Hispanic Consumers Poised to Emerge
Stronger from Economic Downturn

It has now been almost two years since the current recession began in late 2007. It's hard to turn on a TV or radio and not hear a barrage of stories regarding the slowdown, housing, unemployment, foreclosures, bankruptcy, toxic assets, etc. … the list goes on and on. While the recession has affected everyone directly or indirectly, few of us probably stop and think about what a disparate impact the recession is having across the country. Consider the following contrasts:


  • Michigan never fully recovered from the previous recession and is now in a deep and prolonged crisis. Unemployment is the highest in the country at 15%.
  • In Texas there was no housing bubble and therefore no collapse in housing prices and unemployment is still relatively low.


  • Baby boomer empty-nesters looking forward to a rich and active retirement funded by the equity in their home and their 401(k) investments are now scrambling to figure out what Plan B is.
  • A young couple starting a family may be thrilled by the fact that they can now afford to become homeowners and buy a modest home and start a family.


  • A laid-off manufacturing worker in the industrial Midwest may very well wonder whether their factory job will ever come back.
  • A construction worker (the sector with the highest unemployment in the country) can reasonably expect to get back to work once the over-supply of houses on the market gets worked through.

Cultural background

  • With the highest levels of homeownership, mortgage debt, credit card debt and exposure to the stock market, non-Hispanic white consumers have had the most profound change in long-term economic outlook. This is likely to affect consumption for a long time after the recovery has begun.
  • Hispanic consumers with lower levels of homeownership, debt and 401(k) accounts have been mostly affected short-term by unemployment. Their consumption will closely follow the recovery.

This recession is deep and complex, impacting varying segments differently and complicating how marketers should interpret and respond.

Hispanic consumers have also been hit by the recession.

While the recession is being felt across the board, it has hit Hispanics particularly hard:

  • Hispanics tend to work in sectors that have been the first to feel the impact of the recession: construction, manufacturing and the service industry (leisure and hospitality).
  • The crisis has hit harder in states with large concentrations of Hispanics: California, Arizona and Florida.

Given these factors, it is no surprise that the unemployment rate among Hispanics has reached 13.1% versus 10.2% overall.

However, Hispanics remain more optimistic about the future than non-Hispanics.

Hispanics perceive and interpret the economic downturn differently than the general market. Our research shows, even if their present circumstances may be worse, their perception of their own situation is more positive.

  • Hispanics, particularly less acculturated Hispanics, have typically had to live with more insecurity in employment and face greater economic hardship (including less access to credit) than the general population.
  • Even while having the lowest average household income and being hit hard by the recession, Hispanics have still managed to remit $25 billion in 2008 to relatives in Mexico.
  • Hispanics are overrepresented in areas of the economy which began to decline first and will likely rebound sooner (i.e., construction). That means Hispanics will benefit as soon as the recovery begins.
  • Hispanic laborers tend to be very resilient and adaptable. They have quickly found work opportunities in growth areas like healthcare. Hispanics also tend to be more mobile than the general population and readily move to other areas of the country in pursuit of employment opportunities.

How is this affecting Hispanic consumer behavior?

We can see the effect on consumers in two ways: through their ACTIONS and through their VALUES.

ACTIONS: Many of the changes we have observed are direct and intentional:

  • Lower overall spending
  • More comparison shopping
  • Increased use of coupons/shopping for sales
  • Carpooling

VALUES: Some expected, some surprising:

  • Tightening of family bonds
  • Challenges to traditional family roles due to the disproportionate impact of the employment crisis on men and more women having to enter the labor force
  • Heightened concern for teaching values to children

What this means for marketers:

  1. "Sweeten the offer." Make sure it's something out of the ordinary and truly delivering a bang for the consumer's buck. They'll know it, and most likely ignore it, if it's not. Hispanic consumers are comparison shoppers and just plain smart about how they spend their money. And despite the economy, they are still willing to buy brand names. So, understand and really deliver on your brand promise now, and you'll have loyal brand advocates on the other side of the downturn.
  2. Don't be a marketing "drag." Especially not now. Avoid getting too downbeat about the economy, but rather, interject your communications with upbeat themes. Human interest stories of perseverance and creativity in a bad economy touch the heart.
  3. Hang in there. Keep your brand and your message top of mind with your consumers. Why let competitors steal market share away? The Hispanic consumer will be the first to benefit from recovery. And the companies that ride out the storm and stand by their consumers will have the most to gain when the economy turns around.
  4. Listen and learn. Stay close to your consumer. The times "they are a changing." Assumptions from the past may, or may not, hold true. At Lopez Negrete, we monitor the Hispanic market continuously, and stay busy observing, analyzing and incorporating the latest cultural changes that have come about as a result of the economic circumstances.
  5. ¡Sonría! (Smile!) It may not be all good now, but we're on the road to recovery.
    That's how Hispanics look at the economy, anyway, so why not you?

