HOW TO PROFIT FROM DIVERSITY

The face of the U.S. consumer is changing and with it, the market that jewelers serve. Here’s how you can identify and profit from the ethnic communities in your market area.

In Minnesota, a jeweler prepares a marketing plan for his community’s large Hmong population.

On the Texas border, a jeweler stocks gold bangles popular with Mexican customers of Middle Eastern descent.

In Ohio, a jeweler sells prayer beads to Islamic Iraqi customers.

A jewelry chain in Alabama revamps its operations after focus groups with African-American customers.

And in California, a chain thrives by catering exclusively to Hispanic customers.

These real-life examples show how the face of the U.S. consumer is changing, along with the markets that jewelers serve.

One in four Americans is now African-American, Asian or Hispanic, and the ratio is growing. For retailers, ethnic markets are an opportunity waiting to happen, says Lafayette Jones, an ethnic marketing specialist. “Anyone who ignores that is playing Russian roulette with his business,” he says.

This special JCK report details how the market is changing, how many jewelers are responding and how you can identify and reach the ethnic and cultural segments of your market.

THE AMERICAN MOSAIC

America, a melting pot?

Forget it!

This country is a glorious multicultural mosaic, a wonderful gumbo of peoples and cultures. And this ethnicity is becoming more apparent than ever.

Ethnic communities, some fueled by higher birth rates and others by surging immigration, grew 10 times faster than the U.S. population as a whole between 1980 and 1990, says the U.S. Census Bureau. And the pace continues.

The major ethnic groups (Hispanic, African-American and Asian) represent a $600 billion market. Annual estimated expenditures total $300 billion for African-Americans, $200 billion for Hispanics and more than $100 billion for Asians and Pacific Islanders.

Many of these consumers are in higher-income brackets. One in three Asian households, one in six Hispanic households and one in seven African-American households have mean annual incomes topping $50,000, say retail and demographics analysts.

And the growth of ethnic populations has spread from cities to suburban and rural areas.

How significant are these changes? Lafayette Jones, president of Segmented Marketing Services Inc. in Winston-Salem, N.C., a leader in ethnic marketing, calls it “the browning of America.” A recent ground-breaking study of U.S. ethnic consumers by Market Segment Research Inc. Coral Gables, Fla., calls it “the New America.”

The growth of ethnic markets has changed &endash; or should change &endash; the way retailers do business, says Filiberto Fernandez, senior vice president of marketing at Telemundo Group Inc. in New York, N.Y., a leading Hispanic media conglomerate. He compares the U.S. market to a salad bowl. “Each part &endash; a tomato, a pepper, an onion &endash; retains its individuality, but collectively they make up the salad bowl,” he says. “When you market to this salad bowl, you must understand you’re marketing to a tomato or a pepper. You’re marketing to individual niches in this marketplace of America.”

Strategic imperative: Target-marketing to ethnic consumers has become a strategic imperative for retailers, says Jones, who advises many Fortune 500 companies.

Many major retailers and suppliers already recognize the potential of ethnic marketing. Car makers have long known that “different cars appeal to different racial and ethnic groups, each of which has different motivations for buying,” says Ad Age, a leading journal of the advertising industry. Sears Roebuck uses bilingual marketing and credit materials. J.C. Penney and Wal-Mart carry merchandise created especially for African-American and Hispanic shoppers in hundreds of stores in communities where they comprise a large part of the population.

Even promotional materials increasingly are designed to appeal to different ethnic groups. Advertising to Hispanics cost close to $950 million in 1994, for example, while Segmented Marketing Services’s innovative Church Family NetworkTM reaches 1.5 million African-American and 1.1 million Hispanic consumers in 7,000 churches with promotional materials and product samples from major corporations.

Some shrewd jewelry industry vendors and retailers have taken advantage by marketing to ethnic groups themselves. Leading watch brands design multilingual ad campaigns and products for ethnic communities, especially the Latino market. Some national and regional retail chains and independent jewelers successfully use ethnic marketing.

But for the most part, jewelers ignore or are unaware of the lucrative retail niches that ethnic shoppers represent. A JCK poll of hundreds of U.S. jewelers this spring found only one in three believes his or her market area has a sizable ethnic community, and only a few make any effort to reach those shoppers. In addition, a random check of some leading jewelry industry groups found that few do anything to help members market to ethnic consumers.

