In his book "Why We Buy," author Paco Underhill makes the case that retailers must offer customers an experience, rather than just a product. It's a lesson that Dearden's Home Furnishings stores have applied to the Hispanic market in Los Angeles.
The shift from middle-class Anglo buyers to immigrant Hispanics "started in the 1960s as management saw the changing demographics of the market," said Ronny Bensimon, chief operating officer at Dearden's. "They saw a need for the Hispanic population to be served."
As a result, the family chain made decisions that non-Hispanic retailers likely would shun. For example, rather than increasingly specializing in furniture or jewelry or electronics as most retailers do, Dearden's increasingly diversified, offering all manner of goods. Even the lighting in Dearden's stores became less formal and more festive because immigrant Hispanics tend to prefer it.
"It's a smart move," said Underhill, chief executive of retail consulting firm Envirosell in New York. "Merchants should recognize that you have to change as fast as your customers. In Southern California, catering to the Latino and other immigrant markets is good business."
For Dearden's, the first step in the changeover involved Spanish-language print advertising. Today, Dearden's spots are regularly broadcast on local Spanish-language TV. The company also publishes 12 circulars per year in addition to media buys in radio and direct mail.
In tandem with the advertising approach, the company changed its work force. "As new employees were hired, it became almost mandatory that they speak Spanish," Bensimon said. He estimates that only 10 or 12 of Dearden's 620 current employees can't communicate in Spanish.
As for the shopping experience, Dearden's puts nearly as much attention on credit counseling as furniture sales. Stores feature as many as 30 booths where customers arrange credit provided directly by the store.
"A lot of what we do is faith-based," Bensimon said. "We use some traditional methods on how people qualify, but mostly we talk to the customer and find out who they are. They are wonderful people and we can tell that they are good credit risks."
Because many of the customers have no credit history, a Dearden's purchase can facilitate entry into the U.S. financial system. "We have helped hundreds of thousands to establish their credit base," Bensimon said.
"Latinos often shop in larger family groups, and the act of going to the store is for family bonding and family entertainment, but also consumer education," said Underhill. "In Latino culture, when you extend credit, you extend it to the family, not the individual. It becomes a family commitment to pay it back."
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