Hispanics: A Growth Market

As baby-boomers reach age 65 and beyond, they are less likely to use consumer credit than younger consumers who are forming families and furnishing their homes. While this inevitable process slows the growth of consumer credit, a group of young consumers offers credit grantors an opportunity for dynamic growth. However, credit grantors will have to adapt their marketing strategies to a somewhat different culture. Specifically, creditors will need to design credit programs that appeal to some 30 million native and non-native Hispanics, a number that is expected to grow to 53 million by 2020. (“Hispanic” refers not to race but to national origin.) Furthermore, the accompanying chart shows that Hispanics under the age of 18 will account for much of the growth. Currently, 16 percent of all residents under the age of 18 are Hispanic, but 22 percent of 18-year olds in 2020 will be Hispanic. To put it another way, in her article in a recent American Demographics, Joan Raymond notes that “by 2020, the median age of Hispanics will be 28.8, versus 37.6 for the total population.” 

Firms offering financial services to consumers are developing strategies to appeal to this unique market. For example, Sears, Roebuck & Co. was one of the first creditors to provide credit cards to Hispanics. It has had stores in Puerto Rico since 1937 and has had stores in Mexico for ten years. As a result, Sears has a large database of Hispanic customers that should be useful in developing a specialized credit-scoring program. 

Sears has a highly focused marketing program, spending about $25 million advertising to Hispanics last year. It also sponsors cultural events and concerts for Hispanics. One of its major successes is its quarterly publication, Neustra Gente (Our People), which features displays of Sears’ fashions for Hispanics and articles appealing to Hispanics. There are also articles in the publication on home repairs using Craftsman tools. Using its Hispanic database, Neustra Gente has a circulation of about 700,000 and an additional 100,000 are distributed in its Hispanic-focused stores.