Can Grocery Retailers Successfully Target the Asian American Market?

Sep 15, 2004

By Thomas Tseng

For retailers and marketers, targeting Asian American consumers has always represented a certain conundrum. Although Asian Americans — a diverse segment comprised of Chinese, Koreans, and Asian Indians and other distinct nationalities and languages — are comparatively only one-third the population of the U.S. Hispanic market, yet they exhibit over one-half the purchasing power of Hispanics.

Asian Americans rank higher than, and in some cases exceed, that of the general market in such key attributes as education attainment, per capita household income, homeownership, net worth, and professional occupation. In other words, if not for the complication of linguistic diversity, Asian Americans might just be the dream consumer demographic.

Yet retailers continue to be reticent in approaching this consumer. Stymied by a lack of cultural understanding, retail marketers continue to find efforts in capturing this consumer elusive.

Adding to these shortcomings is the fact that U.S. Asian communities have successfully developed their own viable food distribution channels and supermarket chains across the country — catering to the specific needs, tastes, and palate of Asian consumers. One can witness this phenomenon in Asian ethnic enclaves across the country — whether you’re visiting NY’s vibrant Chinese community in Flushing, SF’s animated Filipino neighborhood of Daly City, or Orange County’s Vietnamese hub in Little Saigon.

In fact, the defining features of these neighborhoods are more often than not food-driven activity: restaurants or grocery stores are ubiquitous and serve as anchor points in definably Asian communities. They draw equally from nearby immigrant denizens as well as patrons from afar. Important lessons are to be drawn by examining these bustling centers of food activity, particularly at the grocery stores.

Without a doubt, 99 Ranch is the most prominent star of all Asian food retailers. Founded by Taiwanese entrepreneur Roger Chen in 1984, 99 Ranch is now the largest Asian supermarket chain in the country, with nearly 30 west coast stores alone, as well as branches in Atlanta and Phoenix. For those not in the know, 99 Ranch is considered the mother of all Asian grocery stores. Think of the largest Kroger supermarket you know, but quadruple the size and selection of the seafood and butcher sections. Picture endless rows of fish tanks, shellfish, and gourmet seafood esoterica like geoduck.

99 Ranch locations usually anchor a large shopping strip, which include a number of complementary restaurants and retail businesses. They are a powerful magnet for Asian shoppers, drawing from beyond the immediate confines of their market trade area and are a conspicuous, distinguishing landmark for Asian American suburbia, particularly Chinese Americans.

It is well known among ethnic marketing circles that when Charles Schwab decided to target the U.S. Chinese market several years back, they simply opened up retail branches within the same strip wherever there was a 99 Ranch market. Furthermore, they staffed their branches with Chinese speaking financial consultants, displayed Chinese signage, and generally tailored their approach to be culturally appealing and friendly.

Moderator’s Comment: How can mainstream supermarket operators successfully cater to the Asian American population? What inspiration should be drawn from
expert specialty retailers?

Retailers seeking to pursue Asian American consumers can learn from these approaches used by 99 Ranch and Charles Schwab. In fact, many of these principles
are to be found in the Coca-Cola Retailing Research Council report “Grow With America.” But it’s also important not to overlook another fundamental fact about the Asian
American consumer: the vast majority of Asian Americans do not necessarily live in high ethnic enclaves and don’t have easy access to a 99-Ranch-like store. They reside in mixed
suburban areas and only occasionally visit ethnic stores to do their grocery shopping. Hence, a considerably large proportion of food shopping by Asian Americans occurs, grudgingly,
in the same grocery shopping channels as the general market.

As a result, there are ample opportunities for retailers to shape their approach for this consumer without going up against a giant like 99 Ranch, who knows
their customer like no other. Since it’s simply not realistic for the majority of Asian grocery shoppers to regularly visit, say, a Chinatown, truly opportunistic grocery retailers
can deliver a flavor of Chinatown to Asian American consumers instead. At least in the realm of food, a small taste of home for Asian consumers can translate into potentially
huge gains.

Thomas Tseng – Moderator

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1 Comment on "Can Grocery Retailers Successfully Target the Asian American Market?"

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Gautam Rai
Gautam Rai
17 years 1 month ago

Santhoshjk: I liked your thought about the low spending levels of the typical Asian-American consumer tying back to the exchange rate between their domestic currency and the USD. It’s an interesting thought. But then the high incidence of tech-product ownership and an affinity for quality within say, the Indian-American community, suggest otherwise. Also, it seems like prestige is another key driver within this market sub-segment. Does anyone have any data on this?

Also, how does flavour impact premium CPG (consumer packaged goods) sales within this sub-market?