Growing Buying Power of African-Americans
ED GORDON, host:
From NPR News, this is NEWS & NOTES. I'm Ed Gordon.
Black women are shelling out cash and not just at the malls but also at the computer. That's one of the conclusions of a new survey exploring African-American buying power. Ken Smikle is president and founder of Target Market News. His company analyzes advertising, marketing and media geared toward black consumers. And Cheryl Mayberry McKissack is president and CEO of the market research firm Nia Enterprises and NiaOnline.com, a Web site catering to black women. Both join us from Chicago.
I thank you both for joining us.
Ken, let me start with you, if I may. I know that you do a lot of research by means of the black consumer market. What are we seeing right now in terms of the black dollar and trends?
Mr. KEN SMIKLE (President and Founder, Target Market News): Well, I think the dominant trend right now, Ed, is looking at how black consumers are behaving at least a little differently from the general market. That tends to always be true, but when the economy is tight, African-Americans have a tendency to not completely revert in their spending patterns. So we're not seeing a real retrenchment to being more frugal, if you will, but making smarter investments on things that really matter most in their lives. You see people spending more money on basics for the home like appliances and certainly for things that will give them an opportunity to enjoy life but in ways that are more like investments, if you will. Consumer electronics have always been popular with black households; that trend has not changed. Certainly, the latest technology like large-screen televisions and digital audio equipment of all kinds are still very much on the agenda for black households.
So I think that we're spending out money smarter. There are certainly things that we are giving up, and usually, I have to say, that it's the woman in the household that tends to sacrifice more. We see spending on women's apparel, for example, going down while spending on children's apparel goes up and almost in direct proportion to one another.
GORDON: Cheryl, when we talk about just the kinds of dollars that is generated within the black community and, as Ken has suggested, when you talk about the movement of black dollar, it really is a black female that does that. In your surveys and results of tapping into online consumers, what are you finding from the black female by virtue of dollars being spent?
Ms. CHERYL MAYBERRY McKISSACK (President and CEO, Nia Enterprises): Well, I think that, first of all, as Ken has said, the black female is a very important part of spending in the black household. We recently finished our survey on the African-American household online, which focuses on how important that black female is, and what we're seeing is that that black female is using the Internet as a no-nonsense tool to be able to help direct the dollars that they are spending on their household. So they basically look at it as a means to transact business as opposed to just a means of recreation and social interaction. And they are more open to being influenced by online marketing for the products and services that are coming into their household than their white counterparts.
GORDON: Ken, what about the big picture item here, if you will? Taking some stats from a survey you did in 2003, it's estimated that black consumer power is about $656 billion. And if we go back to what some 20 years ago Tony Brown was talking about, the famed journalist, in terms of turning that dollar over and spending with each other, are we seeing that done any better than we did some years ago?
Mr. SMIKLE: Well, you know, I think that we're overly critical with ourselves about how much we're spending with one another, how much of the black dollar stays within the black community. And I can tell you as a matter of fact that there is no scientific way to calculate the movement of that money in and out of our community. I think that we are doing far more just by virtue of the tremendous growth in black-owned businesses, be they based in our community or elsewhere, but we are spending huge amounts of money with one another.
But by our calculations, we're showing that 2004--that so-called buying power or earned income is now approaching $700 billion, and I think that, again, the most significant shifts in that have been the growth in income for black women. And we're also seeing that having this sense of confidence, as we've monitored in a collaboration between the online and Target Market News in a consumer survey, that we react differently to our sense of confidence about the economy. I mean, even as African-Americans see unemployment becoming more of a threat to them individually, they are still confident about doing the things that they've laid out for themselves. They are still planning on making those purchases that have been in the planning stage for some time. Unlike their white counterparts, we don't see as much pessimism about the future of the job market. So in a scenario where we're usually the last hired, first fired, African-Americans have either been planning for a tight economy all along, or they're reacting to it with less trepidation than their white counterparts.
GORDON: Cheryl, let me ask you one of the important questions in all of this when we talk about consumer spending, and that is the idea of saving. We don't always see that in the same way we should in the black community. What of the idea and what are you finding out in terms of your shoppers and people that you've been surveying by means of wanting to put aside dollars for a rainy day, if you will?
Ms. McKISSACK: One of the areas that's very important that a lot of African-American women who are head of household use the Internet for is to find out information involving financial decisions, information on where to save, how to save and what are some of the ways that they can do that with the income that they have. So that if you take a look at why African-American women are using the Internet today and what kinds of things they're using it for, they're using it to get this type of information so that they can make better decisions for themselves and for their families.
I think the other thing that they're looking at is how they spend those dollars. They are still spending those dollars. They do want to save some of those dollars. They're very concerned about their families. In a lot of the cases, they're head of households. They're the only parent in the family so they have to be concerned about that. But they're also looking at when they do spend their dollars so that have more dollars to actually save, who do they spend those dollars with? So they're looking at companies and making sure those companies are supporting programs that benefit African-Americans, that benefit women. They're looking at companies and making sure that they're giving them the right messages in their advertising and their themes. And they're also looking at going and supporting companies that, in their mind, also give back and support them and their communities.
So it's not just a question of saving, it's a question of taking those dollars and making those dollars really go further, get more value out of those dollars and then also having some of those dollars left to be able to put into programs that protect themselves and their families in the future.
GORDON: Ken, finally, prognosticate, if you would, for me: What would you like to see by means of a consumer trend? What would you like to see the consumer do in the future?
Mr. SMIKLE: Well, one of the things I think has absolutely--has always been important is that black consumers need to leverage their power. And I'm not just talking about who they spend their money with, but actually going beyond the relationship that they have with companies at the cash register. It is very, very important that we start letting corporations know how we feel personally about the way in which they behave and that, you know, we are spending our money on the basis of how we see corporations hire African-Americans, bring them into senior management positions, how they give money back to the black community in philanthropic efforts and the like. If we don't leverage that power, I think corporate America will continue to take us for granted as consumers with the notion that even as we get more money to spend with them, we will not ask of anything in return.
GORDON: All right. Ken Smikle, president and founder of Target Market News, and Cheryl Mayberry McKissack, president and CEO of the market research firm Nia Enterprises and NiaOnline.com, I thank you both for joining us. Appreciate it.
Ms. McKISSACK: Thank you.
Mr. SMIKLE: Thank you, Ed.
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