Are you part of the problem?
Or are you part of the solution?
Six hours in house spending the root of our demise. 1.1 Trillion Dollars and still broke!
African Americans Have $1.1 Trillion in Buying Power, Are We Putting Our Money to Good Use?
by Britni Danielle — Feb 11, 2014
According to a recent study by the Nielsen Company, African Americans will have $1.1 trillion in collective buying power by 2015 (increasing to about $1.3 trillion by 2017), making us “more relevant than ever” as a consumer bloc.
Currently 43 million strong, African-American consumers have unique behaviors from the total market. For example, they’re more aggressive consumers of media and they shop more frequently. Blacks watch more television (37%), make more shopping trips (eight), purchase more ethnic beauty and grooming products (nine times more), read more financial magazines (28%) and spend more than twice the time at personal hosted websites than any other group.
African-Americans make an average of 156 shopping trips per year, compared with 146 for the total market. Favoring smaller retail outlets, blacks shop more frequently at drug stores, convenience stores, and dollar stores. Beauty supply stores are also popular within the black community, as they typically carry an abundance of ethnic hair and beauty aids reside that cater specifically to the unique needs of African-American hair textures. Overall, health and beauty supply stores have an average household penetration rate of 46 percent among African-Americans, and the average black household spends an average of $94 in this store channel each year, providing a significant opportunity to connect with black shoppers.
While the numbers indicate that Black folks are an important part of the buying public, companies spend just three-percent (3%) of their advertising budgets marketing to African Africans consumers. Cheryl Pearson McNeil, a Vice President at Nielsen, warn they are missing out.
“The black population is young, hip and highly influential. We are growing 64 percent faster than the general market,” she explains.
However, Noel King, a reporter for NPR’s Marketplace, cautions companies against trying to reach Black consumers without knowing our needs.
“If you want to market to those groups, then you should know what particular group buys your stuff,” says King. “Blacks tend to spend more on electronics, utilities, groceries, footwear. They spend a lot less on new cars, alcohol, entertainment, health care, and pensions.”
Despite our collective buying power, little of our money stays in Black communities or is spent on Black-owned businesses.
The NAACP reports:
“Currently, a dollar circulates in Asian communities for a month, in Jewish communities approximately 20 days and white communities 17 days. How long does a dollar circulate in the black community? 6 hours!!! African American buying power is at 1.1 Trillion; and yet only 2 cents of every dollar an African American spends in this country goes to black owned businesses.”
Though it may seem like African Americans are frittering away our economic power, Dr. Jared Ball of Morgan Sate University argues the phrase “buying power” does not paint an accurate picture of Black folks’ financial outlook.
“This phrase, ‘buying power,’ is used as a glossy euphemism for Black poverty for being the fault of Black spending habits, as opposed to a per-determined need in our economic model,” he explained to Marketplace Money. “A lot of people pick up this phrase and hear these large numbers, and assume Black America is stronger than Black America actually is.”
Although African Americans make up 13-percent of the U.S. population, just seven-percent (7%) of small business are owned by Blacks. Access to capital, clientele, and other resources hinder many Black folks from starting business, despite our long history of entrepreneurship.
Organizations like the Empowerment Experiment, the Black Owned Business Network, and Recycling Black Dollars are hoping to encourage African Americans to patronize Black businesses, but there is still more work to do. Do you patronize Black businesses? How can we wield our “buying power” responsibly?