RetailSails

Based on the recently released data from the U.S. Census Bureau, Hispanics are the largest and fastest-growing demographic group in America, now accounting for 1 in every 6 Americans, and retailers and brands are paying close attention.

Those identifying themselves as Hispanic or Latino increased 43% to 50.5 million from 2000 to 2010, while the overall population rose only 9.7%. Hispanics now make up 16.3% of the overall population, up from 12.5% in 2000, and the demographic is projected to increase to 57.7 million, a 35.7% gain compared to only 5.8% growth in the non-Hispanic population, from 2010 to 2015. By 2050, the U.S. Hispanic population is projected to reach 132.8 million, or about 30% of the nation’s total.

Even more importantly, the buying power (disposable income) of Hispanics jumped 108% in the last decade to $1 trillion according to a study by the Selig Center for Economic Growth in the University of Georgia Terry College of Business, more than double the rate of the total population. Packaged Facts estimates that in 2009 Latinos accounted for 9.1% of total buying power, compared to only 3.8% in 1980.

“The Hispanic market alone, at $1 trillion, is larger than the entire economies of all but 14 countries in the world–smaller than the GDP of Canada but larger than the GDP of Indonesia,” said Jeff Humphreys, director of the Selig Center and the author of the report.

Hispanic buying power is expected to grow 50% in the next five years, from $1 trillion in 2010 to $1.5 trillion in 2015, and growth in Hispanic buying power tops all other racial and ethnic groups as well as the rate of growth in overall buying power.

“The idea that there’s strength in numbers certainly applies to Latinos and what this powerful demographic is poised to achieve over the next several years, especially in regards to the influence Latino consumers will have on retail and how manufacturers market their products,” says Don Montuori, publisher of Packaged Facts.

Women’s Wear Daily has a good roundup of strategies retailers are using to target this demographic (subscription required, read full article free here):

Retailers such as Macy’s, Wal-Mart, Dillard’s, J.C. Penney, Kohl’s, Kmart and Sears have been paying close attention to the significant spending power of Hispanic shoppers. Stores have been aggressively courting the Hispanic customer with specific apparel collections; TV and radio ad campaigns, and bilingual direct mailers, credit card applications and in-store signage. Kohl’s, in fact, signed a megadeal with Jennifer Lopez and Marc Anthony for a lifestyle fashion venture, and Kmart will launch a Sofia Vergara young contemporary lifestyle collection for fall. Both lines are sourced by LF USA, a subsidiary of Li & Fung Ltd. Major apparel companies, such as Perry Ellis International have several men’s brands specifically targeted to the Hispanic consumer, but many of the other big women’s sportswear players don’t cater specifically to the Hispanic market.

Retailers appear to be laser-focused on the Hispanic market. In 2009, Penney’s devoted $50 million, or 16.4 percent of its media spend, to the Hispanic market, whereas Wal-Mart Stores allocated $66.1 million, or 6.4 percent of its ad dollars, into Hispanic-specific advertising, and Macy’s earmarked $38.8 million, or 4.6 percent of its media spend, to the Hispanic market, according to Nielsen Co. Sears devoted $56.5 million, or 15.4 percent of its media budget, to the Hispanic market, said Nielsen Co.

While brands and retailers are certainly paying attention, media spend focusing on Hispanics is still only $5 billion out of a total $365 billion total U.S. advertising spend, and only $200 million is going to digital marketing. Expect both of these figures, especially digital spend, to increase substantially in the next five years based on these findings from Google:

• U.S. Hispanics are 58% more likely to click on search ads, compared with the general population
• This market segment is significantly more likely to recall online ads, particularly video ads, when looking for retail-related information
• Six out of 10 made a purchase in a store as a result of seeing online advertisements while researching products — 22% more than the general population
• About 86% have high-speed Internet connections at home; and 78% use the Internet as their primary source of information, above TV and friends and family

“The U.S. Hispanic consumers are online, watching videos, sharing on Facebook and watching content on YouTube,” said John Farrell, general manager, Google Mexico,. “Online won’t replace all other media, but budgets need to be adjusted.”