Hispanic Americans are increasingly amassing wealth: what this means for luxury brands (2023)

“Our shared values ​​around family, food, music and the more universal things that bind us,” … [+] Merrill said a financial professional in the interview.

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The market for luxury brands is rapidly changing, with the Hispanic consumer market, the fastest growing demographic of households with incomes of $150k+, according to two new studies.

White/non-Hispanic households still dominate as the nation’s top-income households, with the share declining from 75% in 2018 to 73% in 2021. The Hispanic and Latino demographic grew the fastest, increasing by 13% to 2.4 million households earning $150k+ annually. This is on par with Asian-lonely households and ahead of Black-lonely households in 1.8 million.

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One Step Down Hispanics are the largest ethnicity in the quintile, earning between $90k and $150k. Hispanics account for 14% (3.6 million), black-alone 10% (2.8 million) and Asian-alone 7% (1.5 million). The other 69% are white/non-Hispanic, with 18.2 million households.

Taken together, the affluent top earners and high-earners-rich-yet (HENRYs) are well above their weight in the consumer market. They make up only 40% of American households, but 62% of all consumer spending, 39% and 23%, respectively.

The rapidly increasing affluence of Hispanics, their over-representation in the top two quintiles compared to other races, and the fact that they are the fastest growing ethnicity bar, by no means means that they are an increasingly important for brands to understand. are demographic.

As affluence increases in Hispanic households, it is important for brands to understand how culture defines the growing demographic.

Two topical studies come to the rescue, one from Claritas that looks at the entire Hispanic demographic and another from Merrill that examines only the affluent at the top of the food chain.

These reports have important implications for every consumer-facing business because as Hispanics’ spending power grows, brands and retailers will feel their impact at all levels of the consumer market.

lay of the land

Overall, Hispanics today make up about 20% of the US population and will reach 22% by 2028, growing at or more than three times as fast as any other ethnicity. Claritas calls this a “multicultural boom”, and Hispanic culture is its primary explosive force.

Currently, the Hispanic population is concentrated in five cities: Los Angeles, New York City, Houston, Miami and Dallas. But they continue to grow with population growth in Washington, D.C., Orlando, Tampa, Philadelphia and Atlanta projected from 2010 to 2023.

Hispanic communities are also historically fastest growing in states without large Hispanic populations, such as North Dakota, Alabama, Georgia, Michigan, South Dakota and Vermont. Like others seeking affluence, Hispanic workers are going where job opportunities are greatest.

The wide representation of people from different cultures makes understanding the Hispanic market difficult. While the largest portion of this demographic traces its heritage to Mexico and Puerto Rico, there are links to several Central and South American countries as well as the Caribbean and Spain.

talk to me

Hispanic Americans are a heterogeneous group, distinguished not only by their cultural roots but also by language preferences. Claritas calls this their “Hispanicity” and divides them into separate sections based on the language used and how long they lived here.

Not surprisingly, second and third generation Hispanics may have some Spanish, but they prefer English. About half of all Hispanics fall into this cult group. Others are bilingual (26%) or prefer Spanish (15%) or are Spanish dominant (13%), the latter being recent immigrants who identify more with their home country than the US

Claritas crosses country of origin and Hispanicity and finds that Puerto Ricans, for example, are more cultured and maintain less Hispanic cultural practices. Also, Cuban Americans are less cultured altogether, prefer to speak Spanish and maintain many of their cultural ties.

These cross-cultural streams – American first, Hispanic second or vice versa – add complexity to targeting this market, tailoring stores to their needs and determining the long-term potential of these different market segments across product categories.

youth benefits

As a group, Hispanics are on average smaller than any other ethnicity or race. That being the case, Hispanics are the largest under-representation in the younger generation groups. They make up about one-fourth of the Millennial and Gen Z segment. In contrast, they represent only 14% of Gen Xers and less than 10% of Boomers.

As income increases with age, we can expect continued rapid growth in the top-income quintile of Hispanics by 2028 and beyond.

Not only can we expect income and spending power to increase over time, the relatively young age of the Hispanic demographic also means a longer lifetime value for brands that generate loyalty.

Claritas projects the life span of a Hispanic family by 2068 compared to Asian by 2064, black by 2057 and white/non-Hispanic by 2054. And because Hispanics live in larger homes than non-Hispanics, especially with the multi-generational and with more children in the household, categories such as dining at home, dining away from home, quick-service restaurants and apparel Lifetime value increases.

In addition, Hispanic home ownership lags behind white/non-Hispanic households at 48% compared to 74%. But as affluence increases, Hispanics will invest in buying a home, which translates into increased spending on everything a home has to furnish. Thus an extended lifetime value would favor domestic brands and retailers as well.

money effect

Taking into account the top earners in the Hispanic market, the Merrill study combines qualitative insights with a survey among some 500 affluent Hispanics/Latinos. It differentiates the two, with Latinos having Latin-American descent and Hispanic referring to people of Spanish-speaking ancestry.

