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Black-Owned Brands Get Lift as Big Retail Invests to Help Them Scale

By Jordyn Holman, Jeannette Neumann and Deena Shanker

Corporate pledges to direct more dollars to Black-owned businesses after the 2020 murder of George Floyd have resulted in a refreshed mix of products at big-name stores.

Photo by cottonbro from Pexels

Macy’s Inc. says it has quintupled the number of products it sells from Black-owned brands since it signed the Fifteen Percent Pledge, which asks retailers to allocate 15% of their shelf space to such items. Sephora says it has more than doubled its offering of Black-owned labels since it made the same pledge. Target Corp. says it’s in a “strong position” to meet its goal of spending $2 billion with Black-owned businesses by 2025.

These moves and others like them have made Black-owned brands more accessible to millions of shoppers. But a lack of data on retailers’ efforts makes it hard to know how widespread such changes are across consumer brands and whether they have leveled the playing field for Black entrepreneurs in a lasting way. 

Executives at the Fifteen Percent Pledge, a nonprofit organization, say companies on average have Black-owned brands as less than 3% of their total when initially joining the pledge. The organization and many of its corporate partners haven’t disclosed specific figures on what progress has been made toward the 15% target.

Meanwhile, some business owners say shoppers’ commitment to the Buy Black movement, which calls on consumers to purchase from Black-owned businesses, appears to be fitful.

As retailers continue to diversify suppliers, some are finding their ambitions held up by a challenge businesspeople and activists have warned about for years: There isn’t a strong pipeline of large-scale Black-owned businesses ready to immediately fulfill big orders from major U.S. chains.

That’s because many Black entrepreneurs have had trouble getting access to funding. Now, large companies are coming “to the realization that these businesses need additional capital and support — not just shelf space,” said Shelley Stewart III, who leads McKinsey & Co.’s Institute for Black Economic Mobility.

Accelerator Programs

To address the need to support Black entrepreneurs at earlier stages of their business development, some companies have launched or expanded accelerator or incubator programs to provide mentorship and feedback on products.

These nascent efforts have allowed Black business owners like Megan Graham to reach more customers. 

Graham, the founder of Ries, was one of eight entrepreneurs that Sephora selected for its accelerator program last year. Amid the social justice movement galvanized by Floyd’s murder, Sephora shifted the focus of the program to people of color. Graham said she had tried pitching venture capitalists for about a year before joining Sephora’s stable of brands. She said that many of the investors she initially approached were white men who didn’t understand what she was pitching — a reusable bottle that can hold sufficient hair- and body-care products for a trip but is still small to be carried on an airplane. 

“Raising [capital] is difficult and raising as a Black woman, we know, is that much more difficult,” she said. When she pitched to Sephora, the more diverse group of executives immediately understood the problem her product addressed. “It was like whiplash,” Graham said.

The toiletry bottle will be available at Sephora’s online store in June and in some of its more than 400 U.S. locations by the end of the year. Graham launched the travel bottle on her website in February. Sales have been stronger than she expected. 

“To have the opportunity to compete in the market,” Graham said, “that’s what it’s really about.”

Since June 2020, Sephora has increased its lineup of Black-owned brands to 23. They’re part of the 30 to 40 new brands that the beauty retailer — owned by French luxury conglomerate LVMH Moet Hennessy Louis Vuitton SE — typically launches in the U.S. each year. The chain says it has already reached its target to carry 15% Black-owned brands within its haircare-products category and now has Black-owned brands as about 8% of its overall product mix.

The Black-owned brands that Sephora has added to its roster, including Topicals and Briogeo, provide more options for a wider range of customers than before, said Priya Venkatesh, head of Sephora’s merchandising for skin and hair. The retailer wants to display and market these products to a broad audience rather than pigeonhole them, trying to address a historic concern from Black-owned brands that their items are presented as being only for a niche group. 

‘Compassion Fatigue’ 

Black-owned businesses are perennially highlighted in February for Black History Month. At supermarkets, for example, special displays with Black-owned food brands are increasingly common, pushing consumers toward those choices at a time when they are more likely to be looking for them. Nearly one third of Americans — and 61% of Black consumers — say they are likely to seek out a Black-owned business in February, according to survey data from Morning Consult commissioned by Bloomberg News. 

But that engagement, some business owners say, dips after Black History Month is over. 

Last month, Partake Foods, an allergy-friendly cookie company, had multiple free supermarket displays compared with its single paid placement in a typical month. Denise Woodard, Partake’s founder and chief executive officer, says the spike in interest in February is a double-edged sword. “I appreciate all the support, but also you could support us the other months of the year, too,” Woodard said. 

Some business leaders say they are worried it will be difficult to maintain momentum for the Buy Black movement. There’s “compassion fatigue” when it comes to racial justice issues, said LaToya Williams-Belfort, executive director of the Fifteen Percent Pledge. “The conversation, the history, the emotional capital — all of it is a lot to manage.” 

Thirteen percent of Americans say they shop at Black-owned businesses often. Four out of five Americans say that the race and ethnicity of the owner doesn’t matter when they consider where to shop. And only around one-third of Americans say they are aware of the Buy Black movement, the Morning Consult data show.

“I feel like the Buy Black movement isn’t as sexy as it was two years ago,” Williams-Belfort said. 

Nnenna Stella, who runs The Wrap Life, which sells hair wraps, says she was concerned that corporate commitments would be fleeting. She’s been pleased that her recent partnership with Neighborhood Goods, a small department store, is part of a broader commitment the chain has made to feature Black-owned brands throughout the year.

She still thinks companies can do a better job.

“All of these things are great,” Stella said, “if they’re truly doing what they say they’re doing.”

Upcoming Expansion

Mandy Bowman, founder of Official Black Wall Street, said traffic to her app listing 7,000 Black-owned brands across the U.S. has fallen from its peak in 2020. But an upcoming expansion could help reinvigorate her site and the broader Buy Black movement.

Bowman is using $190,000 in grants she received in 2020 and 2021 to upgrade her digital platform. With the funds from organizations including Mastercard Inc., Fearless Fund and SheaMoisture, she has added more machine learning to the site to help people find Black-owned shops that carry the products that they’re seeking. 

“If it weren’t for that major boost in 2020 and last year, especially when it came to large corporations and grants,” Bowman said, “we wouldn’t have been able to take this next step.”

More stories like this are available on bloomberg.com

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