Business & Money
Black America's buying power estimated to reach $1.1 trillion by 2015
By Nisa Islam Muhammad -Staff Writer-
Updated Oct 5, 2012 - 11:13:06 AM
WASHINGTON (FinalCall.com) - A stroll through the exhibit hall at the Congressional Black Caucus’ Annual Legislative Conference September 20-22, offered a glimpse into the enormous attractiveness of Black America’s buying power.
Kia Motors was there with new cars, and exhibitors had everything from fur vests for women to custom made shirts for men. A pretty penny could get you custom art work, jeweled cufflinks, designer suits, handbags to die for and the perfect accessories.
But around the corner, the second installment to “The State of the African-American Consumer” report was presented to the media Sept. 21. The first installment of the report was released last year.
Black America’s collective buying power is estimated to reach $1.1 trillion by 2015, as Black consumers remain at the forefront of social trends and media consumption, according to the new report, “African Americans: Still Vital, Still Growing 2012 Report.”
Despite a population of 43 million and tremendous buying power, advertisers only spent $2.10 billion in 2011 with Black-owned media compared to $120 billion spent with general market media during the same time period.
“Marketers underestimate the opportunities missed by overlooking Black consumers’ frustration of not having products that meet their needs in their neighborhoods. And companies that don’t advertise using Black media risk having African Americans perceive them as being dismissive of issues that matter to Black consumers,” said Cloves Campbell, chairman of the National Newspaper Publishers Association, which released the report based on research by the Nielsen company. “This report demonstrates what a sustainable and influential economic force we are.”
This report was the result of the continued collaboration with Nielsen, the global information and measurement company and the National Newspaper Publishers Association, which consists of 200 Black-owned newspapers across the country.
The economic force of Black America is stifled, according to the University of Georgia’s Selig Center for Economic Growth, because money in the Black community only circulates zero to one time, compared to the more than six times it circulates in the Latino community, nine times in the Asian community and unlimited amount of times within the White community.
“The issue is not about how much we spend. The issue is how much do we save. The issue is how much do we invest. If we spend more than we save, we should be embarrassed. If we spend more than we invest, that’s nothing to brag about. It’s embarrassing,” said Rev. Jesse Jackson.
“The bigger question is how much are they doing business with us. Next year, I want to know how many soda franchises do we own? How many car dealerships do we own? How much property have we developed? From consumer to saving to mutually beneficial trade, we need to know.”
Among key findings in the report:
Black consumers wield buying power. In certain Nielsen Designated Market Areas (DMAs), there is a correlation between a large Black population and a large base of higher-earning Black households. The Washington, D.C. DMA, for example, is 25 percent Black and has some of the highest Black median household incomes in the country.
Despite the collective aging of America, the Black population remains young. On average, the Black population is 14 percent younger than the American population as a whole. The median age for Blacks is 32, and 54 percent of the Black population is under the age of 35.
Black consumption patterns are not indicative of the total market. Blacks make more shopping trips and offset this greater shopping frequency with less spending per trip, making quicker, smaller purchases based on short-term needs and not on deal availability. As is true among non-Black households, the younger generation of Black households offset fewer overall shopping trips with higher per-trip spending than their older counterparts. But, in all instances, Black households spend less per trip than non-Black households. Brands represent 82 percent of Black households’ total purchases compared to 31 percent for private labels.
Blacks are receptive to segment-specific advertising. Eighty-one percent of Black consumers believe that products advertised on Black media are more relevant to them, and 78 percent of Blacks would like to see more Black models/actors used in ads. More than half (51 percent) would purchase a product if the advertising portrayed Blacks positively. However, total advertising expenditures on TV, radio and magazines spent specifically in Black media is only approximately one percent of total advertising dollars spent with general market media during this same time period, which reached almost $2.1 trillion—a disparity that indicates a possible opportunity for businesses to reach Black consumers.