Surprise driver of holiday spending: Minorities

The minority consumer may be the unlikely hero of holiday 2014.

With the economy mostly back on its feet thank to an improving economy, job gains and lower gas prices, minority consumers — Hispanics, African Americans and Asian Americans — will boost their holiday purchases more than the general population this Christmas, and be a central driver of seasonal spending, according to an eye-opening 2014 Holiday Sales Forecast that the research specialist, Nielsen, shared exclusively with USA TODAY.

While the overall population says it will spend about 10% more on holidays gifts this year than last year, African Americans say they plan to spend 17% more, and both Asian Americans and Hispanics says they plan to spend 13% more, says the national study of 25,000 demographically-representative households conducted in September. The survey also found that middle income consumers — with household income under $50,000 — say they will spend an average 12% more than last year on holiday items vs. 8% more for consumers with household incomes exceeding $50,000.

"This is a wake-up call," says James Russo, vice president of consumer insights at Nielsen. "Holiday is just a reflection of what's happening across the larger consumer retail landscape. This will continue well beyond the holiday season."

For retailers and marketers, this information is invaluable. Shoppers are expected to spend $616.9 billion over the holidays, according to projections from the National Retail Federation, up 4.1% from 2013. The Nielsen research highlighting the projected growth of minority spending can help retailers and marketers focus on who to target — and where. And it's a powerful reminder how rapidly the face of the American consumer is changing — particularly Hispanic consumers. Hispanics now number about 54 million in the U.S., up 50% from 2000 and nearly six times larger than 1970, reports the U.S. Census Bureau. There also are 44 million African Americans and 19.4 million Asian Americans,

"The wake-up call for marketers is about the need to learn what multicultural consumers want and then bringing those insights to how clients go to market," says Jo Muse, chairman of Muse Communications, a multicultural marketing firm. "If they are not slicing and dicing consumer data so that the purchase motivational insights of multicultural consumer are close at hand, I'm afraid they will miss this opportunity."

But there's another twist to the Nielsen findings: although multicultural consumers expect to spend considerably more this holiday, they will wait longer to spend. While 65% of the general population says it plans to "wait until later in the season" to do the bulk of their holiday shopping, that number jumps to an average 70% among minorities, says Russo.

"They are going to spend more, but they're going to wait longer," says Russo. "That makes the timing of messaging even more important."

The Nielsen report also found that Asian Americans are expected to exceed all consumers in the use of online shopping. While one in four Asian-Americans said they will holiday shop online about one in five mainstream consumers do.

Minorities also are leading the way in smartphone use. While 68% of the general population said they carried smartphones, that number jumped to 78% among African Americans; 79% among Hispanics and 82% among Asian Americans, the study found.

The survey also detailed the top product categories that consumers say they will spend more on this holiday season:

• All shoppers: Will spend 12% more on gift cards; 10% more on electronic merchandise and 10% more on toys.

• African Americans: Will spend 17% more on electronics, 17% more on food and 15% more on apparel.

• Asian Americans: Will spend 14% more on food, 13% more on electronics and 12% more on apparel.

• Hispanics. Will spend 15% more on gift cards, 13% more on electronics and 13% more on toys.

"The marketplace is being driven by multicultural consumer behavior," says Muse. "The more retailers and brand marketers increase their multicultural I.Q., the greater their chances of capitalizing."