Reasons why: There are three main reasons why many jewelers don’t cultivate ethnic customers, even in communities with a large ethnic population.

A few don’t believe in specialized retailing. As one Midwesterner says indignantly, “We’re all Americans; we shouldn’t divide into groups.”
Many assume their current marketing and reputation are enough to attract customers, ethnic or not. “We don’t target any market,” says a New England jeweler. “We advertise the same way to all our clientele.” Adds a jeweler in a California town with a large Hispanic population, “If they come in, it’s because we’ve been here a long time [and are] well-known.”
Many others simply have never thought about marketing to ethnic consumers. “We never did anything like that, and probably should,” says a Midwestern jeweler. A Connecticut jeweler says he would “do it in the next 12 months &endash; if we knew what to target.” Even some chain owners admit ethnic marketing isn’t part of their strategy. “That’s for the big cities,” says one East Coaster.

Whatever the reason, jewelers should understand that marketing to ethnic shoppers can be as profitable as targeting any other niche, be it local corporations, businesswomen, the mature market or college students.

And at a time when many jewelers complain that TV home shopping shows, department stores and emerging computer shopping networks are eating into business, who can afford to ignore opportunity? “Jewelers can’t ignore the fact demographics are changing, that white America will be in the minority after the year 2000,” says Mark Moeller of R.F. Moeller Jeweler in St. Paul, Minn. “Anyone who turns his back on that is making a big mistake!”

After all, he says, “it makes no difference where your customers come from. Their money is all the same color &endash; green!”

Start at home: Finding ethnic shoppers isn’t hard. Start in your own store. If you already have some ethnic shoppers, begin expanding your market with them. Be sure they, their friends, their businesses and their social groups are on your mailing list.

Study sales receipts and charge accounts over several months for a better idea of how much your existing ethnic customers spend, what they buy and where they live. Invite them to customer focus groups and ask what they like and dislike about your store’s operations, merchandise, ads and promotions.

You may be surprised what you learn. Lorch Diamond Centers, a 60-store chain based in Birmingham, Ala., conducted focus groups this spring for consumers with household incomes of $35,000 or less, 40% of whom are African-American. “Personal identification and recognition are extremely important,” says President Robert Keller. “They often feel ignored by other retailers, purposely not waited on and even discriminated against.

“[That result] bowled us over. We underestimated the importance of this” to shoppers. As a result, Lorch now puts more emphasis on personal recognition and contact with customers. “As a business, we want to say, `We want your business, we want to be your retailing friend and we’ll treat you as a preferred customer.'”

Direct mail from Lorch now starts with a personal greeting such as “Dear Jane, we enjoyed having you in our store” rather than “Occupant.” A new logo promotes a “Low Price Guarantee.” Promotion of the credit program was revamped to make the language friendlier and to remove any hint of high pressure. A new tagline promises “Easy InstaCredit.”

Even the design of the stores has been altered to make them “very open, very inviting to enter, with very accessible merchandise and pricing,” says Keller. Backlighted photographs on the wall show African-American couples and individuals. In addition, the gold jewelry assortment has been modified to match customers’ likes and dislikes.

Check the neighborhood: Once you’ve considered the ethnic customers you already have, look at your neighborhood to find others. Do they fit the socioeconomic criteria you have for your customer base? Are they served by other jewelers?

Mark Moeller, for example, is developing a marketing program aimed at the St. Paul area’s large Hmong population (originally from Laos). “There’s a great opportunity here, plus changing demographics indicate Asians are becoming a much more significant part of the country,” he says.

The Hmong community, comprising almost 20,000 people, is six miles from Moeller’s store, and has been in the area for more than 20 years. “They’re incredibly hard workers, and many own their own businesses, which they created from nothing,” he says. “Most are now middle to upper-middle class.

“They love jewelry, which is part of their heritage, but no jeweler is really catering to them. So we will.”

Know thy customer: Once you’ve identified your current and potential ethnic customers, do some basic research to learn more about them and to erase misconceptions or stereotypes.

You can find federal census data on population, housing and family size about major ethnic groups in your market at your local library and in your municipal or country planning office (the staff there can help you). Census data also is available at university libraries and regional census bureaus. (Look under “U.S. Government” in the telephone book.)

