Ready for some sticker shock? If the entire Hispanic population of the United States formed its own country, it would have a gross domestic product of $2.13 trillion, which would rank seventh in the world, higher than India, Brazil, and Italy. Don’t think Latinos add just as much economic impact to Arizona’s economy? Think again. The economic impact of the Hispanic market in Arizona is enormous, and growing every day.
“There are two areas where Latinos have the greatest impact on Arizona’s business community: workforce and consumer spending,” says Lisa Urias, managing partner at CoNecs North America. “Latinos are entering and graduating from colleges and universities in higher rates than ever before. Businesses won’t be able to grow without this critical segment as part of their workforce.”
The Latino population also represent $46 billion in spending power in Arizona, a number that is projected to surpass $57 billion in spending by 2022.
“Today, the median age of Latinos is 30,” Urias says. “These are prime years when they are moving into family formation, marrying, having children, buying homes and cars and making other major purchases. The non-Hispanic white population is moving into retirement years, where they spend more on medical and travel and less on consumer products. Latino consumers are critical to a business and organizational growth strategy.”
Opportunities arise
Given the growth of Hispanics in the workforce, they also represent significant market opportunities for every type of financial institution, including banks, insurance companies, asset managers, and FinTech. Unidos US, a non-partisan Latino civil rights and advocacy organization projects that in five years, Hispanics will account for about 20 percent of the entire U.S. workforce and more than 30 percent by 2050.
“The economic impact of Hispanics statewide is critical to Arizona’s future, and growing more important every day,” says Frankie Jo Rios, executive director of the East Valley Hispanic Chamber of Commerce. “Some of that is based on ongoing population growth. More Latinos in Arizona means more Latino consumers and entrepreneurs.”
But Rios says other trends are feeding the economic impact on the Hispanic population.
“More Latinos are graduating from high school,” she says. “More Latinos are starting businesses. More Latinos are purchasing homes. Each of these developments fuels our economy, and at a higher rate per capita. Corporate Arizona is aware and responding to this trend. The university systems are aware and responding to these trends. The major political parties are aware and responding to these trends. Anyone who is not aware of these developments does so at their own economic peril. The Hispanic market in Arizona is no longer a niche market, it’s part of the mainstream and growing larger every day.”
Missing a chance?
Arizona is home to 2.2 million Hispanics, or 31 percent of the state’s 7 million residents, making it one of nine states with a population of at least 1 million Hispanics, according to the Arizona Hispanic Chamber of Commerce’s “DATOS: The State of Arizona’s Hispanic Market” report. The 2019 DATOS report will be released today. But considering Arizona is a major Latino market, experts say Arizona corporations still lag in Latino market spending.
“While large corporations do national campaigns in Spanish or include elements of Latino culture in their general market campaigns, most of the companies connecting really well to this market in Arizona are Latino-owned businesses themselves,” Urias says. “It’s been incredible to see the success of small businesses like the furniture company Muebleria del Sol, the tax-service company Rapido Express, law firms, and banks like Marisol Credit Union. These companies have effectively targeted Latinos and have profited enormously.”
Urias says Cox Communications and Fry’s Food Stores are two of the best examples of corporations that get the Latino market and reaches them with products that work for the market and a multimedia campaign that includes local strategic outreach.
“As a company, we stay in tune with demographics and we want to mirror the communities we serve,” says Julio Herrera, director of national inbound sales for Cox Communications. “We also strive to hire talent that mirrors the community. So we find people who are good at their jobs and, by the way, they are also bi-lingual and bi-cultural. That helps us stay in tune with our customer base and listen to our customers’ needs and meet those needs.”
Tapping into the economic impact of Hispanics
Urias says most consumer brands are lagging in Arizona when compared to other high-demographic Latino markets and could do more to connect with the market.
“The biggest opportunities lie in entertainment areas like casinos and hospitality, banking (Latinos are also the fastest-growing segment of small business startups and need capital for their businesses and home-mortgage loans), real estate, insurance, and auto brands.”
