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Falling Hispanic Spending Hurts US Apparel Retailers

• By  Textile Excellence
• August 24, 2017

Many US Hispanics are venturing out only to buy essential goods and are cutting back on discretionary spending, worried about possible harassment by immigration or law enforcement officials since the election of US President Donald Trump, according to community groups, research firms and retailers.

However, none of the reports specified any changes to first-half online spending by Hispanics, which make up about 18% of the US population, according to research firm Nielsen Holdings Plc.

Trump Effect

The lower spending by Hispanics has been hurting certain retailers since the start of the year. According to reports by brokerage firm Jefferies and analytics firm NPD Group, shopping visits among Latinos were down about 11 per cent in November and December.

“Their buying power is undeniable, as is their influence on everything from fashion and food to music and entertainment,” Cornell said. Big-box retailers have for years invested heavily in courting the Hispanic community's substantial spending power, which reached US$ 1.4 trillion in 2016, according to data by the University of Georgia's Terry College of Business.

Luis Fitch, founder of Minneapolis-based Hispanic marketing company UNO Branding, whose clients have included Target and Best Buy Co Inc, said several small clients across different cities had posted declining sales since Trump took office, and that this had to be affecting big-box retailers, too.

“It's very common to have a Mexican married to an American, but if that Mexican is undocumented, he's really afraid of going out and looking for work,” Fitch said.

Demographic Factors

On average, Hispanics are younger than non-Hispanics, have more children, and spend more on each child, according to Jeff Humphreys, director of economic forecasting at the Terry College of Business. He also said Hispanics tend to spend more on apparel, making their buying choices crucial to many retailers.

As the slowdown has mainly hit discretionary spending, retailers that deal in apparel and footwear - two sectors already feeling pressure - are hurting the most.

NPD said makers of athletic wear popular with Hispanics, including Nike Inc, Sketchers USA Inc  and Vans, would take a big hit. 

Textile Excellence