Daily Management Review

As Immigration Worries Weigh On Hispanic Spending, U.S. Retailers Hit


According to community groups, research firms and retailers, worried about possible harassment by immigration or law enforcement officials since the election of U.S. President Donald Trump many U.S. Hispanics are venturing out only to buy essential goods and are cutting back on discretionary spending.
Being cited as a cause for worry by already-struggling consumer companies, from big-box retailers to auto parts makers has been this change in consumer behavior by the country's second-fastest-growing ethnic group.
Many of the company's stores with weak second-quarter sales were in Hispanic-dominant areas of the United States, O'Reilly Automotive Chief Executive Gregory Henslee told analysts earlier this month. "It's not just something that we've seen. It's something that most retailers have seen," Henslee said.
A report by retail consultants NPD Group that cited a decline in discretionary spending by Hispanics was referenced by Target Corp Chief Executive Brian Cornell at a conference in late July.
"They are staying home. They are going out less often, particularly around border towns in the United States," Cornell said at a conference in Aspen, Colo.
Building a wall on the U.S.-Mexico border and promises to deport undocumented foreigners en masse were two of the factors the helped Trump's surprise election win last November.
Outrage within the American Hispanic community was sparked with Trump's claim that Mexico was sending rapists and drug dealers into the United States along with those pledges.
"For our own president to call us criminals, thieves and rapists - it's terrible ... we live in fear of doing those simple things like going for groceries," said a 19-year-old Chicago college student, Juan F., who did not want his full name used out of concern for family members who are undocumented.
However, a significant decline in Hispanic spending is not experience by all consumer categories. According to research firm Nielsen, even though at a muchc slower rate than in recent years, the purchase of essentials such as food and basic household goods is still on the rise.
According to research firm Nielsen Holdings Plc., changes to first-half online spending by Hispanics, which make up about 18 percent of the U.S. population, was specified in any of the reports. 
According to reports by brokerage firm Jefferies and analytics firm NPD Group, since the start of the year, the lower spending by Hispanics has been hurting certain retailers.
Shopping visits among Latinos were down about 11 percent in November and December, said Cornell, citing a more detailed version of the NPD report than one that has been publicly released, late last month. Cornell said that the "concerning" trend had been noticed particularly around U.S. border towns.
"Their buying power is undeniable, as is their influence on everything from fashion and food to music and entertainment," Cornell said.
According to data by the University of Georgia's Terry College of Business, the Hispanic community's substantial spending power reached $1.4 trillion in 2016 and big-box retailers have for years invested heavily in courting this spending power.
Several small clients across different cities had posted declining sales since Trump took office, said Luis Fitch, founder of Minneapolis-based Hispanic marketing company UNO Branding. And this had to be affecting big-box retailers, too, Fitch added.
"It's very common to have a Mexican married to an American, but if that Mexican is undocumented, he's really afraid of going out and looking for work," Fitch said. "And if only one person is working, obviously their budget is cut in half and that's a problem if they were going to buy a house or car this year."