Blacks Being More Selective About Spending As Buying Power Approaches $1.1 Trillion
Despite high unemployment and other economic hurdles, African-American consumers are still wielding an incredible amount of spending power that just keeps growing.
According to global information and research firm Nielsen Company, black spending power will reach $1.1 trillion by 2015. Yet many black consumers do not understand the full extent of their power says Cheryl Pearson-McNeil, senior vice president of public affairs at Nielsen, reports TheGrio.
Because of this consumer power some companies are looking to tap into the market. Yet they struggle with understanding the cultural nuances of African Americans, explains Pearson-McNeil. “The African-American community isn’t a monolithic group,” she says.
Though things have been slow to change this money-making potential should mark a shift in advertising. “In 2011 advertising targeting black consumers across television, radio and magazines reached $2.1 billion, according to Nielsen. This was a modest increase from the year before and was just 2 percent of the $120 billion spent on advertising that year,” reports the Grio.
Even if they do start targeting African Americans, advertisers may have an uphill battle in convincing the black consumer to buy. Because of the unemployment situation, many black consumers are holding onto their money, opting to be more particular about what they spend on and where they spend. According to TheGrio, total aggregate black household income totaled $696 billion in 2012.
According to Vera Moore,who founded Vera Moore Cosmetics 33 years ago, manufacturers are focusing on providing more ethnic-focused products for consumers who are more aware of their spending power. But she says black consumers are more supportive of black retailers and products now than in the past due to better quality products. “They know the power of the dollar,”she says.
Social media has also played a big part in how and where black consumers decide to spend their money. Smartphones ownership grew from 33 percent in 2011 to 54 percent in 2012 for blacks, according to the Nielsen study. Blacks are more likely to check out prices, reviews and products online. And also to locate black businesses.
“Social media is the great equalizer,” Pearson-McNeil says. “It goes back to connecting with people that look like you,” Pearson-McNeil says.