How to reach ethnic consumers
It really bothers Sabah Shaikh when a grocery store doesn’t carry basmati rice. Her family uses this long-grain rice all the time in biryani, a flavourful dish that mixes rice with spices and meat or vegetables. Basmati is common in Pakistan, where Shaikh’s father grew up, but she rarely finds it in mainstream grocery stores near her home in Mississauga, Ont. “You have no idea how annoying that is,” she says. “We need it because it’s a big part of our culture.” Shaikh would love to avoid the hassle of trekking to an Indian store for basmati rice. “They’re not close and they’re not open all the time.” But given the reluctance of many traditional grocery stores to stock this type of rice, she has no choice.
Why should grocers like you worry about a shopper such as Shaikh? Because shoppers of South Asian descent (from countries including India and Pakistan) are becoming a major consumer force in Canada. Together with Chinese-Canadians, they represent about half of all visible minorities in Canada, and before this decade is through about 20% of Canada’s population will be visible minorities. “If grocers want to maintain the status quo it’s fine to continue catering to the mainstream, but if they really want to grow, they have to capitalize on those groups,” says Fazal Siddiqi, founder of Opal Marketing Group in Toronto.
If the demographics argument doesn’t sway you, then perhaps dollars and cents will. Chinese and South Asian shoppers spend more than other Canadians on groceries. A study by Solutions Research Group Consultants (SRG), a Toronto-based market research firm, shows that Chinese Canadians spend $136 on groceries weekly, 9% more than the average shopper in Toronto and Vancouver. And South Asian Canadians are veritable foodies, spending 23% more.
Yet these shoppers’ needs aren’t always met by traditional grocers. As a result, they are shopping for food elsewhere. Perry Caicco, the respected grocery industry analyst with CIBC World Markets in Toronto, recently estimated that $4 billion to $5 billion of Canada’s $80-billion food industry is going to independent ethnic grocery stores. In a recent report called “The Ethnic Consumer in Canada,” Caicco says these stores are growing in size and sophistication and estimates the ethnic food sector is growing by 15% to 20% a year. Ethnic grocers “may represent as important
a threat as Walmart Canada’s food business,” he said.
“What the ethnic stores are doing is satisfying a customer need that maybe traditionally hasn’t been satisfied as well as it should by traditional grocers,” says Joe Fusco, senior vice-president of merchandising at Metro Ontario. With a whopping 70% of the growth in Canadian consumer spending over the next 10 years coming from visible minorities, Fusco says it’s vital for grocers to understand and cater to these customers.
Multiple trips to multiple grocers
The ideal place to start is to look at how South Asian and Chinese-Canadians shop. As it turns out, many already see mainstream grocers as part of their food-buying routine. Dr. Lucia Lo, a professor in the geography department at York University in Toronto, has studied Chinese immigrants and found most go to both Chinese and traditional grocery stores every week. “If they’re looking for an ethnic-related cooking item, they prefer a Chinese store; if they’re looking for dairy or bread or pasta, then they go to a mainstream store,” says Lo.
That sounds a lot like the shopping patterns of Neil Ta, a Toronto-based photographer of Chinese, Vietnamese and Malaysian descent. Ta almost always heads to smaller ethnic grocers to buy the Asian food items he craves–things like Vietnamese fish sauce and Chinese spices and sauces. He thinks the international aisles in most mainstream stores are small, lack variety and the items are expensive.
Illustrating Lo’s point, Shaikh shops at both ethnic and traditional shops: an Indian store for spices, dry goods and meats; a Chinese store for produce; and a conventional supermarket for dairy and bread. But she longs for a one-stop shop: “No one wants to go to more than one store.”
Now let’s be clear. It’s unlikely that Chinese and South Asian consumers will stop shopping the tiny mom and pop food stores that remind them of home. But just as grocers 30 and 40 years ago began to tailor their assortment to European immigrants with more exotic cheeses and breads, olive oils and kielbasas, today it’s a matter of tweaking your selection and in-store experience to attract Chinese and South Asian shoppers.
