There is potentially $300 billion in annual U.S. spending by Black Americans that is up for grabs because corporate America still isn't creating enough products that appeal to them.
Black Americans are more unhappy with offerings in categories ranging from personal care to financial services and housing than the overall population, according to a report released Thursday by McKinsey and Co. That means Black shoppers are ripe to be attracted by other brands and willing to pay as much as 20% more for an item that caters to them.
"It's an opportunity for everyone because it's a customer segment that has been frankly neglected across categories," said Shelley Stewart, a partner at McKinsey and co-author of the report.
Brands' recent efforts to create offerings for Black shoppers still fall short, according to the report. Companies often focus on products for a mass audience and lose sight of the gains they could see when changing a product to suit a smaller audience like Black shoppers, Stewart said.
To unlock Black spending power, companies need more diversity, including putting Black employees in management roles that affect product design and marketing, according to the report.
A few companies have done a good job of addressing the needs of Black consumers, according to McKinsey. One is Bevel, a brand of personal care and grooming products geared toward Black men that Procter & Gamble acquired in 2018.
There are also Rihanna's beauty and lingerie lines, which have been reported to have a combined valuation of $4 billion. Fenty Beauty pioneered offering dozens of shades of foundation to appeal to women of color. And Savage X Fenty aims to promote diverse ideals of beauty with models of all shapes and skin tones.
Rihanna's beauty brand "fills a significant market need and the valuation of that company speaks for the opportunity," Stewart said. "You're seeing it in different sectors and pockets, but more work could be done."