by Diana Leza Sheehan / founder, principal consultant, PDG Insights
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 significantly outpaced non-Latinos – 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.
In this article, we explore the grocery ecosystem in the Southwest. While national players own strong shares throughout the region, independents continue to find ways to customize offers and experiences tailored to Latino populations of varying countries of origin throughout the region.
Exploring nuance of Southwest
The Southwest region as defined by The Shelby Report includes Arkansas, Colorado, New Mexico, Oklahoma and Texas. This region has the smallest net population in the country, estimated at nearly 50 million in 2024. Yet, across the five states, the region includes about 15 million Latino consumers – second only to the West by size.
According to recent U.S. Census data, we also see that this number continues to grow across the region. With a population of 12 million, 40 percent of Texans identify as Latino and 80 percent say they are Mexican or Mexican-American. After California, this is the second largest concentrated population in the country.
For retailers, understanding how to effectively reach Latino consumers can serve as a guide to more effectively merchandising to them in other markets.
Regional versus national
As with other regions across the U.S., national players have a large presence in the Southwest. Walmart has more than 600 stores in the Lone Star State.
Kroger competes in Arkansas, Colorado, New Mexico and Texas. Albertsons – in four of the region’s five states – uses several banners to reach different markets, with stores targeting their specific tastes and demographics. However, United Supermarket’s Amigos banner targets the Latino population in and around Texas in a differentiated way.
Yet, H-E-B continues to be the defining player in Texas and may be the best retailer in the country for catering to the Latino consumer at scale.
H-E-B leans into its role as the store of the community because the retailer knows and understands consumers in every single market in which it competes. The assortment is intentional and authentic, featuring well-known and established brands and ingredients.
The retailer developed a unique private label, Mi Tienda, that focuses specifically on products that celebrate Mexican and Tex-Mex cuisine.
The perimeter department, including foodservice, has offerings that embrace the local Latino population – from homemade tortillas and pan dulce in some stores, to prepared tamales and tacos in others.
The retailer’s two Mi Tienda stores in the Houston market take the concept further, integrating best practices from H-E-B Mexico’s stores and including a carniceria and panaderia.
There also are many smaller independents throughout the region that court the Latino market. Houston-based Fiesta Mart runs about 60 stores in the state, and California-based El Super has a strong presence in Texas and New Mexico.
La Michoacana Meat Market, a family-owned chain based in Houston, operates more than 100 stores throughout Texas and Oklahoma. The company serves the Latino population but also works hard to support and serve communities beyond store walls.
We also see emerging players such as El Rio Grande Latin Market in north Texas and Supermercados Morelos in Oklahoma carving out market share.
[RELATED: Unlocking The Midwest: Retail Strategies For Engaging Latino Consumers]
Exploring consumer themes
In looking at key consumer trends among Latino shoppers, we see many similarities to the average consumer. Value remains a critical component in decision making – both for the brands and retailers.
Natural and organic products continue to be a growth driver across segments, while the role of technology throughout the shopping 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 shoppers are much more likely to choose a retailer if it carries unique or specialty items that represent their culture or ethnicity – 26 percent versus 16 percent of general population.
In the Southwest, we also see Latinos are more likely than their general population counterparts to choose a retailer for its focus on supporting the community, offering strong private label assortment and having a good selection of natural and organic products.
Nationally, Latino consumers are much more likely to say they will spend more for a product that reflects their values, and we see consistent attitudes among Latinos in the Southwest (61 percent versus 56 percent of general population), which creates an opportunity for purpose-driven brands.
The role of technology also is a bit differentiating for Latinos in grocery shopping and meal planning. More than half (54 percent) nationally say that they plan meals for the week.
When looking at those in the Southwest region, however, 53 percent of Latino shoppers say they tend to decide on meals as they go.
We see that 85 percent of Latino consumers in the Southwest engage with retailers’ mobile apps, using them most often to check for deals and discounts, browse products and place orders for delivery or pickup.
They also are more likely to engage with an app’s new tech features, such as augmented reality to navigate the store and find digital coupons.
In addition, Latino consumers in the Southwest are much more likely than their non-Hispanic counterparts (33 percent versus 18 percent) to use artificial intelligence as part of the grocery shopping journey.
Three-fourths say they use AI tools or apps at least weekly for grocery shopping and meal planning, as well as checking them for meal recommendations, automated shopping lists and finding deals and discounts.
PDG Insights also explored how consumers view their broader circumstances, digging into areas beyond grocery shopping.
Many Latino consumers in the Southwest think positively about their household financial health, with 61 percent stating they are in good or excellent shape. However, the overall cost of living, healthcare costs and inflation remain top of mind for all consumers.
Bringing it all together
Driven by a growing population and spending power, the Latino grocery market in the Southwest presents a clear opportunity for retailers.
As highlighted, understanding the unique preferences and cultural nuances of Latino consumers is crucial for success. Retailers such as H-E-B have set a benchmark with tailored offerings and a community-focused approach, demonstrating the potential for national and regional players to thrive by catering to this diverse demographic.
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.