The good news is it needn’t involve a drastic overhaul of the entire store. “It’s addressing the slightly different ways these people fill up their cupboards,” says Kaan Yigit, SRG’s founder and an expert on South Asian and Chinese Canadians. Once you understand how they do that, you can take practical steps to reach and retain them as customers.
We recommend leaving your own store behind for awhile and taking a walk through a well-run ethnic grocery store. Look at what’s being stocked, what’s at the front, what’s at the back, what items are in bulk and which ones aren’t. And pay careful attention to how products are presented. A lot of success with ethnic shoppers relies on showing products in a way with which they’re familiar.
The price point
Packaging and assortment are only one part of reaching ethnic shoppers. You also need to understand a bit about where they’re at in their life and how it affects their buying habits. If you’re a white 30-something grocer with a Canadian middle-class upbringing, you likely have no problem relating to your white 30-something middle-class Canadian shoppers. Understanding South Asian and Chinese shoppers may not come as easy if they happen to be immigrants. In that case, it’s important to understand two key areas: demographics and income.
Let’s start with demographics. The typical immigrant in Canada is much younger (29 years old) than the average Canadian (who is almost 40). Most immigrants are in the stage of their life where they are raising a family.
Those households are also larger than the average in Canada. “A typical South Asian home averages over four people; the typical Chinese home is close to 3.5 people and the average Canadian home has 2.6 people,” says Yigit. “There are simply more people to feed in the home, so they are absolutely value-conscious. That’s their No. 1 priority.” Such is the case with Toronto resident Rafikun Nesa, who is originally from Bangladesh and says price is her main consideration (along with variety) when choosing where to get groceries. “I have three kids, so I have to come every day to shop,” she says.
Income is the other factor in the attraction to low prices. For those new to a country, it takes a while to find work or get credentials from elsewhere recognized. So immigrants who’ve been here for less than 10 years typically have lower than average income levels. “Whatever savings they’ve brought dwindles very fast in the initial years, so they get into the mindset of saving,” says Siddiqi. “If they see a
Shaikh thinks mainstream stores “charge an arm and a leg for veggies in comparison to ethnic stores,” so she picks up produce at the latter. “We usually go to the Chinese store where blueberry packs are three for $1 compared to one for $3 at the mainstream stores.”
That may help explain why discount stores have become so popular among ethnic shoppers. But CIBC’s Caicco, who noted the trend in his report, says the price sensitivity of ethnic shoppers points to another key takeaway for grocers: when doing price comparisons, grocers should no longer simply compare themselves to their mainstream competitors across the street. They must also take the prices at ethnic specialty stores into account.
Ta often shops for produce at “smaller ma and pa shops” in his Toronto neighbourhood. He finds the smaller grocers can be much less expensive and more reliable than mainstream, chain stores. His point reveals that providing price relief to ethnic consumers can’t be the only arrow in your quiver. “To waste your whole campaign or strategy on discounts would ultimately cut into your profits,” says Siddiqi.
SAVVY AND THRIFTY
Ethnic grocers are no longer just mom and pop operations. Many, such as Foody Mart and Oriental Superstore in Toronto, are large, sophisticated businesses, says CIBC World Markets analyst Perry Caicco. And they’re absolutely killing mainstream grocers on price–even the discounters. Caicco recently compared prices at ethnic stores in Markham, Ont., a Toronto suburb with a large Chinese population, to mainstream grocery stores such as Sobeys, No Frills and Walmart.
The ethnic stores were almost always cheaper, especially in two key fresh categories: meat and produce.
Add that value
New immigrants may fret over every penny spent, but once they’ve been in Canada for five or 10 years they’re basically settled. At that point they’re starting to shop for quality and value rather than the lowest price, says Siddiqi. With these groups, you need to think long term and start creating brand loyalty.
