Selling To The New America

A new wave of immigration is changing the complexion of the American consumer market, turning 'minority' markets into 'majority' ones

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NINETEEN YEARS AGO, MARK ROTH left his job as manager of the food division of a chain of discount stores to take over a dying food market in a working-class section of Los Angeles. Within a week, he had doubled sales at the store, which now serves as the base for a specialty-food business with customers throughout the Southwest.

In 1981, orthodontist Ron Greenspan assumed ownership of a lackluster Volkswagen dealership on San Francisco's "auto row." With a radical change in marketing strategies, he transformed it into the second largest dealership in America.

Harriet Nickolaus, a mother of three from Greenwich, Conn., had virtually no marketing experience when she started peddling her homemade Muscle Medic ointment. Yet with a healthy advertising budget and a change in market focus, she increased her sales last year tenfold and opened up important new export markets.

These three entrepreneurs have two things in common. They are all white, native-born Americans of European descent. And they all have positioned their businesses to ride a wave of recent immigration that is radically changing the complexion of the American consumer marketplace.

Forget seniors. Forget yuppies. Forget female professionals. For sheer numbers and purchasing power, it is immigrants, most of them now from Asia and Latin America, who represent the fastest-growing domestic markets. While Asians and Hispanics were only a few drops in the national melting pot just 20 years ago, they now account for nearly 10% of the American population. And at some magic moment in the next century, they and their offspring -- together with America's black population -- will constitute an absolute majority of American consumers (see charts).

You don't need a futurist's crystal ball to catch a glimpse of the New America. In New York City, Hispanics are about to become the largest minority group, surpassing blacks, while in cities such as Miami, San Antonio, and El Paso, they already constitute an absolute majority of the population. San Francisco's Asians, about 15% of the population in 1970, already outnumber the local Anglo population by some estimates. And Los Angeles, once jokingly dubbed "the largest city in Iowa" because of its ethnic homogeneity, now boasts a hodgepodge of ethnic and racial minorities who together easily outnumber its residents of European descent.

These new demographic trends represent just the latest chapter in what sociologist Nathan Glazer calls the "permanently unfinished story" of America, a nation that continues to take in more immigrants each year than all the rest of the countries of the world combined. Immigration has always been the source of the remarkable self-renewing power of the American economy -- the source of new people, new ideas, new products, and new markets. Similarly, it has always been a source of social unrest and political discord. For U.S. business, that presents both challenge and opportunity.

The challenge is to resist the temptation to write off each wave of new consumers as a fringe or niche market, insignificant and impecunious. Such nativist insularity is nothing new -- the economic history of the nineteenth century is littered with now-defunct businesses that clung bitterly to their familiar customs and customers rather than adapt to the waves of Italians, Germans, and Russians who swelled the populations of the great cities of the East and Midwest. Today the Sunbelt cities of the South and West are favored ports of entry for the American dream. And it is no coincidence that these are the cities enjoying the highest rates of growth and newfound wealth.

To those who embrace the New America comes a rare business opportunity -- the opportunity to sell into rapidly growing, untapped markets largely free from competition. Although a handful of companies such as Anheuser-Busch, Coca-Cola, Kraft, and Campbell Soup have made special efforts to sell to the New America, big business still largely ignores it. By and large, these are still local and regional markets, and as Mark Roth, Ron Greenspan, and Harriet Nickolaus all happily discovered, they are markets just craving to be served.

"It's a whole new ball game out there," states Ed Escobedo, a Los Angeles consultant who advises businesses on marketing to Hispanics. "People have to start realizing that these new immigrants have a lot of buying power. Instead of thinking of them as undocumented aliens, maybe it's time to start thinking of them as undocumented consumers."

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