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Tapping The Puerto Rican Buying Power

Valley merchants find more ways to draw Latino consumers

By Edgar Sandoval

July 1, 2002
Copyright © 2002 THE MORNING CALL. All rights reserved.

Wedding consultant Kathleen Arey isn’t Puerto Rican but she knows all about Puerto Rican customs and other Latino celebrations, such as quinceaneras, which mark a 15-year-old girl’s birthday and her transition into womanhood.

Such knowledge is more than a passing interest for Arey. It’s business.

About 40 percent of her customers at David’s Bridal in Whitehall Township are of Puerto Rican and other Latino descent, and they are buying dresses for weddings, quinceaneras and other special occasions, she said. "And they keep coming."

Like Arey, other business owners are recognizing a growing truth in the Lehigh Valley: Puerto Ricans and other Latinos have money to spend – at local supermarkets, clothing shops, car dealerships and many other places. And as they increase in number in the region, so does their collective buying power.

"Hispanics are growing faster than the rest of the population," said Sue Sampson, spokeswoman for State Farm Insurance in Allentown. "It only makes sense to reach them now.

"I have a feeling that more and more businesses … will come to the realization that they cannot continue doing business and ignore 24, 25 or 30 percent of the population."

According to U.S. Census figures, Puerto Ricans are the dominant Latino market segment in the Lehigh Valley and surrounding six counties.

Numbering 73,276, Puerto Ricans make up 57 percent of the Latino population in the Lehigh Valley and surrounding six counties. Most reside in Allentown, where they are 68 percent of the Latino population, and in Bethlehem, where they are 78 percent of the Latino population.

In the region, Puerto Ricans are nearly 3 percent of total population, but they are 17 percent of the total population in Allentown and 14 percent of the total population in Bethlehem.

National chains have already recognized the importance of Latino buying power – income available to spend after paying for essentials such as food and housing. The Selig Center for Economic Growth at the University of Georgia puts the Latino buying power at $450 billion nationally. Local estimates are not available.

To reach the market, McDonalds, Kraft Foods, Budweiser and other companies advertise on Spanish language networks Univision and Telemundo, seen on Lehigh Valley cable systems. Local businesses advertise in Spanish-language newspapers and on the radio, hire bilingual staff and print literature in Spanish.

"It is important to have a relationship with the Latino community," said Pedro Rubio, a MAC Mortgage loan officer in Allentown. "It’s a growing market. It’s common sense."

Lissette Rivera, who was born in Puerto Rico and now lives in Bethlehem, started a venture to take advantage of the buying power locally. Her "Hispanic Discount Card," which she sells for $20, offers cardholders discounts from businesses that have signed up for the program. In turn, the businesses are marketed in Latino neighborhoods.

Non-Latinos also can buy the card.

So far, Rivera said, about 11 businesses – including a moving company, a furniture store, a travel agency and a music store – have been sold on the idea. The discounts they offer vary from 5 to 15 percent.

"I just ask them if they want to increase their number of Latino customers, and they all say, ‘Yes,’" Rivera said. "I don’t have to do much negotiation."

The business owners pay no fees to Rivera. She makes her profit on sales of the card.

Steve Mohle, who owns Regal Furniture in Bethlehem, recently signed on. Mohle said he only had to spend a few minutes talking to Rivera to know he was making the right decision. In the past few years, he has seen a steady stream of Latino customers.

"We attract all customers, of any ethnicity," Mohle said. "We realize that Hispanics are big in the local market."

Businesses can better court Latino customers if they better understand their traditions and buying habits, market researchers say.

Latinos depend on Spanish-language radio and television for information and entertainment, said Nestor Velazquez, who owns WNV Advertising in Allentown with his wife, Wanda. "So, that’s the best way to get them."

Visibility usually pays off, he said.

"You have to be in the Latino parade, in the events where you know there are going to be a lot of Latinos. It makes no sense to advertise on television if all of the Latinos are out watching the parade."

Also, a large number of Latino families consist not only of parents and children but also extended family members living in the same house or on the same block. Latino women ages 18 to 49 tend to shop for three or more family members, according to research by WNV Advertising. "Once you get her, you get the husband, kids, tia [aunt], abuelita [grandmother], the whole family," Velazquez said.

Carmen Garcia of Allentown says it is customary in places such as her native Puerto Rico for the woman of the house to buy the clothes and groceries for the entire family. Her mother before her did, and her married daughters do at their homes.

"My husband only shops when I give him a list," said Garcia, 43, after shopping at the Little Apple Market in Allentown. "And even then, I have to write everything in detail. It’s the only way we know."

She spends most of the family money on groceries. They prefer to eat in, rather than eat out. She likes to shop at stores that cater to Latinos and that sell products from Puerto Rico and other Latin American countries.

"I see more stores selling Latin products," she said. "But more of them would be good."

Alex Ortiz, 23, also a Puerto Rican native, listens to advertisements in both Spanish and English. But those with a Latin theme, in either language, tend to catch his attention.

"I just buy stuff I need, like food and clothes," said Ortiz, who lives alone and tends to do all of his shopping. "I like to buy where I know they like Latinos."

Several factors make Latinos attractive consumers.

Although they tend to earn less than Americans as a whole, Latinos in America tend to invest less and save less money a year, according to the Association of Hispanic Advertising Agencies in McLean, Va.

"This means that Latinos have more disposable cash a year than other ethnic groups," Velazquez said.

Also, Latinos are among the youngest populations – their average age is 26, compared to an average age of 38 for non-Hispanics, according to the U.S. Census figures. They are at the peak of their consumption years, shopping for new jobs, cars, rental properties and houses, according to research by La Mega Communications, a 24-hour Spanish-language radio station at 1320-AM.

Since many Puerto Ricans moved to the Valley in the last decade, businesses have an opportunity to cultivate a loyalty to their brands, said Ed Macias, former director of La Mega.

Last year, the Lehigh Valley Chamber of Commerce organized a workshop to educate members about Latino buying patterns. Ellen Kern, liaison between the Chamber and the Hispanic Business Council, plans to organize similar workshops on the Latino culture.

"The Hispanic buying power is unique, but also strong," she said.

State Farm Insurance officials have sponsored "mixers," or gatherings for Latino business and community leaders, and have translated their Web site information and literature in Spanish so that language is not a barrier for prospective customers.

The future of the economic clout of Puerto Ricans and other Latinos in Lehigh Valley area – as a specific target market – is unclear.

Most Puerto Ricans and other Latinos in the Valley are working-class, pointed out economist Kamran Afshar and others. As they move into higher-paying jobs to satisfy the need for nurses, bank tellers and teachers, for example, to serve their growing population, they may lose that market identity.

As ethnic groups become middle-class, they tend to speak the language of the community at large and no longer buy ethnic products or subscribe to ethnic media like previous generations, said Afshar, of KAA Inc., a research market company in Bethlehem.

"As any group expands in numbers, so does the interest in that group," Afshar said. "But as groups becomes more affluent, they become less ethnic."

The Irish and the Italians who came to the United States in the late 19th and 20th centuries are no longer targeted by big companies, he pointed out.

"But," he added, "Latinos are not exactly like other groups. And while we can project there will be similarities to what other groups went through, we have to see."

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