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Consumers are move diverse than ever before

According to US Census data, the population of people who are two or more races is estimated to be the fastest-growing racial or ethnic group over the next few decades, with Hispanics and Asians leading closely behind. The nonwhite population, including Black people (13 percent) and Asian Americans (6 percent), represent nearly one-fourth of the US population in 2020. Hispanics of any race represent close to one-fifth. The inherent racial and ethnic diversity of Generation Z is driving the projected growth rates for both multi-racial and Hispanic populations in US and towards becoming a multicultural majority by 2044. Over the next 30 years, the share of the population who are two or more races is projected to more than triple, growing from approximately 8.5 million in 2016 to 25.2 million in 2060, according to IRI, a Chicago-based market research firm.

As the US population becomes more diverse and intersectional, a growing number of consumers are rewarding brands that realistically capture real-world diversity, share their inclusive values and espouse causes that support diversity, equality and equity. 62 percent of US adults said diversity in a brand’s advertising had at least some impact on the way they perceived that brand’s products and services, according to eMarketer.

Cultural intersectionality: The disruptive force for consumers

Changing demographics and evolving consumer attitudes and cultural norms are spurring marketers to make major shifts in how they engage with the consumer of the future. A critical challenge for marketers is to develop comprehensive strategies that are rooted in the needs of the consumer of the future. Consumers that belong to the younger cohorts (Millennials and Generation Z) are characterized by their own unique form of disruption - their cultural diversity and commitment to individuality, human rights and equality. Yet for all their distinctive qualities, Millennials and Generation Z eschew labels, preferring instead to move fluidly in the way they experience themselves and the world around them. The racial and ethnic diversity of Millennials and Generation Z have given rise to a generation with a deep and genuine acceptance for what makes people unique. Rather than trying to conform to social, societal or political constructs, they embrace individualism. They wield considerable buying power (estimated $143 billion) and are more likely to patronize brands that understand their needs and portray them authentically and respectfully.

Building loyalty among Millennials and Generation Z require a commitment to understanding who they really are, not the perception of who they are. This newest generation of influential shoppers is fiercely independent and expects brands to respect and appreciate what makes each of them unique. That means brands must understand what Millennials and Generation Z wants and needs, before they will earn their dollars. As new products launch every day, this cultural shift is a key factor in building and marketing a brand. Staying informed on multicultural insights is crucial for innovation and  accelerating brand and product growth.

Racial bias in retail

Retail is one of society’s most interactive institutions - with millions of people from all different backgrounds crossing paths daily. These interactions bring a range of possibilities: highs and lows, positive and negative experiences, connection and misunderstanding, and often, instances of racial bias and the feeling of unfair treatment. In fact, racial bias is so pervasive in retail that according to a 2018 Gallup study significantly more Black shoppers reported experiencing unfair treatment in a store within a 30-day period than at work, in dealings with the police, or at a restaurant, bar, theater or some other entertainment venue. There are limited racial diversity across marketing, merchandise and retail employees results in exclusionary treatment before US BIPOC shoppers even enter a store and continues across their in-store journey, according to a study commissioned by Sephora on racial bias in retail.

In January this year, Sephora revealed the detailed changes it will implement across all of its US stores in order to mitigate racially biased experiences and unfair treatment for shoppers in the retail sector. This is the latest in a series of actions announced by Sephora to underscore the retailer’s continued commitment to diversity, equity, and inclusion. The plan includes increased diversity in its product offerings and workforce, more inclusive marketing programming and greater accountability through the institution of updated employee conduct policies. The decisions are based on the results of the study on racial bias in retail commissioned by the retailer.

The limited diversity and exclusionary treatment shoppers encounter in the retail journey

Source: "The Racial Bias in Retail Study", Sephora, 2021


Source: 1) "The Racial Bias in Retail Study", Sephora, 2021; 2) "The diversity imperative in retail", McKinsey, 2021


Retailers pledged action on diversity, but delivery is proving more elusive

Diversity, equity and inclusion (DEI) is especially important for marketers, who are on the front lines of communicating these initiatives externally and who set the tone for whether a brand is perceived as inclusive. Brands are striving to be more inclusive, especially as they relate to people who have been historically underrepresented, excluded and stereotypically portrayed. Marketers are playing a key role in these efforts. By embracing and reflecting real-world diversity, they can build greater brand affinity and deeper customer relationships while working to effect positive change.

Still, many efforts by brands to represent and include consumers of color and multicultural consumers are falling short. While Black representation in marketing and advertising has increased in the past decade, a large percentage of Black and African American consumers are feeling underrepresented - stereotyped, pigeonholed and overlooked in advertising. Similarly, Asian Americans are underrepresented and often stereotyped, despite being an affluent and fast-growing group.

Reflecting and embracing real-world diversity: How companies can act fast and with purpose

Consumers want brands to embrace real-world diversity. Marketers who exclude consumers of color and multicultural consumers are missing important opportunities. While each company will ultimately  create its own roadmap that drives real progress toward diversity and inclusion, three strategic efforts can help marketers master customer engagement towards real-world diversity and inclusive marketing.

  • Recognize cultural intersectionality in marketing. Create marketing, communications and customer experiences that authentically reflect the diversity of real-world communities. Inclusive campaigns incorporate messaging, people, stories and imagery in a normalized way that realistically represents diverse facets of identity and experience without making judgments or assumptions. For example, consumer packaged goods company Procter & Gamble produces inclusive campaigns for its brands (including Dove, Gillette, Tampax and Tide). "The Choice" campaign illustrated how marketers can usher people from conversation to action on racial inequality through additional resources that go beyond an ad.

  • Know your audience. Understand their needs and motivations, notably that they are consumers who are multidimensional and ever-changing by including multicultural audiences and cultural insights in advertising and marketing. Create a feedback loop that allows the brand to consistently connect with them and make sure marketers are able to integrate those learnings into their actual behaviors to fully understand how their needs and motivations translate to their omnichannel retailer and brand choices and ultimately increase purchase intent, brand lift and brand loyalty.

  • Technology fosters inclusion. Marketer-friendly artificial intelligence (AI) and integrating AI and predictive analytics with marketing can help marketers identify exclusion, reach more diverse audiences, and create inclusive content. Technology is also improving marketing to diverse audiences by facilitating data collection and driving first party data led advertising.

Not all brands are created equal. With many small businesses struggling during the pandemic, the pandemic is disproportionately impacting Black-owned businesses. Help SAP drive change and #SpotlightBlackBusinesses.

Brands and products that win engage authentically, simply and transparently

Source: "Understand Me, Don't Define Me", IRI, 2021


Brands that want to serve the future consumers and build profitable relationships with them will need to look at value through a wider lens.

Three steps to creating more values for consumers:

1. Meet consumers where they really are

2. Capture demand by optimizing consumer intent

3. Build relationship with consumers beyond first sales