By Armando Martín  |  As Published on Progressive Grocer

Fear is the biggest single hurdle preventing executives from investing in ethnic markets, but reason and data tell us that the time to act is now.

How often did we hear our parents say, “Just use the common sense you were born with, and you’ll be all right”? The truth is, if we adhered to this simple adage, we’d probably be better merchants and marketers. Somehow, advances in analytics applied to marketing and merchandise reduce the common-sense edge. There just doesn’t seem to be much wiggle room for instinct when making multimillion-dollar decisions.

Sometimes, a decision-maker’s own inner voice, that voice they trusted back in the day when they were coming up the ranks, when they were moved to make bold and brave decisions, that inner voice that served them well, gets shoved aside by corporate tradition or politics, or it droops away in self-doubt. This year and for the next few years, store managers, brand managers, category managers, and marketing and merchandise executives will have an opportunity to rely on an abundance of data as well as their own common sense, and be tested like never before, in a diverse market like we’ve never seen before. A proliferation of media options, cultural diversity, social networking and mealtime alternatives will temper the best and the brightest within our industry. Today’s consumers defy segmentation by their desire for sophisticated individuality, be they black, brown or white; male or female; or young or old. Today’s consumers know they’re in control. The choices at customers’ fingertips are mind-boggling. Data alone won’t help us get there; the committee isn’t much good in this territory either — in fact, the committee can get in the way of breakthrough thinking. We need to value what’s inside of us, our own common sense.

It’s about to get even more complex. This year, thousands of workers are being mobilized to conduct door-to-door counts, and millions of dollars are being invested to promote the 2010 U.S. Census. And for most of the year, discussion of the census will be a common theme for opinion leaders and political pundits. I don’t consider myself the leader of a cause, and I’m certain I’m not a pundit, but I’ve never hesitated to share an opinion.

The census is a ritual that occurs every 10 years, and its findings shape the way government agencies spend money in communities across America. It will also influence the way corporations will invest to persuade more consumers to buy their brands and shop in their stores.

Minorities are the New Majority

The hyperbole is already mounting. In a recent article from the Oct. 12, 2009, issue of Advertising Age, Peter Francese writes that minorities are the new majority: “One fact says it all. In the two largest states (California and Texas), as well as New Mexico and Hawaii, the nation’s traditional majority group — white non-Hispanics — is in the minority.” And in the nation’s 10 largest cities, he says, “no racial or ethnic category describes a majority of the population.”

After careful consideration, I’ve come to the conclusion that the biggest single hurdle stopping executives from investing in ethnic markets is not lack of data, not lack of media infrastructure, not a lack of merchandise, not a lack of strategy, and not a lack of will, because we know the American merchant and marketer is fearless when it comes to competing. So, what keeps decision-makers from reaching out to the ethnic consumer, from pursuing the ethnic market with the same zeal and fearlessness that they’ve done throughout their careers?

Data, logic and common sense all point to a high-spend, growth-driven ethnic population that in some markets equals or transcends the growth and contribution of the white consumer population. Indeed, the ethnic shopper represents incremental growth. So, what’s the hesitation? I’d like to know. I’m sure shareholders would like to know what innovation, what new package idea, what new aisle assortment, what new technology, what new flavor can rival the multitrillion-dollar market represented by ethnic spend.

Risk-averse Retailers

I believe that the reluctance to jump into the ethnic world of merchandise and communication can be defined by a single emotion. Is it possible that one single emotion can hold an organization’s brand hostage and prevent it from truly maximizing its growth potential? If I had to guess what that one emotion is that keeps executives from embracing the ethnic audience, what comes to mind is a four-letter word that starts with the letter F. F is for Fear. Fear to offend a white customer who has been a regular shopper for a generation or two, or more. The self-doubt bounces in our heads that an in-store sign in Spanish will start as a whisper and soon turn into a roar, sparking a mass exodus of white shoppers. Can it be possible that Americans in general have had their heads buried in the sand or, like Rip Van Winkle, have been asleep for 20 years?

I’ve witnessed and heard this concern expressed many, many times. I’ve heard it shared with the deepest respect and complete sincerity from coast to coast by defeated store managers as well as executives at headquarters shaking their heads, not knowing what to do. It’s not just fear of complaints from customers regarding bilingual signage, but also fear from their bosses for any missteps. No one wants to take the risk. So, status quo rules the day.

I give the white shopper more credit for being ready to embrace diversity than corporate America is willing to give. I give the white American shopper props for being curious about serving fresh, flavorful, rich food at the dining room table. Heaven forbid that a Mexican would ever eat meatloaf, or anyone not Mexican would cross the food segmentation profile prepared by an industry analyst and buy the ingredients to make cheese enchiladas, or beans and rice with a warm tortilla.

I understand it’s a difficult thing to imagine that future strategy is no longer going to be prioritized by a diminishing white majority but more by the leading metros where your stores are located, and the national brands naturally follow the distribution. It’s a relatively easy process to determine who lives around the radius of the stores.

Act Accordingly

Francese, in the same Advertising Age article, further supports the reason that a general market strategy is less critical. “The average American has been replaced by a complex, multidimensional society that defies simplistic labeling …. This census will show that no household type neatly describes even one-third of households,” he writes. “The iconic American family — married couple with children — will account for a mere 22 percent of households.” All I’m suggesting is, why not consider your resource allocations according to region and the demographic makeup of the store footprint surrounding your stores, and then act accordingly? Common sense tells us that acting accordingly is to sell what people want and to let them know about it in culturally relevant ways.

Francese notes how diversity varies greatly by age, “with the younger population substantially more diverse than the old. Consider these 2010 projections: 80 percent of people age 65-plus will be white non-Hispanics. But just 54 percent of children under age 18 will be white non-Hispanics … White non-Hispanics will surely account for fewer than half of births by 2015.”

It’s probably not a good strategy to wait until 2015 to react. Reason tells us the time is now. It’s going to be interesting to see if this year’s round of business planning for 2011 will be business as usual. It will be interesting to see whether there’s a groundswell of activity in pursuing ethnic shoppers by those brave souls, the independent thinkers. We’ll all have common access to the census data, but if you want the edge, don’t forget the common census that our parents encouraged us to use.

Armando L. Martín is the co-founder of XL Edge and a managing partner of the XL Alliance, a network of companies dedicated to helping business executives elevate their culture and maximize their profits. To find more information on multicultural perspectives and practical resources, visit www.xledge.com. To contact Armando Martín directly, email amartin@xledge.com.