Read or watch the media serving that community. For example, Moeller reads periodicals and newspapers serving the Hmongs to learn about their culture and investigate what jewelry styles appeal to them.

Periodicals for larger ethnic groups &endash; such as Ebony for African-Americans, Hispanic for Hispanic-Americans and A. Magazine for Asian-Americans, to name just a few &endash; are available on many newsstands. Cable TV stations carry programming for various nationalities &endash; from Greek to Korean &endash; and radio and TV networks for Hispanics are led by giants such as Univision and Telemundo all across the country.

Also consult local ethnic community and business groups for information, and offer to present talks or seminars to their members. Add the groups to your mailing list. They may be willing to sell their own mailing lists to you.

In addition, major ethnic groups, and many small ones, have Chambers of Commerce. Check The Encyclopedia of Associations at your local library for addresses and telephone numbers.

And don’t forget your personal experience with ethnic and cultural groups. While growing up, Robert D. Trette often worked alongside Latinos on his uncle’s farm in California’s San Joaquin Valley. When he opened his first jewelry store in 1972, he decided to cater to Latinos because no one else did. Today, Trette has 41 Don Roberto Jewelers stores in California and Texas catering exclusively to Latinos. Most of his sales are on credit terms (Trette remembered from his days on the farm that credit is Latinos’ preferred payment method), and defaults are low.

Don’t assume: Once you’re ready to develop a marketing plan, keep several things in mind. Ethnic marketing involves “waters shark-invested with a lot of myths,” says marketer Lafayette Jones. “You must get rid of those myths. If African-American or Hispanic customers walk in, don’t assume they can’t afford fine jewelry and automatically show them less-expensive lines. They may not have credit cards, but they will have significant cash.”

Consumer research shows that African-Americans tend to buy more jewelry than the general population and are more concerned with value than price, says Jones. They and Hispanics also tend to show more store and brand loyalty than the general public. Research will deflate stereotypes and help to avoid marketing mistakes later. Research also will tell you that:

In many Latino cultures, people give gifts collectively, notes Gary L. Berman, president of Market Segment Research Inc., a leader in studying ethnic consumers,who spoke recently on “Marketing to the New America” at a New York Merchandise Mart symposium. Thus, “rather than buy one piece of china or a piece of flatware, they will pool their resources and buy something complete or really good.”
Among the Chinese, knives, clocks or white handkerchiefs are inappropriate gifts because knives symbolize separation while clocks, handkerchiefs and white suggest funerals, says Berman.
Latino households are more likely to buy a wrist watch than the general market, according to Strategy Research Corp., Miami, Fla.

Also keep in mind that no major ethnic group is homogeneous with lock-step tastes. “Sweeping generalizations are usually inaccurate,” says Berman. The Hispanic market, for example, comprises groups that trace their ancestry to Mexico, Puerto Rico, Cuba, Central America and South America, and each group has its own traditions and tastes. Asian-Americans cover an equally wide field, tracing their ancestry to Korea, Vietnam, China, Japan and the Philippines, to name a few. The tastes of African-Americans are influenced by urban vs. rural as well as North, South, East and West.

Reality check: Now stop and look at your store through the eyes of ethnic shoppers.

“What does your front line &endash; the sales staff &endash; reflect?” asks Jones. “Does it represent the people you sell to, does it represent the community? If African-American or Hispanic shoppers come in, do they see an integrated staff or only European-Americans?”

As Larry Pollock, president of the Zale Corp., the nation’s largest jewelry retailer, puts it: “America is a rainbow of peoples. We hire the rainbow.”

Do you carry styles and designs that appeal to your community’s ethnic shoppers? “We have core merchandise and across-the-board marketing,” says Pollock. “Then we fine-tune our marketing and stock accordingly where there are special interests, based on demographics and what our managers tells us.”

At Sterling Inc., the second largest U.S. jeweler, “We utilize many elements &endash; including demographics, lifestyle and life stage &endash; in our marketing mix to strategically target distinctive segments of the population and to communicate with them with special offers and products,” says Steve Holden, executive vice president. Ethnic marketing &endash; including use of demographic databases to identify social and economic trends among ethnic groups &endash; is “a very important component of this activity.”

