Taken from Forbes
Written by Laura Rocha Co-founder and CEO of Dathic
The U.S. is the market where everyone wants to play and win.
With almost $16 trillion in personal consumption expenditures,1 the United States is the world’s largest consumer market.
From the smallest to the largest consumer companies, everyone dreams to play and win in the U.S. market, even the legend of football (soccer) is a newcomer to the market.
After the official announcement a few weeks ago in Miami, there have been not just goals and warm celebrations from avid fans, but also millions of dollars spent with the halo effect of a starpower presence in and for the South Florida market.
Soccer is not even in the top three most popular sports in the U.S. and the Miami team is not at the top of its league. However, given the sheer size and magnitude of the U.S. market, there are opportunities for success in nearly every industry, and a fair likelihood to win a piece of this consumer market, making becoming a multi-million dollar business a reality.
In my work with local and international brands in the consumer goods space, I frequently hear that if you can make it here, you don’t even have to go anywhere else. Brands know that even just winning a tiny percentage of the U.S. market will be impactful enough to make great profit and are eager to enter, scale, and win their piece.
Let's take a look at some numbers and define what makes the U.S. a dream market where every brand in the consumer space wants to play, and lay out some strategic steps brands can follow to better understand their specific opportunity and win a piece of the U.S. market pie.
Deep Dive Into the Numbers
According to the Bureau of Economic Analysis, by 2021 $15.9 trillion dollars was the total personal consumption expenditures in the U.S., meaning the measure of spending on goods and services purchased by, and on behalf of, households. For reference, if government consumption of goods and services was included, it would be $19 trillion.
To reach this massive collective wallet, brands want to place their products on as many shelves as possible.
There are approximately 1 million retail establishments around the country. With a broad diversity of consumers, retail buyers and brokers are always hunting for the best and most innovative products from both local and big brands to satisfy their consumers' needs, surpass their expectations, and gain the loyalty of the over 120 million households in the U.S..
To put it in perspective, consider the numbers of the most sought-after partners for any consumer brand: mega retail chains. One of the largest chains in the country has approximately 5 thousand retail units and 3 thousand of them are supercenters. Based on reported data, its largest store format has 187,000 square feet, and offers 142,000 different items, on average.2 There is no doubt why a large percentage of consumption dollars are spent on retail shelves and why the world’s largest company by revenue is a retail company.
Food and beverage are one of the most popular categories for shoppers. Looking west, California is the largest economy in the country, almost equivalent to Germany’s economy.3 It’s also the state with the highest expenditure in food and beverage, followed by Texas and Florida.4
In California alone, $2 trillion dollars were spent on personal consumption of goods in 2021, and from that, $151 billion on food and beverages.5 Just as a reference, If they were spent equally, Californians had spent $4,800 dollars every second on food and beverage in 2021.
Florida is another consumption paradise. According to the Bureau of Economic Analysis,6 on average, a person in Florida spends $50k dollars a year in consumption of goods and services, and of this total, almost $4,000 is spent on food, and beverages. Just a local grocery store in Florida, like the one the Miami football star was spotted at recently, serves an estimated amount of 100 thousand people a month.
How to Win Your Slice of the U.S. Pie
Going for it all at once is going wrong. To win in the market is to know your market. Little by little, use data to measure and decide your next steps, as well as prioritize your strategies based on your specific industry, company size, and objectives. The larger the opportunity, the more competitive and complicated it is to navigate it, so knowing your market is strategic and necessary to make the best decisions.
The U.S. market is large and there are many stores and customers to serve. Each state, even each store, is its own world, with a broad diversity of consumers, preferences, costs, logistics, and traditions. It is important for brands to know sooner the better where they want to go and why.
Going back to the Miami football celeb example, it was clear how strategic of a win it was for multiple parties to bring him to Florida. A high percentage of the population is Latino, especially in South Florida, with a great concentration of South Americans who are passionate about soccer. Evaluating the data we monitor at Dathic, the 2022 World Cup topic and keywords were 3 times more popular in South Florida than in the north of Florida.
