Growing Hispanic Population Needs Well-Priced Furniture

August 31, 2006  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on September 2006 Good news, furniture sellers: America’s ever-booming Hispanic population needs you.

New reports from federal agencies, as well as the University of Georgia’s annual report on buying power by race and ethnicity, tell you what you already know: The nation’s Hispanic population is growing and buying more furniture as they settle into life in the United States.

Here are some highlights from new federal data and from “The Multicultural Economy: Minority Buying Power in 2005” report from Georgia’s business school:

• Hispanic households spend more of their income on furniture than the average household.

Over the past five years, the average Hispanic household spent 1.1 percent of its post-tax income on furniture. That’s slightly above the national average of 1 percent for all households, according to the federal Bureau of Labor Statistics’ annual Consumer Expenditure Survey.

The downside: Because the average Hispanic household earns less than the national average, the dollar value of their furniture spending is less, too. Hispanic households averaged $1,929 on furniture between 2000 and 2004. That’s about $50 less than the average American household.

The upside: “Despite their lower average income levels,” the Georgia report said, “Hispanic households spent more on groceries, telephone services, furniture, major appliances, men’s and boys’ clothing, children’s clothing, and footwear.”

• The buying power of the nation’s Hispanic population is growing faster than all other groups.

Nearly one in eight of the nation’s residents is Hispanic, and their population rose 21 percent between 2000 and 2005. Growing even faster was their inflation—adjusted buying power, up 37 percent during that same time. The University of Georgia researchers say Hispanic buying power will top that of African-Americans in 2007.

• The boom won’t slow anytime soon.

Hispanics will have 9.2 percent of the nation’s buying power by 2010, as they continue to grow in numbers and to find higher-paying jobs. (Of course, that Georgia survey was published before Congress began considering tighter border control and other immigration-related laws.)

More importantly to the furniture business: The Hispanic population is relatively young compared to the rest of the population, and as they age they may be more likely to buy more and better furniture.

• Hispanics are buying more houses, but the homeownership gap is wide.

Hispanics own about half of the housing units they live in, according to the 2005 American Housing Survey report released in July by the U.S. Census Bureau. The national homeownership rate is 69 percent, suggesting that Hispanics have a long way to go to close that gap.

• The Hispanic homeownership gap is closing quickly.

Hispanics owned 11.7 million housing units in 2005, up 41 percent since 1999. The national growth rate for owner-occupied housing units was 9 percent during that time. What does it mean to you? People who own homes are more likely to buy more and better furniture than people who rent.

• The average Hispanic-owned house has less room for furniture.

Federal reports say Hispanic-occupied houses are typically smaller, more crowded and come with fewer amenities than the average U.S. house.

The Census report says the average Hispanic-owned home has 1,532 square feet, which is 85 percent of the size of the average owner-occupied home nationwide. About one-third of Hispanic-occupied houses have more than 1.5 people sharing a bedroom. The rate is just 11 percent among all houses nationwide, suggesting there may not be a lot of room for a lot of furniture.

Only about 15 percent of Hispanic-occupied homes have two or more living rooms or a recreation room, about half of the national average, meaning fewer sofas and entertainment centers. And only 40 percent of Hispanic-occupied houses have a separate dining room, which is below the 48 percent rate of all housing units.

• You should expect more competition.

Hispanics are opening new businesses at a rate four times faster than the national average, according to the federal Minority Business Development Agency’s survey of minority-owned businesses. The government doesn’t break down sales by categories, but furniture was part of the $40 billion spent by Hispanic retailers in 2002, the latest available data. HFB