The Black Buying Power

25 Jul The Black Buying Power

The power of the Black dollar has been known to significantly vitalize the American economy. The racial wealth gap between Black Americans and other races in the US hasn’t discouraged the Black consumers to rise as a major consumer base. The African-American consumers contribute more than $1 trillion to the economy and are predicted to increase their spending to $1.5 trillion by 2023. The Nielsen report “Black Dollars Matter: The Sales Impact Of Black Consumers” confirms the spending habits of the Black community and that they are significant contributors to the retail market.

While the Black consumers spend on a variety of products, they are found to specifically spend more on hair and beauty products. According to the Nielsen report, Black consumers spend nearly nine times more than non-Black consumers on ethnic hair and beauty products. Yet another Nielsen report “It’s in the Bag: Black Consumers’ Path to Purchase” established that media engagement, lifestyle interests, and economic progress have made Black Americans a key population to stimulate the U.S. economy.

However, the report finds that retail giants have decreased the amount of money spent on advertising to reach out to Black consumers decreased significantly since 2017 – nearly a $7 million decline in investment to reach Black people via television. Despite the power and the growth of Black consumers, complains of racial profiling at retail environments are prevalent, which compels them to limit themselves to certain brands. This exists despite major brands pledging to expand the diversity in their recruitment programs and advertising strategies. Industry observers have constantly implied that brands and retail outlets need to reform their ways of connecting with Black consumers and appreciating their spirit to buy.

The enormous buying potential of Black consumers has highlighted the ability – or inability – of popular brands to tailor products to suit the African-American buyer. African-American consumers are an important population for smart brands that want to grow market share and brand preference. For instance, the beauty market has seen only a few players introduce hair and skin care products that are designed to cater to their Black consumers who are specific about the type of beauty care products they want to use. Although customization of products is a move that reflects the recognition of Black customers by retail giants, the numbers are not impressive.

An interesting factor that influences the buying choices of Black Americans is a brand’s involvement in social causes. African- Americans are most likely to be attracted to brands that use culturally relevant and socially conscious marketing.

Given the power of the Black dollar and the much-deserved respect and recognition it doesn’t get, it’s time for companies and brands to ponder: What would the financial impact be if Black consumers stop shopping with big brands especially in retail and limit themselves to black-owned businesses?