Although South Asian Americans make up only 1.5% of the population, they are unique in their purchasing power.
Some members join the company as college students or service industry workers, while others work in high-paying fields such as information technology or health care. They founded multi-billion dollar companies and own most of the nation’s hotels. Many are visible symbols of the American Dream, including CEOs like Microsoft’s Satya Nadella and Google’s Sundar Pichai. The average Indian-American household’s annual income is more than double the U.S. average, about $150,000 compared to about $70,000. According to recent reports, they pay 5 to 6 percent of their total income tax.
Cities and suburbs that attract South Asian immigrants for professional reasons, such as Houston and Chicago, have long attracted medical professionals, while South Asian entrepreneurs have long attracted grocery and clothing stores. , has served them by providing restaurants that serve local food and imported clothing. , and a place to find and gather community.
But the growing purchasing power of the diaspora is creating new competition for what Birju Shah, clinical assistant professor of marketing at Kellogg Co., calls “a share of India’s wallet.”
“Because of Indian wealth and desire for consumerism, there will be more Indian products sold in American stores,” Shah said, citing Whole Foods as an example of a mainstream retailer that caters to South Asian tastes. , Nordstrom, and Macy’s. .
This competition means traditional South Asian retailers, such as national grocery chain Patel Brothers, must adapt to attract, retain and satisfy customers.
Shah identifies three trends that will define the future of retail in South Asia.
Growth of retail locations
Despite the diversity and class differences of the South Asian diaspora, the retail giant functions as a common space for its customers.
“Everyone goes to the Patel Brothers, even if behaviorally they haven’t completely left the caste system yet,” says Shah. “From the richest Indian to the poorest Indian, they will go to Patel Brothers to buy their produce.”
It is no coincidence that large grocery stores are located near houses of worship, allowing people to make regular trips to each store in one go. These places of worship (churches, temples, mosques) serve a similar democratizing role for South Asians in the United States. After all, when Indians and other South Asians gather for worship and socializing, they also exchange valuable information, so-called “trades.” “Flow” or “edge” in other contexts.
“You can hear everything in the temple,” Shah says. “We hear everything from where they get their best puris, where they get their best clothes, where they get their religious items and beads.”
Rather than trying to reach non-Indians, large Indian retailers like Patel Brothers are focusing on building retail hubs with larger stores and offering more products to their core customers. is placed. For example, a major Indian real estate group purchased a strip mall in an area with a high concentration of South Asians with the intention of providing culturally relevant services such as an Indian fast food chain, travel services, clothing stores, and a medical clinic. These places are turning into earth. “These are similar in spirit to Eataly,” Shah said.
These retailers have a deep understanding of their core customers and will be able to continue to listen and gather valuable information. For example, the opening of a particular temple may signal an influx of people from a particular region, so local grocery stores take those customers into account when stocking their shelves.
“Some years it’s North India, some years it’s West India, some years it’s South India,” Shah says. “For retailers, that means the mix of produce and packaged goods will change over time.”
Marketing beyond transactions
Shah believes that while doubling down on serving existing customers via retail hubs can be a winning strategy, retailers need to think more creatively about marketing.
He said earlier that many retailers, including Patel Brothers, were marketing in a very transactional manner, with new Diwali fashions in vogue and this season’s mango harvest. But Shah worries this won’t continue to work.
“We are now in a new phase of loyalty for Indian consumers, so we need a deep understanding of their context to differentiate,” says Shah. “If a new grocery store opens and it’s the same quality, everyone will shop there, even if the prices are the same.”
Shah predicts that individual retailers will begin to bundle and cross-sell more holistic, concierge-driven experiences to targeted communities. This allows them to personalize products, services and knowledge to these specific consumer segments, facilitating a more personal and holistic connection with the retailer’s brand.
“Not only can you get your groceries here, but you can also get your medical and travel concierge here. Also, by allowing a convenient way, you can get certain financial credits linked to your family in India. You can also get a card and send the money back,” he says.
He also predicts that retailers will need to find creative ways to target specific subgroups within the diverse South Asian diaspora. At the moment, retailers like Patel Brothers are failing to offer online shopping. But Shah believes this may eventually change, although it is “set up in an Indian style.” This could mean partnering with Uber drivers in India who can pick and deliver the right groceries, or delivering regionally specific prepared meals and meal kits.
“Or a personal shopper with the same background or religion as you will target your personal shopping experience,” he says. “Similar to the dabbawala system, it is structured so that a person from a particular region of India does this.”
Growth of new consumers
Shah also points out that broader economic and generational trends can change both retailers and the products that line their shelves.
For example, India’s projected economic growth could be a headwind for South Asian retailers in the US. Indian companies exporting to the US may prefer to serve the domestic market. This could force U.S.-based retailers to turn to China or Mexico for substitutes, which could mean customers finding familiar products aren’t the same as before. means.
“As sales and consumption increases in India, it may be difficult to sustain that,” Shah says.
Even products and services developed by members of the diaspora can change over time.
The first South Asians to immigrate to the United States often used food and other cultural markers to bond and build community (mothers made samosas and brought them to temples to share); ), subsequent American-born generations are interested in marketing them. It becomes a cultural touchstone for the community and beyond.
“Many first-generation entrepreneurs just want to offer something they are used to making at home to all their friends, and they want to offer that to the temple community as well,” Shah says. “The second generation is thinking 100% in terms of brand.”
Shah also sees third-generation South Asian Americans running a different business than their parents. While previous generations stuck to family businesses, younger Indians are more open to doing business with partners beyond the diaspora community. Some sell family businesses to private equity groups, while others simply cut across kin groups or castes.
“There is a behavioral shift happening in companies,” he says. “As more South Asian entrepreneurs expand their businesses, their products become more widely available, with more choice of brands and price ranges, and more category-specific products such as probiotics and organic foods. will increase,” Shah said. “This will require stronger marketing and branding efforts.”
For example, Chai Baby sells $6 bottled teas. The drink itself, apart from being branded as an artisanal local product aimed at giving it cross-over appeal to non-Indians, is made with other spices that Shah regularly drank at home. There is no big difference from milky tea.
“Everyone drinks chai, right?” he says. “Everyone else is selling the same thing, but the idea of the brand is huge for marketability.”
With India’s explosive economic growth and growing diaspora, can South Asian retailers and entrepreneurs become national players?
“There are plenty of opportunities for individuals to follow this trend, and there are no signs of it slowing down anytime soon.”