Small brands might feel they don’t have the resources to get access to expensive market research analysis, or internal insights teams to plan detailed strategies or get to know their market, so they go to the market blind, and I have set out to change that.
In my work with small and mid-sized brands at Dathic, I often hear the pain point that data is costly or brands don’t have access to structured databases, technical skills, or cultural knowledge, which makes it very difficult and time-consuming to make data-driven sales and marketing strategies. However, even early-stage brands generate data from different points of interaction with their customers and don’t always realize they can leverage it to better understand their market and shoppers' needs without having to wait until they are big enough to afford insights or expensive consultants.
When brands onboard with Dathic, I’m always amazed by how revealing it is for the leaders to have clarity on their top-market locations, shopper characteristics, or estimation of new opportunities, just from understanding the interaction with their store locator. For brands, even at the early stage, integrating data from in-store and e-commerce sales, social media engagement, or website interactions, can be beneficial to dominating their market and feeling the confidence to establish hypotheses on the way the market will go.Then, can also benefit from data to design and run tests to prioritize opportunities. By using data in combination with empathetic and authentic interactions with local customers, brands can gain a better understanding of the market at scale, assess their opportunities, and define effective strategies.
Differentiate Your Tactics Based on Your Market, Business Needs and Company Size
For e-commerce brands relying on word of mouth, optimizing the advertisement costs might be different than for a brand willing to expand in the brick-and-mortar retail space and in need of capturing the market store by store. The local grocery in Miami where the superstar was seen doing groceries recently has a different audience, metrics to prove a success, and logistics than a larger store in Orlando or one in Jacksonville.
If a Californian brand with a well-known presence in the L.A market is looking to grow from the local California market to the South Florida market, it might need to better understand how different the market is there. In California, and L.A. County specifically, Latinos account for the majority of the population, a similar number to Miami-Dade County, where Latinos account for almost 70% of the population.
However, the brand would need to test strategies to better engage Florida’s Latino market, because it is different from the Latino market they currently serve in California. Language, heritages, cultural local events, competitors, and other nuances in income, purchasing behavior, and even weather, have an impact on the consumer data coming out of these markets. Not to mention, the strategy to launch and generate brand awareness needs to be different than the one to grow and expand.
Being intentional with experimentation and monitoring selected metrics can help brands to understand the diversity of markets and set specific strategies to better engage with local consumers without breaking the bank with expensive market research or focus groups.
There are tools that can help with this. Digital marketing platforms might be great tools to understand your customers and test strategies, but it is important for brands to acknowledge the strategy when addressing diverse market segments, and retraining the algorithms with their specific metrics and targets. For instance, just with a few hundred a Brand can run A/B testing social media ads to compare different strategies to better know their consumers' preferences and then be more intentional in how to allocate their larger budget. In-store strategies like coupons or demos don’t have to run randomly either. Checking how are the local communities different, your followers, engagement rates from previous strategies, or even sales results in similar communities can help to decide how to focalize these strategies.
As brands learn from their historical data, it is crucial to also look ahead to where the market will be in the future. Growing a brand is a long-term marathon and brands will have to adapt to market swifts. Some important aspects are the undeniable growth of the U.S. multicultural market and fast digitalization. The Latino consumers' new interests, like football, which is growing in popularity in the US as North America prepares to host the next World Cup, will move the trends and open opportunities. My advice for brands? use insights to establish and grow in their core market as well as keep an eye on insights and stay curious to anticipate what other markets could be ripe for innovation, or at least on the rise, and learn from them.
There is no magic formula to win the large and wealthy U.S. Market. However, having a great product to differentiate, understanding that for a market as large as the U.S., the expansion will take brands to own of the relationship with their consumer and an intentional commitment to serve their diverse needs authentically to really connect, and the time and patience to set, test and reiterate on the strategies, will help brands succeed.
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