Bloomberg Línea — The McKinsey & Company consultancy has researched how Latinos in the United States create wealth by looking at their performance as workers, consumers, and investors, and this year published a report to understand the impact of Covid-19 on the ethnic group’s wealth creation journey, and discovered that Latinos’ consumer power is rising, and that companies need to work to address the needs of this group.
Lucy Pérez, a senior partner at McKinsey, told Bloomberg Línea in an interview that Latino consumer spending totaled around one trillion dollars in the US in 2021.
“When you look at the growth of this segment, it is the third-largest growth rate behind China and India. So if Latinos in the US were their own country, they would be growing as the third-fastest group after China and India,” she said.
Despite this consumption power, Pérez says the report found that Latinos are actually neglected consumers, and that they show a significant level of dissatisfaction with the products that are marketed to them.
The McKinsey report found that one-third of Latinos are unhappy with the current product offering, versus the reaction from the non-Latino White community.
“This happens pretty much in all product categories. If companies address this dissatisfaction, there is basically a hundred billion dollars that are on the table where these consumers can find the products that best fit their needs,” López said.
The McKinsey report states that if companies address the gap that exists in the parity of Latinos and non-Latino Whites, satisfaction could grow sixfold, “a significant opportunity”.
In general, the dissatisfaction is amplified among Latinos in the low-income bracket, and also among Latino women, with the latter group 10% more dissatisfied with product offerings, according to the report.
According to Pérez, 80% of Latino businesses have stabilized their sales back to the same levels in 2019, representing the resilience of entrepreneurship that is a hallmark of the Latino community.
In terms of their overall consumer power, Latinos in the US are the equivalent of the fifth-largest economy in the world. McKinsey’s research to understand the underrepresentation of decision-making shows that Latinas are particularly not well represented in corporate America for C-Suite, in which Latinas make up 5% of the total in that executive segment.
Looking at consumer spending, the report also shows that there is a high level of social media influence on Latinos, and around 68% of them engage with brands on social media, whereas among overall consumers the figure is 47%.
“This [Latino] population tends to be younger, and has less disposable income, but really can be quite influenced by social media,” Pérez says.
“The other thing that we saw is that it’s generally a demographic that really cares about environmental and social impact topics and sustainability. This is something that can have an impact on understanding what a brand stands for. If we get this right, there is a big opportunity at a time that there is so much economic uncertainty to address the needs of a growing sector and create growth opportunities for the companies that have a better understanding of the needs of this population,” she added.