Here are just a few examples of how some jewelers tie their merchandise mix to their ethnic customer base:

Zale carries more jade in some of its California Guild stores with Asian clients.
Sterling carries religious jewelry favored by Portuguese and Irish customers in New England markets, bold gold and religious jewelry popular with Hispanic customers in major Texas and California markets, and special gold offerings for stores with sizable African-American markets.
Jeweler Sandy Rivchun of Cleveland, Ohio, tries to stock the “masbaha” (strings of prayer beads) favored by some Islamic Iraqi customers.
Jeweler Ellen Lacey of El Paso, Tex., carries a large stock of crosses for her affluent Mexican customers, most of whom are Catholic, and gold bangles popular with Mexican customers of Middle Eastern descent.
Don Roberto Jewelers stocks a large selection of religious jewelry popular with its Latino clientele. It also offers a small in-store design studio and does its own repair work with a 15-person staff at headquarters. “Latino customers like colorful jewelry,” says Arthur F. Tschopp, former marketing and advertising director for Don Roberto and now president of Los Conexion, a communications agency representing the jeweler. “Diamond jewelry also sells well. We set 14k as our standard. Cheap, cheesy merchandise isn’t acceptable.” The stores also offers ear piercing for $3.50 &endash; a popular service.

Savvy advertising: Now that you’re ready to develop an advertising campaign, be sure to target, target, target. Don’t assume you can reach ethnic shoppers with advertising you think is designed for everyone. “You can’t be all things to all people anymore,” says Jones. “The age of mass marketing is over. Today, you have to use your ad dollars to be more important to smaller groups of people.”

Pollock agrees. “In the old days, `broad’ casting hit everyone,” he says. “Today, you need narrow casting, too.”

Also remember that people view media differently. Simply putting a jewelry ad on local TV during prime time is no guarantee you’ll reach a lot of ethnic viewers. Surveys by the BJK&E Media Group in New York, for example, found the top 10 national TV shows watched by black viewers are completely different from those watched by white viewers.

Advertise in the same publications you read and on the same cable TV stations you watched when you were trying to learn more about the ethnic groups. Eve J. Alfillé, a jewelry designer and retailer in Evanston, Ill., decided three years ago to reach Chicago’s growing Russian immigrant community by advertising in regional newspaper editions that cover that area. “They tend to be highly educated, professional people who are very style-conscious and appreciate one-of-a kind pieces,” she says. Her decision has led to “a definite increase” in business.

If you’d like help in choosing newspapers, magazines, and radio and TV stations, consult one of the growing number of ethnic-oriented advertising agencies in your area.

Don Roberto Jewelers relies heavily on Spanish-language radio and TV as well as direct mail in advertising. “The average Latino gets one piece of direct mail per day, compared to three for the average Caucasian household,” says Tschopp. “That means our material gets read.”

Promotions: Even your promotions can be tied to merchandise or events that interest your ethnic target market. Here are just three examples of promotions that Don Roberto Jewelers conducted to attract its Latino clientele:

The jeweler tied various promotions and advertising to the World Cup soccer championship held in Los Angeles in 1994, taking advantage of Latinos’ interest in the sport.
For Father’s Day, Don Roberto gets 90 pairs of boots from renowned bootmaker Tony Lama (in exchange for advertising) to use as sweepstakes prizes.
Don Roberto promised a $1,400 diamond watch to the winner of the world lightweight boxing championship match between Oscar de la Hoya and Rafael Ruelas in May. After winning the match, de la Hoya received the watch and held it high as he pranced around the ring for photographers. Don Roberto Jewelers also was cited in the show’s closing credits. “We saw a direct response in our stores the very next morning,” Tschopp says. “People came in asking for the de la Hoya watch.”

Tie your ads and promotions to holidays, festivals and special occasions. Cross-cultural events &endash; including Christmas, New Year’s, Mother’s Day and Father’s Day &endash; are part of every jeweler’s ad budget and appeal to ethnic and non-ethnic shoppers. But there are specific ethnic holidays that present “a remarkable amount of unique gift-giving opportunities,” says Gary Berman of Market Segment Research Inc. These include Kwanza (African-American), Steuben Day (German), Adult Day (Japanese) and the New Moon festival (Chinese) &endash; to name a few.

The right words: Language is important. It represents a person’s culture and is part of who that person is. In the U.S. today, says the Census Bureau, one in seven Americans speaks a language other than English. So it makes sense to go bilingual with your marketing material and, in areas with a large ethnic group, to hire staffers who speak the language and/or are from that group.

