by Diana Leza Sheehan
In this new series, we explore the opportunity created for retailers by targeting Latino grocery consumers across the United States.
For context, the Latino population in 2024 reached about 66 million, or about 19.5 percent of the total U.S. population. Spending power among this diverse demographic group has reached more than $3.7 trillion. Annualized income growth among Latinos has outpaced non-Latinos significantly – 4.8 percent compared to 1.8 percent.
This series will highlight the size and opportunity for retailers, unique consumer trends and success stories across each of The Shelby Report’s five regions.
Up first is the Midwest. The retail ecosystem in this region has a mix of national chains and independent superstars, yet most have had to find a way to customize offers and experiences for the Latino population in core metropolitan areas.
As mentioned in The Shelby Report’s 2024 series on Successfully Selling Regional Grocers, eight of 10 Midwestern consumers live in urban and suburban population centers, including Chicago, Cincinnati and Milwaukee. In these markets, we see innovative and unique ways that retailers of all kinds are targeting Latino consumers.
Size and scale
The Midwest, home to 69 million people, has a Latino population of more than 5.7 million. This demographic has shown strong growth over the last decade, particularly in Indiana, Michigan, Minnesota, Ohio and Wisconsin.
Illinois – specifically the Chicago metropolitan area – is the key geography to understand when retailers and manufacturers look to build a strategy focused on Latino consumers. The Land of Lincoln is home to 2.3 million Latino consumers, accounting for 40 percent of the region’s Latino population. Retailers in the Chicago area have learned to cater to some 1.2 million Latino consumers, many of whom have lived in the area for generations.
It is also important to understand the diversity of the Latino population in Chicago. Nearly 74 percent are of Mexican origin, with neighborhoods like Pilsen and Little Village serving as hubs.
However, the city has a strong and long-standing Puerto Rican population, which accounts for nearly 13 percent of Latinos, or 200,000 residents, across the Chicagoland area.
Independents drive differentiation
National players such as Walmart, Kroger and Albertsons/Safeway hold significant market share in the Midwest. However, to reach the Latino market, these mainstream retailers can learn from successful local players that have customized their offers.
The Heritage Group competes effectively with its Tony’s Fresh Market banner, which has expanded to about 20 stores throughout the region. Founded in 1979, it is the largest independent ethnic grocer serving the market.
Other strong local chains – including Cermak Fresh Market, Pete’s Fresh Market and newer entrants such as Fresh Farms and Valli International Fresh Market – focus on the broader international diversity of the area.
They ensure their perimeter departments highlight the meats, produce, dairy and baked goods that appeal to a number of different cultures, while leaning into large assortments of imported and local products that represent the countries of origin of local communities.
This approach to retailing that celebrates the Latino culture – along with that of Eastern European or South Asian immigrants living within the same communities, particularly in the suburbs – creates a strong shopping experience.
In other Midwestern cities, we may find independents or small chains with fewer than five stores thrive. Retailers such as El Rey Foods in Milwaukee have catered to the local Latino community for more than 40 years. It focuses on imported products, fresh tortillas and authentic foodservice items, as well as offering a space that allows recent immigrants to build a sense of community.
Key consumer trends
In looking at key consumer trends among Latino consumers, we see many similarities to the average consumer.
Value remains a critical component in decision making – both for the brands purchased and the retailers chosen.
Natural and organic products continue to be a growth driver across segments, and the role of technology throughout the shopper journey evolves as new technologies change how retailers and brands engage with consumers.
There are some attitudes and perceptions that stand out. According to a study conducted in December by PDG Insights, Latino consumers are significantly more likely to choose a retailer if they have unique or specialty items that represent their culture or ethnicity – 26 percent versus 16 percent of general population.
In the Midwest, we also see Latino consumers are more likely (40 percent versus 30 percent) to choose a retailer for its in-store services, including bakery, deli and prepared foods.
Nationally, Latino consumers are significantly more likely to say they will spend more for a product that reflects their values. In the Midwest, they show an even stronger distinction (53 percent versus 42 percent). Latino consumers are looking for a personal connection to their cultural identity.
The role of technology also is a bit differentiating for Latino consumers when it comes to grocery shopping and meal planning. Nationally, more than half (54 percent) say they plan meals for the week. When looking at the Midwest, that number increases to 60 percent.
We see that 87 percent of Latino consumers in the region engage with their retailers’ mobile apps, using them most often to browse products, manage loyalty rewards and create shopping lists.
Latino consumers also are more likely to interact with their retailers’ apps using new tech features such as augmented reality to navigate the store and find digital coupons.
In addition, they are significantly more likely than their general population counterparts to use artificial intelligence as part of the grocery shopping journey (42 percent versus 16 percent).
About seven out of 10 (73 percent) Latino shoppers in the Midwest say they use AI tools or apps at least weekly for grocery shopping and meal planning, and they are using them for meal recommendations, automated shopping lists and finding deals and discounts.
PDG Insights also explored how consumers are viewing their broader circumstances, digging into areas beyond grocery shopping.
In the Midwest, Latinos are slightly more likely to think positively about their household financial health, with 63 percent stating they are good or excellent, compared to 57 percent of the general population. However, overall cost of living, healthcare costs and inflation remain top of mind for all consumers.
Bringing it together
With a significant and diverse population, particularly in metropolitan areas like Chicago, retailers must adapt their strategies to cater to the cultural preferences and shopping behaviors of Latino consumers.
Successful examples from local independents and national chains alike demonstrate the importance of offering culturally relevant products, personalized services and leveraging technology to enhance the shopping experience.
As the Latino population continues to grow and its spending power increases, retailers that prioritize understanding and meeting the needs of this demographic will be well-positioned for success in the Midwest.
Diana Leza Sheehan, CEO of Evanston, Illinois-based PDG Insights, helps emerging brands and retailers make more effective strategic decisions. By leveraging data, she shares cost-effective consumer insights to plan retail sales narratives and brand strategies. Her 25-plus year career in the industry across sales, insight and strategy provides a unique perspective for clients.