Do you think Tiffany & Co, BMW, Ralph Lauren, Private Banking, AMEX Platinum or The Ritz when you think of Latinos? If not, you may be allowing stereotypes to limit your ability to tap into a segment growing faster than any other within the luxury and upscale categories.
While previous research has already revealed a vibrant luxury market with Hispanics earning $110,000+ (which is growing 8 percent faster than the rest, reporting 221 percent growth in the last decade), the sweet spot has now been revealed by a new study challenging conventional thinking: "America’s New Upscale Segment: Latinos!"
The study by AHAA: The Voice of Hispanic Marketing, in partnership with Nielsen and Santiago Solutions, is placing the spotlight on the ‘brown elephant’ in the room represented by Latinos.
"[Hispanics] already represent an important part of our consumer base and with their growing buying power and influence in the U.S. we think it is important to have a more intimate dialogue with this group.
- André Branch, VP of marketing at Ralph Lauren Fragrances
However, this time around the ignored ‘elephant’ becomes even more daunting when zooming into the upscale segment. In fact, one in three U.S. Latinos are “upscale Latinos” with incomes in the range of $50,000-$100,000 per year, representing 37 percent of the Hispanic spending power in 2013, $500 million out of $1.3 trillion.
As 2014 business planning season heats up for many corporations, this data could be what many needed to turn the corner and invest in America’s fastest growing population segment. Here are five key reasons why you cannot afford to ignore this emerging market:
1. Doubling in size: Dare to find another upscale segment that is paced to double in size by the year 2050, reaching 35 million households.
2. Young and Vibrant: As boomers age, upscale Latinos are younger and living in growing households. They are 33 years old compared to 39 years old, therefore living active lifestyles, often with young families — in fact, 85 percent of upscale Hispanics have a household size of three or more, compared to 65 percent of upscale non-Hispanics. This means, opportunities to earn and maintain loyalty longer, opportunities to offer a wider range of service and products and a trendsetting/contemporary mind-set.
3. Highly Localized: If you are quite not ready for a national plan, anyone doing business in the southwest and Pacific region of the U.S. must make this a priority as 60 percent of all U.S. upscale Latinos are in that region.
4. Purchasing More: Upscale Hispanics not only spend more per trip, but also shop more frequently for health and beauty items than both Hispanics and upscale whites. Preliminary reports find that upscale Hispanics over-index other Hispanics in Investments and Personal Care categories
5. Entrepreneurial & Educated: College enrollment among Hispanics has seen dramatic growth of 15 percent from 2010 to 2011. A half-million upscale Hispanic homes have a member in their household that own their own business. In fact, Hispanics who owned business at large are growing 41.8 percent in the next six years to 4.3 million, which is nearly twice the rate of the national average with annual revenues at $350B.
While this may be a new revelation for some, others have already tapped into this segment and are getting ahead of the competition. BMW for example has partnered with the United States Hispanic Chamber of Commerce (USHCC), while Visa Inc. has also launched a Small Business Alliance to help strengthen and grow the three million Hispanic-owned businesses that USHCC advocates.
Gucci Timepieces & Jewelry has also demonstrated its commitment as an official partner of The Latin Recording Academy. The partnership began last year with the launch of a special-edition collection of timepieces and jewelry inspired by the eclectic world of Latin music. Gucci Timepieces & Jewelry has recognized the nominees in the Best New Artist category with a special-edition I-Gucci Latin GRAMMY watch and presented the 2012 Latin Recording Academy Person of the Year, Brazil's Caetano Veloso, with a custom I-Gucci Latin GRAMMY watch set with 42 diamonds.
Most recently, luxury brand Ralph Lauren, which already features a Latino as their worldwide ambassador – Nacho Figueras – has launched a targeted effort elevating the awareness and equity of Ralph Lauren Fragrances amongst Latinos.
With national Spanish television advertising, print advertising on magazines such as Vanidades, People en Español and Latina, partnerships with retailers like Macy’s, Hispanic celebrity gifting and participation in exclusive premium Hispanic events, Ralph Lauren Fragrances is demonstrating its commitment through an integrated approach.
“Hispanics are an important consumer for the Ralph Lauren brand. They already represent an important part of our consumer base and with their growing buying power and influence in the U.S. we think it is important to have a more intimate dialogue with this group,” says André Branch, VP of marketing at Ralph Lauren Fragrances, L'Oreal Luxe Division. The brand’s upcoming launch of Polo Red featuring Nacho Figueras will also include an integrated plan to reach Latinos.
Hopefully the numbers and brand examples serve as an inspiration for many more who are waiting on the sidelines or still clouded by stereotypes about this market. Certainly AHAA is giving more than one marketer an ‘aha! moment’ with all this new data. ¡Muchas gracias!
Lili Gil Valletta is an award-winning entrepreneur, multicultural marketing strategist, media contributor and co-founder of XL Alliance. She is a World Economic Forum Young Global Leader and member of the Harvard Kennedy School Women's Leadership Board.