Some months ago Nielsen released its report Resilient, Receptive and Relevant highlighting the spending habits of African-Americans in the United States. The document, filled with usable data does not adequately address the opportunities for Black entrepreneurs.
We extracted the five industries we believe Black entrepreneurs should dominate. There are already positive signs in each industry, but the opportunities remain plentiful.
Essence’s 2009 Smart Beauty research study found that African-American women spend $7.5 billion annually on beauty products and spent 80 percent more on cosmetics and skin-care products than the general market. According to celebrity makeup artist Sam Fine, Black women are spending more at the counter because “there’s little satisfaction. She keeps buying with the hope that this product will do what it’s supposed to do.”
Good news: Brands like Iman Cosmetics are generating over $25 million a year in revenue.
In addition, Black women have decreased millions of dollars spent on relaxers and weaves as they transition to natural hair care.
According to a 2009 study by Mintel, an international market research firm, big brands like L’Oreal USA and Alberto Culver Company, which account for more than one-third of the market, have both experienced sales declines in recent years thanks to the emerging black-owned natural hair market.
Earlier this year, Michael O’Neil, vice president of sales at Ultra Distributors revealed that the combined annual revenue of major natural hair brands Mixed Chicks, Curls, Kinky-Curly, Miss Jessie’s, Shea Moisture and Jane Carter Solution has soared from less than $10 million in 2009 to about $150 million.
African-Americans watch more television than any other group at seven hours and 17 minutes per day compared to five hours and 18 minutes of viewing for total market, according to a 2013 report by Nielsen. A 2011 report by the Kaiser Family Foundation found that Black kids consume 4 1/2 more hours of media every day than their white counterparts.
Good news: Writer and producer Shonda Rhimes is reigniting the conversation around a Black lead on a prime time show, in addition to Black writers and producers guiding a multiracial cast on broadcast television.
BET, the most watched network among African-Americans according to Nielsen, has ramped up its offering of scripted shows as well.
Technology Innovation, Digital
African-Americans continue to be resilient in their role as early adopters of technology, as 14 percent are more likely to spend time on Telecom/Internet service sites.
African-Americans continue to adopt new shopping technologies at a faster rate than Caucasians, with 18 percent using their mobile devices to make purchases as compared to 10 percent of Caucasians.
Black entrepreneurs are facing major roadblocks in their attempt to elevate beyond a consumer. Only about 1 percent of entrepreneurs who received venture capital in the first half of last year are Black, according to a study by research firm CB Insights.
Quick Service Restaurants: McDonald’s
African-Americans have a notable preferences for Quick Service Restaurants than any other group. First amongst them, McDonald’s, followed by Burger King.
Franchises have created an opportunity for Black entrepreneurs to profit from Black buying power. However, minorities are a little late to the world of quick-serve franchising, says Gerry Fernandez, president of the Multicultural Foodservice & Hospitality Alliance. That is because many of the prime sites have already been taken, only leaving locations that may not be as profitable as those first colonized.
Good news: McDonald’s African-American-owned restaurants generate estimated annual revenues in excess of $2.4 billion and 13.5 percent of McDonald’s owner-operators are African-American.
Black travel and tourism is a $40 billion industry – a big business made bigger because African-Americans tend to travel in groups and use a variety of online resources to help them with travel planning. Despite the hefty number, according to Michael Bennett of Black Meetings & Tourism, Blacks are not capitalizing on their own spending power.
*Of the well over 600 Convention and Visitors Bureaus (CVB) across the country: Less than 10 have an African-American as a president/CEO.
*Over the past 20 years, we’ve had fewer than 25 CVB presidents/CEOs combined.
*Black hotel ownership stands at 500, though most are owned by business magnate Robert Johnson’s RLJ Companies.
*By contrast, Asian American Hotel Owners Association owns upward of 40 percent of all hotels in the United States.
*We don’t control the marketing and advertising dollars. Most destinations hire large Madison Avenue firms who do not employ African-Americans in managerial or creative positions.