Melart Jewelers, a 20-store chain based in Silver Spring, Md., is polling employees to learn who speaks what languages in order to better address merchandising needs at certain stores, says Albert Foer, chairman and chief executive officer. In Annapolis, Md., home of the U.S. Naval Academy, and in downtown Washington, D.C., Melart makes many sales to non-English speaking customers. In Annapolis, for example, a Hispanic customer who spoke no English recently came to the store with a napkin on which the English words “engagement ring” were written. She chose a 10-point ring, but had communication problems until a part-time employee who speaks Spanish happened to come in and close the sale. “Now we make an effort to have people who speak Spanish in areas where that is helpful,” says Foer.

It’s smart, too, to have your ad reviewed by someone who speaks the language &endash; a staffer, someone from the local ethnic media or business group, an ethnic customer, even a local teacher. This helps to avoid the unintentional use of words or phrases that would embarrass or confuse the ethnic consumers you want to attract.

It doesn’t hurt, either, to learn a few words or phrases yourself. It shows that you respect the shopper and his or her culture. At the very least, a friendly Buenos dias, Ni hao or Konnichi wa (Hello! in Spanish, Chinese and Japanese) is always a useful icebreaker.

Be aware, too, of how your ethnic customers or media refer to themselves and other sensitive issues. Many Hispanics prefer to be called “Latino,” for example, while some African-Americans may prefer “black” or “people of color.” And some jewelers, out of sensitivity to their variety of customers, dub their year-end promotions and catalogs “holiday gift” catalogs rather than “Christmas” catalogs.

Involvement: Marketing to ethnic communities doesn’t end with advertisements and promotions. Ethnic communities tend to be tight-knit and family-oriented, and you ned to get involved with them.

Arthur Tschopp attributes Don Roberto Jeweler’s success in the Latino market to one word in its corporate philosophy: family. “We try to create a sense of belonging,” he says. “Many customers are first-generation immigrants looking for a tie to Mexico [and] we try to give it to them.”

To help win their attention and loyalty, say marketing experts, support their social, sporting and cultural activities. Examples include paying for a children’s soccer team’s uniforms, cosponsoring the annual “Person of the Year” dinner at a synagogue, donating prizes to the Orthodox Greek parish fair and sponsoring a local ethnic festival.

Moeller Jewelers, located on the boundary between Catholic and Jewish neighborhoods in St. Paul, advertises in synagogues and sponsors many of their events. “You name something [in the Jewish community] and we’re probably involved with it,” says Mark Moeller.

Finally, say experts, handle ethnic marketing as you do any other business decision. Focus on what your market is. Determine the type of customer you want (socioeconomic bracket, age, etc.) and if your area has several ethnic communities, decide which group or groups you want to reach.

Above all, approach ethnic marketing with a bottom-line orientation, not a public-affairs mind-set, says Berman. “Treat it like any other viable, reachable segment,” he says. “Do your homework to make sure the return on investment is there, make a long-term commitment and then monitor your progress.”

Note: Here’s where to contact some of the ethnic research, marketing and media companies we consulted for this report.

Market Segment Research Inc., 1320 S. Dixie Highway, Suite 120, Coral Gables, Fla. 33146; (305) 669-3900.

Segmented Marketing Services Inc., 4265 Brownsboro Rd., Suite 225, Winston-Salem, N.C. 27106; (919) 759-7477.

Strategy Research Corp., 100 NW 37 Ave., 3rd Floor, Miami, Fla. 33125; (305) 649-5400.

Telemundo Group Inc., 1740 Broadway, New York, N.Y. 10019; (212) 492-5550.

1993 HOUSEHOLD INCOME

Source: U.S. Census Bureau.
	African-American	Asian/Pacific Islander	Hispanic	U.S. total
Mean income	$27,065	$49,089	$30,033	$41,426
% with incomesof $25,000-$49,999	25.8%	25.3%	29.9%	31.0%
% with incomes of $50,00+	14.4%	39.5%	16.2%	28.6%

CONSUMER POPULATION GROWTH
(in millions)

*projected Source: U.S. Census Bureau.
	1990	2000*	2020*
African-Americans	29	34	43
Hispanics	22	31	49
Asians/American Indians	9	14	35
Total U.S. population	249	275	325

% OF U.S. MANUFACTURERS THAT TARGET ETHNIC GROUPS

Source: Donnelly MarketingInc. and Segmented Marketing Services Inc.
	1991	1992
African-Americans	30%	38%
Asians	4%	9%
Hispanics	57%	68%

ETHNIC POPULATION GROWTH 1980-1990

Source: U.S. Census Bureau.
African-Americans	13.2%
Hispanics	53.0%
Asian-Americans	108.0%

ETHNIC MARKETS & JEWELERS

Do you serve a largely ethnic market or one with a sizable ethnic population?

