Couple counting money

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.

Nielsen takes us inside the numbers:

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, warns 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 pre-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 Black folks. Access to capital, clientele, and other resources hinder many Black Americans from a 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?

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  • Evidently your losing audience i know your belittling refuse listen to same lame
    rhetoric are saying national average. Blacks income are dismal due lack careers,
    racism cause demise emerging “middle class”keep up with generalizations are speaking. Corporations revenue certainly, not Blacks whom resent ownership okay franchise why bench marking destroyed. Black commerce whom controls commerce and financial circles ideal investors and cities. i know going say, riddle another wise tale to prevail getting laugh at Blacks. Some refuse allow success of independent commerce don’t lie moment open business victimization paradox non Black elated. So Black unity is bogus dependency failure use politics to enrich your standards Indians are new elite. USA doubt me once vocations of Blacks given others considered minorities whom placid. Never speak up regarding racism! “Hip hop” hate harm and harass fellow Blacks okay kiss ass trying pass as citizen yeah!

  • Wattis D. Gentry

    I agree with everything you have said, but I would like to point out a few things. First, as you mentioned, the economic output of Black-owned business is $138 billion a year, but black people only contribute $22 billion of the $138 billion. One hundred sixteen billion is from sales to non-Blacks, therefore only 2% of our gross goes to other Blacks, and even that is only 16% of the receipts to Black-owned businesses. Second, since our money only circulates within our community for six hours, it leaves Black hands before the close of business each day, and you cannot build an economy doing that. Because it leaves before the close of business each day, we have no money to make loans for business development. We are not self-sufficient at all. We are unable to even provide for our own food.