppers keep in mind when grocery shopping is authenticity. More than 40% of multicultural shoppers said they buy grocery brands that are authentic to their heritage, compared with just 26% of white/Caucasian shoppers.” Soto reiterates knowing the local population is essential to stocking the right items. In reference to Hispanic and Asian consumers, she notes, “Retailers “don’t have to create assortments for Hispanics and Asians from all the countries they represent across the United States. … In the West and Southwest, their Hispanic target may be primarily Mexican, while in the Northeast it may be Puerto Rican, Cuban and Ecuadorian, or Nicaraguan and Cuban in the Southeast. Separately, Asian targets might be Chinese in New York, San Francisco and Los Angeles, while it may be Filipinos in Los Angeles, Hawaii and San Diego, and it may be Indian in San Jose, Chicago and New York. Focusing on multicultural consumers in a retailers’ trade areas is a much more manageable task, but one that nevertheless requires focused effort to research, understand and apply to their businesses.” Nevertheless, she stresses, “Retailers do need to understand the needs and preferences of Hispanics and Asians who are concentrated in the areas their stores serve.”

Let cognitive technologies help

Fortunately, today’s grocery retailers have access to a lot of data that can help them deal with multicultural complexity. For example, Enterra’s SensoryMap™ solution provides companies an easy-to-understand way to visualize consumption and demand patterns by geography. This way they can know what local consumers are eating and what they will prefer to eat in the future. Predictive modeling allows marketers to simulate consumer acceptance by region, proving deep insight and forecasting capabilities. Pre-mapping preferences to geography allows marketers to quickly determine if a product will sell well in a given area. SensoryMap products can be augmented with additional data and insights to improve forecasting, enhance target marketing and better align inventories to demand. For example, the Enterra Shopper Marketing and Consumer Insights Intelligence System™ can leverage all types of consumer data to provide high-dimensional consumer, retailer, and marketing insights. How important are such insights? Kevin Sterneckert (@KSterneckert), Chief Marketing Officer at Symphony RetailAI, believes they can help a business thrive.[4] More importantly, he believes a lack of such insights could spell disaster for local grocers. He explains:

“Research shows that up to 17 percent of items in a grocery category are duplicative, and many retailers see removing duplication as a way to improve margins. But if a grocery retailer is going to replace or eliminate a product from shelves, they must first understand the value the product has within the category and store for the customer. Is it possible that particular item is the deciding factor for someone choosing to shop with one retailer over another? You would sure hate to lose a customer because of a significant yet avoidable rationalization mistake. Knowing how consumers view and value products in a category is important; not knowing could cost a grocer the entire shopping cart.”… Artificial intelligence now steps in with the power and insights to help grocery retailers make category rationalization decisions that protect profit and customer satisfaction. AI understands, with high accuracy, the idea of transferrable demand. It learns shopper behaviors, understanding what a customer buys as a complement to another product or even as a substitute. Consumers, after all, pay no mind to the profitability of their favorite breakfast cereal, coffee creamer or baked good. What matters to them is that they can rely on its availability when they come in to shop.”

Acosta analysts conclude, “Failing to keep up with the preferences of multicultural shoppers — from offering digital tools to stocking health-focused products — will cause retailers and brands to get left behind in the years to come. The population growth of multicultural shoppers is spread across the US, not just limited to select markets, so stores and manufacturers must find ways to connect with these consumers in order to succeed.” It’s important for grocers to remember they are catering to consumer flavor and product preferences rather than ethnic groups, even though ethnicity may play a big role in those preferences. The only way to deal with the complexity of today’s multicultural food and drink sector is to leverage cognitive technologies and advanced analytics.

Footnotes
[1] Danah Boyd, “Self-segregation: how a personalized world is dividing Americans,” The Guardian, 13 January 2017.
[2] Acosta, “Report: Multicultural consumers shape the future of grocery retail,” SmartBrief, 14 May 2019.
[3] Terry Soto, “Soto: Know Your Multicultural Customers To Offer Right Items, Grow Sales,” The Shelby Report, 22 October 2019.
[4] Kevin Sterneckert, “Guest Column: How AI Is Saving The Grocery Cart,” The Shelby Report, 31 July 2019.