Black Buying Power In The Pandemic: How Holiday Spending Is Expected To Change

The coronavirus has thrown into question Black consumers’ reliable and formidable prowess for spending during the holiday season.

 By Bruce C.T. Wright

(Source NewsOne):

Source: NoSystem images /Getty

Black Friday officially kicked off the 2020 holiday shopping season, but the coronavirus pandemic has affected consumers’ spending habits considerably in myriad ways. Black consumers, in particular, have not been exempt from that truth, throwing into question their reliably formidable buying power at a time when businesses need as much patronage as they can get.

Black shoppers spent $1.4 trillion in 2019, according to the most recent buying power statistics. Nielsen, which provides analytical insights about the habits of consumers, projected that figure to reach $1.8 trillion by 2024. But with the unfortunate combination of Black unemployment remaining sky-high and low-wage job hirings, it wouldn’t be a surprise to see a steep drop-off from the traditional levels of holiday spending.

It wasn’t too long ago when Black people used to set the standard for spending during the holidays. In 2014, Black consumers were predicted to lead all holiday spending by shelling out 17 percent more than other racial backgrounds. Six years later and it could be a completely different story with the pandemic not just affecting if we shop but also how we shop.

Nielsen released in October the latest installment of its ongoing in-depth look at Black buying power to document the trends associated with that tremendously reliable level of spending. One of the findings from the report — “Power of the Black Community – From Moment to Moment” — shows that Covid-19, which is disproportionately affecting communities of color, has prompted Black people to “make more frequent trips to the store, spending less per trip than the total population.”

And while statistics showed just a couple of years ago that Black consumers preferred to spend their money in person instead of over the internet, the opposite has become true this year in part because of the pandemic.

“This year, 48% of African American households shopped online, 11% more than the average household,” the Nielsen report found. Most of those online purchases are “health and beauty items, groceries, clothing and shoes,” everyday normal expenses that are expected to remain a constant in addition to the holiday gifts that will probably be bought, as well.

That circumstantial combination could be an indication that Black folks will continue to power online spending and possibly help it rise during the holidays.

There’s also the ongoing national racial reckoning that factors into helping Black consumers decide not just what to buy but also where to buy from. The Nielsen report found that Black buyers are increasingly spending their money with companies that have tailor-made messaging to target Black folks.

Marc Stephenson Strachan, a senior executive at Diageo, recently said during a NewOne panel discussion that brands have had to bring a level of authenticity to develop return customers.

“You don’t get brand loyalty with the best commercials,” he said, emphasizing that corporations are finally realizing that they can’t just take Black people’s support for granted. “You have to earn our respect, and you have to earn our association and you have to earn our dollars.”

As such, it shouldn’t be shocking that the new Nielsen report also found this year has especially prompted Black consumers to buy Black. That is, they are spending more with Black-owned businesses, a group that has suffered disproportionately from the pandemic’s devastating effects on the economy and largely missed out on the Small Business Administration’s Paycheck Protection Plan that offered modestly-sized companies government loans at low-interest rates in order to keep the businesses from closing.

“African Americans are now 58% more likely to expect the brands they buy to take a stance on these issues and 37% more likely to buy a brand when they do, up from just 4% more likely and 1% more likely respectively last year,” the report found.

With that said, 2020 has upended any and every rosy outlook there might have been for the year, suggesting the same could be true for this holiday season.

A recent Gallup poll found that the average American will spend more than $130 less than they did during the holiday season last year — “the lowest October holiday spending projection Gallup has measured since 2016.” The poll also showed “28% of Americans saying they will be spending less on holiday gifts this year than in 2019, more than double the 12% who expect to spend more.”