GROCERY WARS: THE EMERGENCE OF THE ETHNIC SHOPPER
Canada is recognized as being the most cultural diverse society of any Western country. Yet, despite ethnic consumers being identified as a segment, brands must embrace to sustain growth in the CPG sector, a Nielsen study revealed “Most Canadian companies either don’t have (36%) or don’t know (27%) of any objectives or goals tied directly to any particular group”. So, what is the make-up of the new Canada, what impact will this segment have on CPG spending, where are they shopping and how best to engage with them?
The New Canada!
The old Canada (white, rural focus society) is giving way to the new Canada (urban-suburban, multicultural society). By the end of 2011, Canada had a foreign-born population of 20.6%, with 59% of Canada’s immigrants coming from Asia including the Middle East. Europe was the second region of birth for immigrants coming into Canada, accounting for 16% of all immigrants. It is estimated by 2030, 30% of the Canadian population will be foreign born. Toronto and Vancouver represents Canada’s most multicultural cities:
- Toronto – 50% of Toronto’s population foreign born.
- Vancouver – 40% of Vancouver’s population foreign born
Over the next ten years Canada’s population is expected to grow by around 7-8 million consumers, with close to 60% of this increase attributed to immigration.
Ethnic Spending in the CPG Sector!
Immigrants have and will continue to be a vital source to Canada’s economy. This may be in direct correlation to a change in Canada’s immigrant entry classification. Since 1986, there has being a change in the immigrant entry classification with a greater emphasis on economic immigrants. In 2013, 57% of all immigrants were classified as economic immigrants, as compared to 36% in 1986. Chart 1 outlines Canada’s 2013 immigrant entry classification.
Immigrant Entry Classification – 2013
From 2008 to 2013, visible ethnic groups far outpaced the average non-visible resident in consumer spending as outlined in Table 1. In fact, it is estimated over the next decade some $12B in additional grocery store sales will be attributed to immigrants.
Grocery Store Destination for Ethnic Shoppers!
In a study undertaken by Loyalty One, entitled The Modern Grocery Shopper: Attitudes and Opinions Survey, nearly 9 out of 10 ethnic Canadian grocery shoppers indicated the selection of ethnic food and ingredients is an important feature in choosing which grocery stores to shop at. Yet as part of the same study:
- 63% of visible minority shoppers in Canada believe the big box store does not stock a sufficient selection of ethnic foods.
- Independent grocers outperform, big box grocery stores in terms of customer satisfaction amongst visible-minority communities regarding ethnic food selection.
- 69% of visible minority Canadians state they are satisfied with independent retailers compared to only 54% for large grocery chains.
In fact, most ethnic shoppers seek out local stores operated by their own ethnic group, rather than shop at a local supermarket. This gives rise to the increase in grocery sales through ethnic supermarkets. Though difficult to judge, Mr. P. Caicco of CIBC World Markets estimate sales at between $4B and $5B per year while Mr. B.K. Sethi of BK Sethi Marketing figures sales are between $2B and $3B annually. Whatever the actual number is, it represents substantial sales loss for conventional food stores.
Engaging with the Ethnic Consumer!
The million-dollar question marketers are asking themselves today is, how to reach out to the ethnic shopper as current marketing efforts including promotions and advertising do not work. Of particular interest is how to reach out to the Ethic millennial. The Millennial ethnic consumer wishes to fit in and the key is to be connected with them. They are savvy on social media:
- 77% log into social media between 1-5 times per day.
- 44% will follow a brand on Facebook.
- The ethnic consumer will use YouTube to connect with the world around them.
Nielsen undertook a study entitled “Ethnic Consumers, How to Tap into Canada’s Unprecedented Growth Opportunity”. Their best practice tips for engaging multicultural consumers:
- Integrated marketing initiatives. Reach multicultural consumers where they learn and network in digital space and in languages that they speak.
- Identify cultural interests and behaviours. Understanding and activating multicultural consumers’ diverse eco-niches will pay dividends to savvy marketers.
The Impact for Small Business!
Visible ethnic groups are impacting grocery sales in Canada. Over the next 10 years, period ending 2023, about 70% of the growth in Canadian consumer spending will come from visible minorities.The choice is simple. Ignore this segment at your own risk or embrace them to reap unprecedented growth opportunities. The key is to research this segment, understand what motivates them and engage with them in dialogue. Do not rely on traditional marketing efforts. Embrace social media and identify the influencers for this segment. A recent study undertaken by influencer marketing platform MuseFind revealed 92% of consumers trust an influencer more than an advertisement.The power of influencers does not necessarily lie in their follower count, but in their ability to actually influence through authenticity and curation.