Helping clients through and out of the downturn.

With almost 25 years’ experience in the advertising and marketing business, Lopez Negrete Communications has experienced its share of tumultuous times. Over the years, we’ve worked with clients to make the most out of both good and down economies. Here are just a couple of examples of what our clients are doing now to ride out a less than ideal marketing climate.

Walmart has continued inviting Hispanics to its stores through its Spanish-language programs that specifically address their needs in tough times and make them more affordable: a $4 prescription; glasses and frames with free replacement for one year; $7 money transfers worldwide, including the U.S.; a rolled-back price of $3 for the Walmart MoneyCard (a prepaid Visa debit card), which gives consumers a safe alternative to cash while they work toward financial freedom; plus the continued price reduction on items across the store, including over 100 toys for $10 or less each. Hispanics can now also access a vast reservoir of information after the launch of a dedicated Spanish-language site, AhorraMasViveMejor.com, in 2008, which includes information on funding higher education, an area of special Walmart commitment and giving. As a testament to the importance of the Hispanic consumer, Walmart recently opened the first Supermercado de Walmart in Houston and in Phoenix, a new-format store developed entirely to serve Hispanic needs with its products and services. Walmart has stepped up to the challenge of the economy and the Hispanic consumer has benefited. Opportunity exists even in hard times.

The bank’s most recent Hispanic market campaign reassures Latinos that Bank of America is America’s most responsible lender. Always has been, and always will be. Bank of America is making it clear that it’s committed to helping Hispanics during the downturn. It now offers a financial help line, a 1-800 number that people can call if they are having trouble paying their mortgage. This move alone has helped keep an untold and still growing number of Hispanics in their homes, and boosted the morales of families, neighborhoods and communities across the country.

Rather than lowering quality, as many QSRs have to lure consumers in with lower prices, Sonic offers smaller portions at a lower price on their value menu. And consumers are eating it up. They have also initiated a “Happy Hour” between 2 and 4 p.m., increasing visits during that daypart. Sonic’s ads have more focus on “value” in response to the downturn and consumers are continuing to enjoy the great Sonic experience despite the economy.

The medium-to-long-term outlook continues to be very positive.

Even using the most conservative of Census Bureau assumptions, the Hispanic population will continue to grow faster than the general population for the foreseeable future:

  • Although immigration from Mexico has fallen since the beginning of the crisis, the anticipated and media-headlined "reverse" migration of foreign-born unacculturated Hispanics back to Mexico actually never happened (no wonder, since the Mexican economy has its own set of unique problems and America continues to be the beacon of opportunity, safety and progress).
  • In any event, according to the Census, immigration has ceased to be the primary driver of Hispanic population growth, and natural increase (i.e., higher fertility rates) accounts for two-thirds of the future population growth projections.
  • The number of U.S. Hispanic births has exceeded one million annually since 2006.
  • 25% of children in the U.S. under the age of five are Hispanic.

The Hispanic population, even with all its growth, is still characterized by the striking fact that it is overwhelmingly young: an average 26 versus 35 years old for general market – still the best consumers in America. This is extremely important, since it drives to what is emerging as the largest and most dynamic segment of the Hispanic population: The Biculturals. These are U.S.-born Hispanics who are native speakers of both English and Spanish. They are completely comfortable navigating either Hispanic or mainstream culture. They talk, watch TV and surf the Internet in either language situationally, depending on the social circle they are in.

This emerging group is establishing consumption habits, brand preferences and a unique cultural identity NOW. They are not waiting until the end of the recession to choose where they shop, what they drive, where they bank, what they wear, what they eat, how they communicate, and what music they listen to. This population is growing, their spending will grow, and their influence on the culture will spread. It is critical for marketers to understand their brand's emotional and rational appeal among this group.

In summary

  • Hispanic consumer spending has been hit by the economic recession but Hispanic consumers remain optimistic.
  • Hispanics will be the earliest beneficiaries of a recovery.
  • Not being saddled with debt, they will not suffer a long-term "hangover" on spending.
  • Over the medium-to-long term, the foundation of the Hispanic market continues to be very strong.
  • Marketers need to stay engaged during the downturn and position their brands for the recovery. If you "wait until the economy picks up," you may find your competitors ahead of you in establishing a long-term relationship with America's fastest growing and most dynamic consumer segment.

A number of recent economic indicators suggest that the economy may have bottomed out and that recovery is just around the corner. The "green shoots" of economic revival are becoming evident and with them comes great opportunity ahead, if you play it smart now.

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