How Black people spend their money, and how long does this money stay in the community?
A dollar circulates:
- 6 hours in the Black community
- 17 days in the white community
- 20 days in the Jewish community
- 30 days in the Asian community
“African Americans continue to squander their vast spending power, relegating Blacks to economic slavery instead of financial freedom, per several consumer reports detailing the use of cash in the black community.”
Compared to all consumers, Black Americans spend 30 percent more of their total income – even though we make $20,000 less than the average household. A whopping 87 percent of annual retail spending consists of Black consumers! But where does our money go?
When it comes to shopping at the mall, we make eight more annual trips than any other group pulling in an average of 154 visits. Blacks also patronize dollar stores the most; we make seven more trips than the average group making a total of 20 trips. Lastly, Black Americans made more visits to convenience/gas stores by a small margin: making a total of 15 annual visits.
However, African American trips to grocery stores and warehouses (like Costco) are a bit scarcer. Less time is spent at grocery stores, with three fewer trips. The exception to grocery store shopping, though, is with Blacks who earn upwards of $100K annually. We also make three fewer trips to warehouse stores and two fewer trips to mass merchandisers than the Total Market. However, more upper-income Blacks (73%) shop at warehouse clubs than non-Blacks annually.
It could be that the lack of grocery stores and other healthy establishments in Black neighbourhoods that contribute to this trend. Therefore, it’s not at all surprising that African-Americans frequent McDonald’s and Burger King more than other U.S. households.
What you probably won’t see in our carts are dairy products such as milk and yogurt. This could be because many of us are lactose-intolerant.
But probably the largest retail disparity between African Americans and other groups rests in the hair and beauty industry. We spend about nine times more on hair care and beauty products in comparison to other demographics. In fact, 46% of Black households’ shop at Beauty Supply Stores and have an average annual total spend of $94 on products at these stores.
All the figures were pulled from Resilient, Receptive, and Relevant: The African-American Consumer 2013 Report. With African Americans approaching $1 trillion buying power, one must wonder why aren’t marketers paying more attention to Black consumer trends?
Despite our collective buying power, statistical data reflects that much of that money is spent outside of the Black community and not with Black-owned businesses.
Compare these numbers about dollar circulation reported by the NAACP:
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! Black American buying power is at 1.1 Trillion; and yet only 2 cents of every dollar blacks spend in this country goes to black owned businesses.
If the dollar circulation data does not get your attention, consider the following information from an article written by financial expert Ryan Mack:
55 percent of African Americans are un-banked or under-banked meaning they do not have a bank account or the appropriate bank account (Federal Deposit Corporation Survey)
- About a quarter of all Hispanic (24%) and black (24%) households in 2009 had no assets other than a vehicle, compared with just 6 percent of white households. These percentages are little changed from 2005. (Pew Research)
- The median amount Black households reported saving on a monthly basis is $189, compared to $367 among White households. This is the first time in a decade that African-American households have reported saving less than $200 per month. (Ariel Investments 2010 Black Investor Survey)
- Blacks on the average are six times more likely than Whites to buy a Mercedes, and the average income of a Black who buys a Jaguar is about one-third less than that of a White purchaser of the luxury vehicle. Earl Graves, Black Enterprise Magazine
- Although Blacks make up 13% of the U.S. population, just seven-percent (7%) of small business are owned by Blacks. Access to capital, clientele, and other resources hinder many Black folks from starting business, despite a long history of entrepreneurship.
- African Americans consistently outpace the total market population in overall growth, smart phone ownership, television viewing and annual shopping trips according to the new study, Resilient, Receptive and Relevant: The African-American Consumer 2013 Report, a collaborative effort by the Nielsen Company in New York and the National Newspaper Publishers Association (NNPA), located in Northwest Washington, D.C.
- Black buying power continues to increase, rising from its current $1.1 trillion level to a forecast $1.3 trillion by 2017.
- Despite the strong economic outlook, Blacks continue to spend most of their money outside of the Black community and, according to Nielsen and NNPA, advertisers have repeatedly slighted the black media, spending only 3%, or $2.24 billion, of the $75 billion spent with all media last year.
- Each year, Blacks spend more than $47 billion on Lincoln automobiles, $3.7 billion on alcohol, $2.5 billion on Toyota’s, $2 billion on athletic shoes, and $600 million each year on McDonald’s and other fast foods, according to Target Market News Inc., a Chicago-based marketing research group.
- Blacks also spend wildly to keep up their appearances. The black hair care and cosmetics industry counts as a $9 billion a year business, but while African Americans are spending the most, they are profiting the least, said officials from the Black Owned Beauty Supply Association (BOBSA) in Palo Alto, Calif. Beauty product lines designed for African Americans were once 100 percent owned and operated by blacks, today other ethnic groups control more than 70% of the market.
- The current home-ownership rate reveals that 73.5% of whites own homes while approximately 43.9% of Blacks are homeowners, according to the Harvard Joint Centre for Housing Studies State of the Nation report for 2013.
- Sixty percent of Blacks have less than $50,000 saved in company retirement plans and only 23% have more than $100,000.
Is There Resolute To This Dwindling Economic Displacement?
The Black Wall Street – The surge towards broad-based economic growth. ‘Strategy and Vision of Black Economics‘, is to build economic growth within the wider Black community. The general consensus is developing a multi-tiered commerce infrastructure; consisting of primary and secondary sectors of industry, whilst ensuring an ethic of group economics is practiced. The method will eventually generate steady growth & financial stability for service businesses within local Black communities.
Black economics doesn’t aim to take wealth from one group and give it to another. It is essentially a growth strategy, to re-surge where Black peoples’ weakest economic point is inequality. No economy can grow by excluding any part of its people, and an economy that is not growing cannot integrate all its citizens in a meaningful way. As such, this strategy stresses a process that is associated with growth, development and enterprise development, and not merely the redistribution of existing wealth.
Black economics is an important instrument aimed at broadening the economic base of the black community – and through this, at stimulating further economic growth and creating employment. The strategy is a broad-based, approach, which is to situate Black economy within the context of a broader national empowerment strategy, focused on historically disadvantaged Black people. Discrimination is at its most severe when race coincides with gender and/or disability.
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