Urias says the principal way of turning this around is to see the market as an important part of your growth strategy, take it seriously, allocate healthy budgets to it, and integrate it into your company’s overarching strategic plan. Are the products and services you offer relevant? Are you targeting them effectively? This also means Latino inclusion within your workforce and using your employee resource groups to support your efforts.
“The single most important things companies in Arizona are doing to attract Hispanic consumers is to publicly acknowledge the vitality, purchasing power and growth of Hispanic consumers,” Rios says. “There was a time when these trends were ignored. That is no longer the case. All of that said, some companies and nonprofits do a better job than others are serving the Hispanic market. Companies that understand that their managerial infrastructure, meaning their decision-making staff, must reflect their customer base. It is the presence of a diverse customer base that will ensure diverse hiring practices all down the line, which translates into customer service personnel who reflect the face of that increasingly diverse consumer base. It’s not brain surgery. Customers want to buy from companies that openly welcome them, and that doesn’t come from simply hanging a sign in the window that says, ‘Hablamos Español.’ Latinos are no different than any other consumer. We buy goods and services we can depend on, which tells us if the companies behind those goods and services are worth investing in as well.”
Guiding light
One resource that businesses can utilize when formatting strategies to tap into the Hispanic market in Arizona is “DATOS: The State of Arizona’s Hispanic Market Report,” which is published annually by the Arizona Hispanic Chamber of Commerce. The DATOS report covers a wide range of topics in-depth: access to healthcare, affordable quality housing, community safety, economic opportunity, educational opportunity, environmental quality, affordable food, community design, parks and recreation, social/cultural cohesion, social justice and transportation. DATOS also highlights socio-economic trends and the far-reaching implications for the multicultural consumer, entrepreneurs, and corporations across the state and nation.
“Depending on the business, there are many aspects of DATOS that can be used to develop marketing strategies, and statistics can help frame messaging,” says Susana Martinez, regional economic development specialist for the Maricopa Association of Governments (MAG). “The same is true for business plans; you can analyze trends to determine market opportunities. This may include identifying gaps or other existing opportunities where you can fulfill a specific niche or need.”
Martinez says the annual DATOS Report showcases a large selection of data that can be analyzed and applied to various business sectors. For example, the Hispanic Chamber partners with organizations like Vitalyst Health Foundation to better promote data using elements of a healthy community. Other data concisely highlight efforts ranging from social/cultural cohesion to transportation.
Taking notice
But it’s not just the Hispanic adults that Arizona businesses need to focus upon. Among the state’s K-12 student population, Latinos are nearly 50 percent of the total, meaning a greater percentage of the state’s future workforce will be Hispanic.
“The one thing we need to focus our energy on is the educational attainment of all people, and in particular people of Latino descent,” said Arizona State University President Michael Crow, who is making a big push to recruit more Hispanic students. “Our economic success will depend on the realization of the American dream for all ethnic groups.”
Even if you’re a business leader who has yet to tap into the growing economic base of the Hispanic market, there is still time to make that cultural shift — and it may impact your bottom line across the board.
“Start with one word: respect,” Rios says. “In order to serve any customer base, not just Latinos, a business must respect the impact and influence they wield in the marketplace. The fact that Latino consumer power and business growth is outpacing almost every other major segment of our economy, deserves respect and well-planned response. Advertising to Latinos, for instance, only during Hispanic Heritage Month is not a thoughtful response, because it suggests that Hispanic consumers don’t matter the rest of the year. The Hispanic market matters.”
And Urias says you cannot look at the Hispanic market as one undifferentiated mass.
“There are various target markets within the Latinx (a gender-neutral neologism, sometimes used in lieu of Latino or Latina) market that may fit your products and services,” she says. “Is it the 19-39 Millennial? Are you targeting Latinx with higher income levels for specialty items like high-end automobiles, hospitality, banking services, jewelry, or luxury furnishings? Or are you interested in younger Latinos for music or festival events?”
Urias says it’s vital to develop campaigns that speak to the heart of those audiences and incorporate their stories and know the mediums they consume.
“Latinos over-index on digital – again – because they’re younger,” she says. “Generation Z is the most culturally diverse of any market in American history, and Latinos influence this generation through music, food, culture and stories. You need to start your strategy with this market in mind. It’s truly the only real growth story out there.”
