By Michael Nam
A new Nielsen report shows the buying power of Asian Americans expanded by $718 to $770 billion in 2014 and is expected to soar to $1 trillion by 2018. The report dissects the consumer impact of the still relatively small demographic, but while the report notes the Asian American population is the “most culturally diverse,” it does miss an opportunity to disaggregate the multiple Asian sub-groups that would provide a clearer picture of spending habits.
“Asian-Americans are focused on the future, trendsetting and leading the way in technology, digital entertainment and fresh food while maintaining strong ties to their cultural heritage,” saidBetty Lo, vice president, Community Alliances & Consumer Engagement. “Increasingly ambicultural, Asian Americans’ cultural identities are shaping the mainstream market.”
Particularly in areas of digital consumption, Asian Americans tend to outspend other consumers. They are:
31 percent more likely to shop online
29 percent more likely to bank online
37 percent more likely to visit digital apparel/merchandise stores compared to non-Hispanic whites
At just 5.3 percent of the population, Asian American spending contends with Blacks at 13 percent, spending approximately $1 trillion, and Hispanics at 17 percent, spending approximately $1.4 trillion.
While this paints an impressive picture of economic clout, Asian Americans, and the overlooked Pacific Islander demographic, are hardly monolithic, a warning for businesses and marketers overgeneralizing.
In a report earlier this year, the National Coalition for Asian Pacific American Community Development (CAPACD) disaggregated Asian American sub-groups and generations in order to provide a more nuanced view of overall wealth and interactions with finance.
For instance, while the Nielsen report shows the use of financial instruments to be strong among Asian Americans (88 percent use credit cards compared to 66 percent of the total population), the CAPACD report notes that 68 percent of Asian Americans did not know their credit score.
The CAPACD also shows that the growth of the population has largely been fueled by immigration, and that newer immigrants tend to have fewer dealings with financial institutions or advisors.
Additionally, breaking down median household incomes between the various ethnic cultures that make up the larger Asian American Pacific Islander population shows that the Indian and Filipino communities skew the data upward in terms of median household income, somewhat erasing groups with lower incomes such as Hmong, Cambodian and Bangladeshi Americans.
The explosive spending growth as a whole is a good sign for outreach and policy adaptation by businesses and politicians, but the sheer diversity within the framework of Asian Americans and Pacific Islanders requires a careful and nuanced approach based on specific data.