With a strength of 47.8 million, African Americans are the second largest consumer group, providing businesses with $ 300 billion in opportunities in the community. Despite 13.4% of the US population, black households will account for just under 10% of total US goods and services spending in 2019, according to McKinsey. But when businesses interpret this data as evidence that there is little benefit in servicing black consumers, they make billions of mistakes.
Breakdown you need to know: In 2019, consumer spending on black households totaled about $ 835 billion, with total spending on all black households increasing by 5% each year over the last 20 years. CultureBanx said that when he read that African Americans had a purchasing power of $ 1.4 trillion, it was an incredibly impressive number. This is even more so when you realize that it is more money than Spain, Mexico, the Netherlands, Turkey, or Switzerland make each year. It’s hard to imagine that African Americans have more total purchasing power than most developed countries.
There are two strategies that companies pursue. Expanding local access to goods and services and creating services tailored to the needs and preferences of black households to take part in this $ 300 billion opportunity. According to a Nielsen study, black consumers are taste makers when it comes to setting the tone of mainstream brand selection. “According to our research, black consumers’ choices have a’cool factor’that creates a halo effect that affects not only color consumers but also mainstream,” the rating company said.
Black purchasing power: Black consumers have a big impact on spending. In luxury goods such as watches, blacks make up $ 60 million of total spending of $ 385 million. Women’s fragrances represent $ 151 million out of the $ 679 million industry.
Years of underinvestment by the private sector have led some black communities to lack retail options and key services. In addition, black consumption is curtailed and growing rapidly, while growth begins on a lower base. Spending related to rising housing, medical and higher education increased from 38% in 1984 to 45% in 2019.
Situational awareness: While our purchasing power is virtually unmatched, advertising spending tailored to black consumers has been steadily declining in recent years. Also, this demographic is 25% more likely to change buying behavior. Knowing that if these companies do a survey, the black community is likely to buy products or services that better match their self-image, along with the huge untapped market opportunities awaiting them. There will be.