Sneakernomics: Hispanics and the Sports Business
Matt Powell, Vice President, Industry Analyst ;
The National Sporting Goods Association (NSGA) recently published a study entitled, “Scouting the Hispanic Market,” which explores the opportunities around Hispanics and the sports business. Multicultural consumers are increasingly becoming a larger part of the U.S. customer base, with Hispanic and Latino Americans making up the largest ethnic minority.
One of the most important truths about the Hispanic market is that just because a demographic may speak the same language, its people do not all act in the same way. Those from the Dominican Republic have different interests and preferences than those from Mexico and both, in turn, are different from people of Puerto Rican heritage. For instance, one may prefer baseball, the other soccer, and so on.
Also, people of different origins are clustered in the U.S. in different ways. In the book Diversity Explosion, William Frey explores the different ethnic makeup of U.S. regions and cities. For instance, while Los Angeles has the greatest Mexican population, Chicago has the fourth-largest in the U.S. New York houses the greatest group of Puerto Ricans and Miami the most Cubans. Each group has its own unique characteristics.
Frey points out that the Hispanic population tripled from the 1970’s to the 90’s as it reached 35 million, and then grew another 15 million in the 2000 decade, reaching 50 Million in 2010. Most of this recent growth came from net birthrate rather than immigration. One-third of all Hispanics in the U.S. are under 18-years old. As compared to Whites, Hispanics in the U.S. are more likely to be in a “traditional” household of a married couple with children.
Today, most major American cities are majority non-white. While Hispanics remain concentrated in major metropolitan areas like LA, NYC, and Miami, most of their population growth is coming in new regions where Hispanics do not yet have as deep a concentration of the population. It is these new areas where Hispanic population growth will have the greatest impact. They are also the areas of greatest opportunity for the sports business.
With that background, let’s summarize the NSGA report. Today, Hispanics make up 17 percent of the U.S. population at about 55 million people. Hispanics collectively represent $1.5 trillion in spending power. By 2030, they are projected to be 22 percent of the U.S. population, or 77 million residents. By 2055, they are estimated to comprise nearly 27 percent of the population, or 112 million people. Many estimate that by 2055 (if not sooner), the U.S. will be majority non-white.
The NSGA identifies the core values of Hispanics as “family unity, responsibility, selflessness and connectedness.” Ninety-two percent of Hispanics view sports as an important part of their lives -- a greater percentage than non-Hispanics. “Having a sense of community is also important for Hispanics and sports can be a way to stay integrated,” according to the study.
Fitness activities such as running generate the greatest interest in participation by Hispanics. Again, Hispanics have a greater interest in fitness than non-Hispanics. Outdoor activities such as camping and hiking and team sports also rank high with Hispanics, and higher than non-Hispanics. Given the penetration of youth in Hispanic families, sports participation can be a major point of leverage.
From a commerce perspective, Hispanics enjoy shopping as a social activity, and it is often enjoyed as part of a family activity. Purchase decisions are often driven by recommendations from their social network of family, work, and friends. Hispanics also tend to be more brand loyal than non-Hispanics.
There are obviously huge opportunities to capture incremental business in sports from the Hispanic consumer. Retailers must create an inclusive atmosphere in their stores, and leverage Hispanics’ brand loyalty. Understanding which brands Hispanics align with is a critical concept.
Community-based events are another way to engage and leverage the family-oriented behavior of the Hispanic consumer. Hispanics use sports to bond with family and their social network. Brands and retailers need to be part of that relationship.
Trust is critical to capture the Hispanic consumer. Retailers and brands must be Hispanic-friendly and Hispanic-oriented. Brands and retailers that earn the trust and loyalty of the Hispanic sports consumer will win in the future.