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Should retailers pay more attention to Aggregate Income rather than Household or Per Capita Income in choosing a retail site?


A little over a week ago, I attended the ICSC Hispanic Retail Marketplace Program in Los Angeles.  For the most part it was very informative.

A couple of key points that caught my attention at the conference:

With rare exception, the speakers noticeably avoided any reference to the Hispanic Market as a traditionally lower income market and preferred to point out that Hispanic shoppers do spend money on, other than lower priced retail items. Another key concept discussed was the Aggregate Income of Hispanic communities.

So what does Aggregate Income mean and what is the significance of this concept to retailers and developers?  I haven’t confirmed any of the numbers that I heard at the program, but it seems to me that there may be a very significant opportunity for shopping center developers, owners and retailers in Hispanic communities.  At the risk of inadequately describing what was said at the conference, let me explain, my understanding of the concept of Aggregate Income and its significance to retailers, developers and landlords.

Aggregate Income, for the purpose of this discussion is the total income generated by a populous within a given radius.  As it relates to the Hispanic market, we should consider census data and statistics, including the following:

  1. Hispanic households include approximately 3.5 people per household as compared to 2.5 people per non-Hispanic households;
  2. Hispanic communities tend to be much denser, containing more households per given radius than non-Hispanic households

As a result of the above data that I have grossly simplified for the purpose of this post, it would seem that although the average income per capita in the Hispanic market tends to be lower than many other non-Hispanic communities, the total spending power of a given Hispanic community is likely to be as great if not greater than higher income, per capita or households in non-Hispanic communities.  Stated another way, while the average income per person in East La. may be less than that of the average person in Newport Beach, Ca., there may be significantly more money available, in the aggregate, to spend by the Hispanic community in East La.

This is not to suggest that all products will sell well and all retailers will succeed in Hispanic communities.  However, those that understand their customers well and in particular those buyers in the Hispanic community should flourish very well.  Good thought and strategy should work well in this often-overlooked market.  For further thoughts on the Hispanic market, listen to http://creradio.com/2012/hispanic-retail-marketplace-in-los-angeles-prequel/ on CRE Radio at www.creradio.com.

 

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