Latinos and Franchises: The Untapped Trillion-Dollar Market
With the much anticipated release of the 2010 U.S. Census data, it is time for businesses and franchises to gear up for the new customer demographic adjustments that will inevitably follow. The biggest news to emerge thus far is the rapidly expanding Latino population, estimated to have become a trillion-dollar customer base in the 10 years since the previous census was taken.
As with any demographic, the Hispanic population in the United States has its own unique preferences and cultures when it comes to shopping and, more importantly, when deciding where to spend their money. Learning more about this expanding base of customers is absolutely crucial to the continued success of franchisees nationwide.
General demographic information
It is not new news per se that the Latino population is rapidly expanding in Southwestern region of the United States, but some interesting information indicates that even States that have not typically been considered to have large Hispanic populations are seeing immense increases. Oklahoma, for example, saw their Latino population increase by upwards of eighty percent in the last ten years. This is why it is so crucial to review the census for customer base information - the facts may be surprising and ignoring the needs of this huge population is to ignore an equally sized business opportunity.
So, exactly how big is this opportunity? Experts expect to see the United States Latino population to surpass the fifty million mark, effectively making the U.S. Hispanic population larger than the entire population of States such as California, Texas, or New York. Texas is a wonderful microcosm for what the business climate might look like for franchisees with surges in their State Hispanic population. Latinos have contributed over seventy percent of Texas's overall population growth and ninety-five percent of all children born in the State. Given the data, this is clearly a trend that will not be slowing down any time soon.
Seize the opportunity
With a fresh and hungry new demographic now in the mix the question remains: How can franchisees ensure that they are prepared to cater to the consumer needs of this group? As always is the case with a franchise, not everything is discretionary. There is already an accepted business model in place, as well as specific requirements that franchisees must meet such as store design or product branding. Some things are just simply out of the owner's control. However, that need not dictate the decision whether or not to pursue the Latino market. Those who dismiss this market will fall behind the ball and sales figures will reflect that. Latinos are simply too large a market these days to be ignored.
- Review the business model
Although there is very little latitude to negotiate the structural business model in a franchise, reviewing the initial business plan can still inspire some ideas. The business plan may need to be rewritten or edited to include a much larger Latino population. Where there is the leeway to do so, certain aspects of how the franchise is run, set up, or designed can be altered and manipulated to benefit sales.
- Build a dedicated team
Consider hiring a direct report to do research about the Latino community and shoppers. This would not only save time, but would dedicate a specific person responsible for maximizing sales to this demographic. When hiring employees, be mindful of factors such as whether or not they can speak Spanish, whether they themselves are Hispanic, or if they are culturally knowledgeable and understanding of Latino culture.
- Promote within the Latino community
Since the Hispanic community in the United States has been largely ignored for quite some time, many consumers, as well as businesses, have formed their own marketplaces with like-minded people. Such a well-established customer trust and loyalty can be difficult to tap, so some relationship-building will be crucial to driving sales. By getting involved in the Latino community, a franchise builds the kind of trust that keeps their customers coming back. This can be achieved by sponsoring Little League teams, volunteering locally, or getting involved in Internet marketing through social networking. All of these are potential routes to consider.
- Get to know the market
This is perhaps the single, most important factor that will determine how well a franchise does with the Latino consumers. Census data can help initially to gather demographic information in the local business area. However, more-substantial research will ultimately prove to be beneficial. Learn about the culture, what drives Latinos and Latinas to shop, what they spend their money on, and how to cater to those factors. Franchise owners already know how important something as seemingly benign as product staging and placement can be. An attempt at some real research and understanding can help to unlock these tiny nuances that drive sales.
Franchisees who wish to significantly boost their revenue and stay on the leading edge of consumer market research must take advantage of the information released in the 2010 Census. By catering to and understanding the demographic, franchises can both maximize profit as well as provide some much-needed services to a long-ignored populace.
Jose Torres is principal partner and founder of BuscaTuFranquicia.com, the first and only Spanish and English language online marketplace for aspiring Hispanic and Latino entrepreneurs looking for business opportunities and franchise companies looking to tap into this community. He also is a franchise advisor and consultant with than 20 years of general business management, marketing, and sales experience in the consumer goods and franchise services industry.