The easiest way to do that is to offer the products they want. While Siddiqi has seen rice that’s regularly $10 a bag on special for $7 in mainstream stores, once the promo ends he’s disappointed. “If I go back to buy that rice after the deal is over, I see rice–but not that same brand. It’s 100% a missed opportunity that the store doesn’t carry that brand regularly.”
Shaikh has experienced a similar feeling during Ramadan (the Islamic month of fasting). She’s impressed when mainstream stores sell the same brands of rice during Ramadan as her Indian stores do. But once Ramadan ends, the rice disappears from these stores as well. “When you break your fast, you just want to go to the store that’s closest to pick up food, but then they stop carrying it after Ramadan.”
Authenticity in products is also vital. Shaikh says the ones in mainstream grocers “aren’t the same as the traditional brands we’ve trusted for years.” So when she’s looking for a specific spice–say, black cumin–a substitution just won’t do. “Especially with Pakistani dishes, the ingredients really matter. You can’t skip out or substitute, otherwise it ruins the entire meal.”
Having a long-term strategy to please these consumers requires commitment. As Caicco says, “The first bin of bitter melons put on display is not going to sell. The easy answer is to abandon the program. The right answer is to consistently offer bitter melons every day, no matter what.”
Keep it fresh
Speaking of produce, the fresher, the better for these groups. Of course that’s true with any ethnic segment, but it’s especially valuable here. “For South Asians and Asians the common denominator is fresh produce,” says Yigit. Both the Chinese and South Asian consumer segments do a lot of cooking from scratch, he notes. “They’re not opening a can or a box. As a result, that way of feeding your family requires a different mix of products than a mainstream grocery store has.” In South Asian homes, Yigit’s research has found slightly higher incidents of stay-at-home moms or students or a multi-generational home where cooking is a bigger part of the culture.
Case in point: Shaikh cooks daily and takes about four hours to prepare the meals her father grew up with. But she’s often disappointed with the fresh factor at mainstream grocers. “Sometimes I look at the chicken in the halal section and think, What’s this? How long has this been here? It’s not necessarily past its date, but you can just tell when chicken’s not at its freshest. And then I look over at the other section and that chicken looks so fresh and I think, Wow, I wish my chicken looked like that.”
And if you do have a halal meat section in your store, be aware of what you merchandise beside it. Shaikh doesn’t eat pork and is turned off when she sees it next to the halal meat. “In my mind, the pork has been handled by the same person that handles the halal stuff.”
Yigit admits it’s difficult to educate every staff member about the nuances of different demographics, so he suggests hiring staff that reflect the population you’re serving. These staff members will understand not only the language, but the cultural context and nuances. “They become your built-in advisors,” he says.
One of the main components of the ethnic strategy at Metro and its Food Basics discount banner is a new four-person team dedicated to ethnic merchandising across both banners. “It’s not specifically dedicated to grocery or produce or meat, it’s really bringing a cohesive strategy together on ethnic across all departments,” says Fusco. Forming this group, which includes a category manager for ethnic lines in Ontario, “has raised our level of focus in meeting our customers’ needs,” he says.
There are lots of subtle things to consider when merchandising to the ethnic customers strolling your aisles as well. For example, while shoppers reading English tend to scan an aisle from left to right, shoppers reading Hindi or other languages written from right to left scan a shelf in that same direction.
For those trying to upsell (and who’s not?), Siddiqi suggests positioning fish around your halal meat section since “fish can be eaten the way everybody eats it.” Similarly, you could place the lentils next to the rice since the two are often cooked in conjunction.
What will these sorts of store changes lead to down the road? “Ten years from now, we’ll look back at today and say, ‘Gee, we were getting diverse then, but we weren’t as diverse as we are now,’ ” predicts Yigit. Over the next decade, major Canadian centres will see their populations of Chinese and South Asians grow, “so if grocers begin to take action today, that’s going to pay dividends down the line.”