WASHINGTON - NOVEMBER 27: Consumers shop online during a shop and lunch event in the boardroom of the National Retail Federation November 27, 2006 in Washington, DC. The National Retail Federation, a retail trade group, provided laptop computers, personal shoppers and lunch to encourage shoppers who stopped by to participate in Cyber Monday, the online retail world's equivalent of Black Friday. (Photo by Brendan Smialowski/Getty Images) (2006 Getty Images)
Latinos are the fastest growing purchasing bloc in the United States.
The Selig Center for Economic Growth estimates that the Latino community is projected to flex its purchasing muscle to the tune of $1.5 trillion dollars by 2015, up from $1.2 trillion today. To give you an idea, if you compare the U.S. Latino purchasing of $1.5 trillion a year against worldwide gross domestic product figures you’ll realize that if Latinos were separate nation they would be the 13th largest in the world.
Consequently, big business is pulling out all stops to attract Latino consumers with multi-lingual marketing and products. Walmart told suppliers last week that it plans to double its advertising budget to over $100 million this year to localize and competitively target Latino consumers, and McDonald’s launched its new “café con leche,” which is an espresso with steamed milk.
The inclusion of Latino leadership on corporate boards will result in better insight into cultural differences, community members’ likes and dislikes and important considerations.
Businesses might be spending millions of dollars developing strategies to win over the Latino market but they have failed to understand one simple fact: the key to a winning Latino-consumer strategy is including Latinos on their boards. Failure to do so is not only systemic discrimination, but bad business.
A new survey published last week by Senator Robert Menendez reveals that even though Latinos represent 16.7 percent of the U.S. population yet they are severely underrepresented on corporate boards across the United States. How bad is it? A study released in 2012 by recruiting firm Korn/Ferry found that there were 870 companies in the Fortune 1000 without a Latino on their board. According to Korn/Ferry Senior Client Partner Victor Arias, “[a]s our country climbs out of a recession, growth opportunities and financial success should absolutely include tapping into the Hispanic market. Companies that overlook having Latinos on their boards risk missing those opportunities.”
An article published by the National Association of Corporate Directors, “Tapping Into the Growing Hispanic Market,” states that companies "ought to have people on their boards who understand how Hispanics think, how they live, how they work, what they value, what they trust, what they don’t trust.”
The inclusion of Latino leadership on corporate boards will result in better insight into cultural differences, community members’ likes and dislikes and important considerations that are most likely lost when Latinos do not have a place at the conference room table.
For six years I sat on the Board of Directors of Winn-Dixie Stores, a Fortune 500 supermarket in the southeast, with 20 percent of its stores in Hispanic neighborhoods. I witnessed how a Hispanic perspective in the boardroom is critical and can go right to the company’s bottom line. Richard Rivera, the former president of Darden Restaurants, and I were both on the board and we worked closely with its members, the CEO and the management team to assist them to become the supermarket of choice for the Hispanic consumers. Our Hispanic clustered stores consistently outperformed other stores by sales/per square foot, and other metrics we regularly measured.
The arguments were purely factual. Our initial data showed that Hispanics spend $133 a week on groceries, compared with $92.50 by other shoppers — an impressive $40.50 difference. And we found that Hispanic shoppers made almost twice as many trips to the grocery store as non-Hispanic shoppers. Over the course of a year, that $40 difference between the weekly grocery expenditures of Hispanics and non-Hispanics adds up to $2,106.
In a business with thin margins, this represents a considerable financial upside, which easily justified our reallocation of corporate budgets and resources to more effectively pursue the Hispanic shopping dollar. These facts repeat themselves across industries.
Additionally, Latino consumers want to be represented on the boards and leadership teams of the companies that they are supporting. According to the Garcia Trujillo Hispanic Consumer Insight Survey: Latinos’ Emotional Connection with Companies and Brands, conducted by Newlink Research in 2011, over 64 percent of the consumers interviewed indicated that it is “very important to them” that companies include Latinos on their boards of directors, while more than 62 percent of those interviewed stated that it was “very important” to them to ensure that U.S. companies employ Latinos in management positions. Finally, 66.7 percent of those surveyed said that they would be more inclined to buy products from companies that demonstrate a commitment to the Latino community.
Corporate commitment can be shown in a variety of ways. First, companies should include Latinos on corporate boards and in leadership positions throughout the organization. Second, companies should use culturally appropriate marketing strategies, and conduct community-targeted outreach and engage in charitable giving that benefits the Latino community.
Businesses only stand to win. A number of studies have found that inclusion of diverse board members resulted in positive gains for companies, including higher Dow Jones and NASDAQ returns, stock market gains and improved financial success .
If Fortune 1000 companies hope to reap real and sustained rewards from the Latino consumer base, then they need to reverse their shortsighted practice of systemically locking out Latinos from their boardrooms.
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