	% of panelists saying
	Yes	No
North	31%	69%
South	26%	74%
Midwest	21%	79%
West	41%	59%
U.S.	29%	71%

If your store is in an area with a sizable ethnic population, what groups are represented?

Source: JCKRetail Jewelers Panel poll.
	% of groups mentioned
Hispanic	40.0%
African-American	23.0%
Mixed	15.0%
Asian	8.0%
Italian	7.0%
Other	7.0%

WATCH DESIGNS: INTENTIONALLY ETHNIC

Watch brands are leaders in marketing to ethnic shoppers, especially Hispanic consumers, the fastest growing ethnic group in the U.S. Swiss brand Juvenia has long been popular among Latinos, for example, while Bulova, a fixture in many jewelry stores, does specialized work for many retailers with Latino audiences.

Here are other examples:

Three years ago, Seiko Corp. of America asked retailers who sell to Spanish-speaking shoppers what styles sold well. Based on that information, Seiko introduced the highly successful El Dorado Collection of watches with bold, gold bracelets in fall 1993. This fall, Seiko is sending a Spanish-language version of its new four-color, four-page print advertisement to 1,200 independent stores nationwide.
Wittnauer has long offered product brochures in English and Spanish. It also established a co-op program for jewelers who print ads in Spanish and offers Spanish-language radio ads, including some created specifically for Puerto Rico this past Mother’s Day, says Director of Marketing Frank Salzano. “We did a major `blitz’ there in radio and print where we tagged 20 jewelers,” says Salzano. The company also produces consumer product brochures for the U.S. market in Chinese, Japanese and French, in addition to English and Spanish.
Citizen tailored its two-year-old Matador Collection to jewelers with substantial Latino clientele. The 15-watch collection features goldplated bracelets with rectangular faces in black, mother-of-pearl, gold and white, some with diamond accents, retailing for $150-$225. The latest additions to the line feature Our Lady of Guadalupe on the face in gold or color. More than 250 retailers nationwide carry the line; others use consumer product brochures as needed.

ETHNIC JEWELRY: NOT BY DESIGN

Few of America’s top designers create jewelry specifically for ethnic groups. For example, designer Sandy Baker, an African-American, designs her jewelry to appeal to working women of any race who want affordable, interesting pieces that look good with a work wardrobe. “It all depends on what you’re brought up with, what you learn to appreciate,” she says about different ethnic groups’ jewelry design preferences. “I have black friends who love really big jewelry, and I have black friends who prefer small, tailored jewelry.”

Still, cultural differences within ethnic groups can have an influence. Baker says African-American consumers seem to have more affinity for silver jewelry than Caribbean-born black consumers, because most jewelry in Caribbean nations is gold.

Asian and Indian cultures, meanwhile, are raised with a view of gold as portable wealth, not just adornment, and both share an affinity for high-karat gold.

A smart retailer must study his market and stock merchandise according to design preferences.

While jewelry designers in general don’t base their work on ethnic or cultural origins, they can be inspired by their travels to foreign lands or their study of ancient cultures. Such influences are seen in the Greek revival techniques of granulation and hand-woven chain, popular with designers such as Maija Neimanis, Jenny Lessard and Kent Raible. Designers Stephani Briggs and Paula Crevoshay have spent time traveling in India, and the lush colors of that land are evident in their eye for stones.

Closer to home, designer Ray Tracey employs a lot of his native Navajo culture in his designs, though they’re not specifically geared to a Navajo audience. He also incorporates techniques of other tribes living in the Southwest. Two New Mexico companies &endash; Kabana, a jewelry manufacturer, and Surrissi, which produces sterling silver watches &endash; also offer designs inspired by southwestern cultures but done in modern styles.