How Can Grocers Appeal to Changing Demographics Due to US Multiculturalism?

The United States is a highly multicultural country, one which is only set to become more culturally diverse, as Supermarket News indicated. With immigration expected to largely bolster an otherwise declining U.S. population, the proliferation of grocers seeking to satisfy the changing palate of the American people is at hand.

In fact, according to a recent study by Credence Research, the U.S. ethnic food market is set to grow from $24.8 billion as of 2023 to an estimated $46.7 billion by 2032, a compound annual growth rate (CAGR) of 7%. Per the report, the primary drivers behind this growth are expanding multicultural demographics, a diversified palate due to heightened travel experiences, and a belief that ethnic food may possess health benefits not afforded by other grocery options.

What can grocers do to ensure they are properly meeting the needs of an increasingly multicultural population?

The Rise of Asian and South Asian Grocers

As The New York Times detailed, Asians represent the fastest-growing demographic in the United States, and that cohort is having an outsized impact on the grocery industry.

Although Asian American grocers represent less than 1% of the total grocery business in strictest terms, per the NYT, they are having a big impact on what products are hitting store shelves. Pointing to the fact that Shin Ramyun moved half a billion packs of its ramen noodles last year alone — and that products such as soy sauce, ghee, miso, and turmeric were also first introduced to the American market by Asian grocers — the outlet made it clear that "mainstreaming" of many products once foreign to the American consumer was taking place.

“Without Asian grocery stores, it is extremely hard to get into the mainstream market,” said Kevin Chang, director of marketing for Shin Ramyun's parent company, Nongshim.

And as Kellogg Insight pointed out, South Asian consumers (listed as the second-largest immigrant group in the nation) are also spurring growth in the grocery sector. According to Kellogg, the average Indian American household earns more than twice that of the national average, making approximately $150,000 a year versus the average of $70,000. This places a lot of buying power in the hands of these households.

Birju Shah, a clinical assistant professor of marketing at Kellogg, indicated that this degree of spending power meant that grocers and retailers were set to compete for "the Indian share of wallet."

"You’re going to see more Indian products sold in American stores because of the wealth of Indians and their desire for consumerism,” Shah said, gesturing toward Whole Foods as one example of this trend.

Changing Grocery Trends May Mean Shared and Community-Based Shopping Experiences

According to a separate Supermarket News report from 2020, there are differences in shopping behavior and preferences beyond the products stocked.

Citing Acosta Strategic Advisors data, the outlet indicated that shopping is a family affair in many instances. At the time, 72% of Asian American shoppers said they shopped with others, as did 67% of Hispanic respondents and 63% of African American consumers. Caucasian/non-Hispanic grocery shoppers came in at 55%.

"Through the research that we have commissioned and inherently, we know that many of our shoppers live in multi-generational households,” said Michelle Mendoza, director of marketing and customer experience of New York-based Associated Supermarket Group. “Therefore, familial shopping in our stores is a norm and Customer Appreciation Days become important promotional events that reward and thank the family for the business, not a single consumer."

As Kellogg pointed out, South Asian Americans were also democratized in their choice of grocer when it came to produce — and the fact that many grocers aimed at serving this demographic had placed outlets near places of worship.

"Even if, behaviorally, we still haven’t entirely left the caste system behind, everyone goes to Patel Brothers," Shah said. "From the richest to the poorest Indians, they’re going to go to Patel Brothers to buy produce."

Americans of All Backgrounds Excited About the Proliferation of Product Offerings, New Brands

Some of the reactions to the corporatization of former neighborhood markets or regional brands are rooted in nostalgia, as The New York Times indicated. Many customers miss "the humble community anchors where they hung out as children, or that made them feel welcome in their first years in a new country."

As first-generation and second-generation immigrant communities find themselves now accommodating change within their own neighborhoods and grocers, it remains to be seen how — as members outside of these communities now join them in their shopping experiences — these businesses will evolve to meet the needs of tomorrow's America.

With the NYT signaling that consumers from each diverse demographic were becoming increasingly open to experimenting with new flavors, fusion cuisines, and market experiences, the question remains: What can grocers from both sides of the aisle — whether its established giants such as Walmart and Costco or growing ethnic markets like Patel Brothers and H Mart — do to appeal to customers traditionally outside of their long-established customer bases?