According to the data found in a new report, The Buying Power of Black America, now may be the most opportune time ever for businesses to develop a strategy for increasing their share of the African-American market.
With the nation slowly recovering from recession, African-American consumers represent the margin of profitability in most consumer product categories.
"What the recession did to Black America's buying habits is to give them a reason to re-evaluate how they spent the billions of dollars they earned collectively," said Ken Smikle, president of Target Market News and editor of the report.
"Before tight economic times, companies felt they could afford to take their loyalty – especially to top brands – for granted. That changed during the downturn. Price was a bigger factor driving purchasing decisions. Now brands have to earn the loyalty of black consumers all over again. Black consumers are asking brands, 'what have you done for me lately.'"
For the past 17 years, Target Market News has published the only report that breaks down in dollars the impact of the Black Consumer Market. Now approaching a trillion dollars in spending, the earned income of Black America is already the 16th largest market in the world, and is on the verge of surpassing the gross national income of Mexico.
The 105-page report breaks down how much of African-American consumers' $836 billion in income was spent during 2011 on clothing, entertainment, food, beverages, toys, consumer technology, cosmetics, autos, travel and dozens of other categories.
Another factor causing a shift in the loyalty of African-American consumers is social media and increased access to business information. The new edition of The Buying Power of Black America includes a section detailing the dollars spent by major companies on advertising in Black media. It also compares the ad spending of companies by categories.
"African-Americans can now rely on their own research about brands," said Smikle. "This is one of the reasons why we added a section that tracks how much leading advertisers spent in black-oriented media. There is a correlation between building and sustaining black consumers' patronage and the dollars spent to reach them through advertising. That fact has not changed in this diverse media environment – it has become an imperative for brands that want success."
The report compares spending by African-American households on 500-plus products and services between 2010-11. The top five categories with the largest dollar expenditures were Housing and Related Charges – $206.2 billion; Food – $70.7 billion; Health Care – $25.5 billion; Cars and Trucks (new and used) – $22.6 billion; and Apparel Products – $21.1 billion.
The top five categories showing an increase in spending between 2010 and 2011 were Appliances, $2.7billion (29 percent); Sports and Recreational Equipment, $850 million (28 percent); Personal and Professional Services, $5 billion (27 percent); Computers, $5 billion (21 percent); and Non-Alcoholic Beverages, $4.3billion (16 percent).
The Buying Power of Black America is an analysis of data compiled annually by the U.S. Department of Commerce. It is based on interviews and diaries collected from more than 3,000 African-American households, and is the most comprehensive survey conducted on African-American consumers. This same data is also used as the basis for the U.S. government's Consumer Price Index.
The 17th annual edition of The Buying Power of Black America includes these sections covering:
• Expenditure & Trends: An break down of how spending by African-American consumers has changed in more than 500 individual categories between 2010 and 2011.
• Income Data: A detailed look at how much African-Americans earn, explanations of the varied definitions and types of income, city-by-city data on African-American income, a comparison with world economies and a look at African-American buying power over the past 30 years.
• Black Buying Power in the Top 35 Markets: An expanded breakdown of the billions of dollars African-American consumers spent in 26 major categories of products and services in the nation's top markets.
• Leading Black Media Advertisers: A ranking of national advertisers and industries according to their ad expenditures in Black media
• The 100-Plus Index: A special section providing data on dozens of items for which African-American consumers out-spent their white counterparts.
• Demographic Data on the Black Population: The latest information on the African-American population including rankings of the largest African-American metropolitan areas, the percentage of Black population in U.S. cities and a listing of the total dollars earned by Black consumers for each of the past three decades.
• The Buying Power of Black America is an analysis of data compiled annually by the U.S. Department of Commerce. It is based on interviews and diaries collected from 3,000 African-American households. The data is the basis for the U.S. government's Consumer Price Index.
(For more information about the Buying Power of Black American, call 312-408-1881.)