The Hispanic/Latino survey sample was virtually the same as the affluent people as a whole. That is, it was skewed slightly older (76% of age 35 and older), more male (54% to 46% female), mostly married (69%) and employed (77%). They are also highly educated with a college degree or some college (58%), with 32% holding a post-graduate degree. In addition, 38% have a child below 18 years of age in their household.

And of all surveyed investable assets were $100k or more, only a quarter had investable assets of $1+ million. “If Hispanics/Latinos living in the United States were an independent country, their GDP would be the eighth largest GDP in the world,” the report said.

ties that Bind

As a group, affluent Hispanics/Latinos identify as predominantly American (76%), while others feel a strong connection to their country of origin or to being part of a Hispanic/Latino community.

“Our shared values ​​around family, food, music and the more universal things that bind us,” one financial professional said in an interview.

The concept of universality, as opposed to one’s country of origin, can help brands overcome the incredible diversity among Hispanic or Latino heritage. This diversity drives marketers and brands to segment further, taking a more inclusive perspective when what is needed.

“Despite many people born outside the United States or coming from humble beginnings, Hispanic/Latino individuals strongly believe in the American dream.” That’s what has brought every inbound group into this country from the first settlers in Jamestown, VA and Plymouth, MA to the present day.

The report continued, “Hispanics/Latinos are more likely than the general public to believe in the American Dream—specifically, they believe that hard work will pay off and that each next generation will be better than the previous generation.” ”

For affluent Hispanic/Latinos, family is the most important value in their lives, which includes providing for their children and making their elders proud. Religion and culture are also more important to them than the general population.

The connective thread between the generations has kept the Spanish language intact. Some 73% of affluent Hispanics/Latinos under the age of 35 said they speak both English and Spanish at home.

“This is the American dream. Get a degree, buy a house, have a business. Education is a priority, and speaking Spanish must not be forgotten,” said a young female marketing executive.

It is worth noting that the Claritas and Merrill studies come to different conclusions on the question of language preferences. Juan, a financial professional who was interviewed by Merrill, offers insight into how he feels when a clerk is greeted by saying “hola.”

“I have very mixed feelings when this happens,” he said. “On the one hand, I appreciate cultural awareness and want to be inclusive. On the other hand, I think, ‘Why don’t they just say hello? Do they think I don’t know English?’ I’m American, but sometimes those moments make me feel like others don’t see me that way or that I don’t belong. ,

honor a legacy

Across the board, the Merrill Report highlights the sacrifices that Hispanic/Latino parents and grandparents made, helping surveyors reach their level of prosperity. And they feel a concomitant responsibility to do the same for their children and provide for their elders when needed.

As a result, financial stability is aimed at achieving wealth, not buying indulgences or winning by dying with the most toys.

One middle-aged woman said, “What my parents always focused on was to work hard and save as much as I could.” And second, “My biggest life goal is to provide a stable and comfortable lifestyle for me and my family. This is my daily life and goal. That’s what I learned growing up.”

not afraid of hard work; Rather, they feel responsible for working harder than others. This color approaches entrepreneurship, a proven path to growing wealth.

Citing a study on entrepreneurship from Stanford, the report noted that the overall number of Hispanic/Latino business owners grew by 34% from 2009 to 2019, and that these occupations topped the U.S. economy overall, an average of 14%. Revenue increased.

“My father was one of the hardest working people I know,” said the 36-year-old entrepreneur. “He started with nothing and by the time he retired, he had seven gas stations. I worked with him after high school and ended up running three gas stations by the time I was 20. With them, we bought properties next to the stations and built a bodega to grow the business. ,

Entrepreneurship is also seen as a way for Hispanic/Latinos to address inequality and discrimination. Some 46% felt they had to work harder than others to be successful and more than a quarter believed their opportunities for advancement were limited by their ethnicity. And entrepreneurship is also seen as a way to provide more opportunities for other members of your community.

we rather my

While the Merrill study did not delve into Hispanic/Latino buying behavior, the context around their values ​​of family, hard work, responsibility, stability and community suggests a “we-centered” rather than “me-centered” approach.

This can make them a tough sell for luxury brands that use distinctive, self-elevating marketing and positioning. More subtle messages about long lasting value and exceptional quality that justify trading up to luxury will attract more of this consumer.

Hispanic/Latino consumers understand the value of money and how hard they worked to get it. They are not going to throw it away for enjoyment here-today, tomorrow and tomorrow. They want to leave a legacy behind.

“It’s important to me that they [my children] Learn how to manage money and work hard, so I know our family’s ability to be self-reliant and successful will continue in generations to come,” said one affluent male health care consumer.

Source: www.forbes.com

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