For decades and decades, Black consumers have been regularly overlooked by companies that don’t see them as a priority demographic. Black consumers continue to be underserved in areas such as food,...

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For decades and decades, Black consumers have been regularly overlooked by companies that don’t see them as a priority demographic. Black consumers continue to be underserved in areas such as food, housing, healthcare, broadband, and banking. Essential needs are going unmet because of decisions made by companies. Yet these companies may well be missing the chance to cultivate a significant emerging market. With a little ingenuity and deeper analysis, companies may find that serving the Black American consumer will allow them to tap into significant value while contributing to a meaningful economic revival. Black households do have lower income and wealth. Despite being 13.4 percent of the US population, Black households accounted for just under 10 percent of the nation’s total spending on goods and services in 2019. Because Black workers bring home smaller paychecks, they have less money to work with every month, especially after accounting for debt. Nonetheless, companies that interpret this data as proof that there’s little profit in serving Black consumers are making a big mistake. Many years of underserving the Black community has created significant opportunities for companies that are willing to look beneath the surface. There are two significant strategies for companies to pursue: expanding local access to goods and services and creating offerings that are better tailored to the needs and preferences of Black 1 A $300 billion opportunity: Serving the emerging Black American consumer There’s a big market to be unearthed if companies meet the real needs of Black consumers. by Michael Chui, Brian Gregg, Sajal Kohli, and Shelley Stewart III August 2021 2 households. We estimate that companies filling these needs could tap into $300 billion of value annually. That’s a significant reason for innovative companies, in the United States and globally, to compete for this market. The state of the Black consumer There’s no denying that Black consumption has been constrained, and while it’s growing quickly that growth is starting from a lower base. The steadily rising costs of housing, healthcare, and higher education—needs that are foundational to the quality of life and the possibility of future mobility—are eating up a larger share of household budgets for all poor and middle-class American families, particularly for Black households: the share of expenditures Black households direct to these three categories rose from 38 percent in 1984 to 45 percent in 2019. Our analysis of publicly available but previously uncompiled microdata from the Census Bureau’s Consumer Expenditure Survey shows that at similar income levels, Black households spend a smaller share of their income than White households, although more goes toward the basics. This has not, however, translated into more liquid savings. More money in Black households goes to giving financial support to extended family, servicing higher student debt burdens, and paying higher interest rates on various consumer loans. McKinsey recently surveyed 25,000 Americans to get their views on economic opportunity and the obstacles they face to achieving it. Black respondents were most likely to say that their level of debt had increased over the past year, and they were 50 percent more likely than White respondents to say that they had student or medical debt.1 Beneath these sobering realities, however, is a market with substantial buying power and influence—and plenty of upside for the future. In 2019, consumer expenditures by Black households totaled approximately $835 billion. Combined spending by all Black households has increased 5 percent annually over the past two decades. It has outpaced the growth rate of combined spending by White households (3 percent), driven mostly by faster population growth.2 Black consumers are younger, more plugged into smartphones, and more brand-aware than other groups. The median age of Black Americans is 34, a decade younger than the median for White Americans. Black consumers are highly digital: they are more likely to own a smartphone, and they use their phones 12 percent more than White Americans. They are nearly three times more likely than White Americans to expect the brands they use to align with their values and support social causes.3 How Black communities are underserved Years of underinvestment by the private sector has left some Black communities with a dearth of retail options and key services. For Black households, this can translate into 1 André Dua, Kweilin Ellingrud, Michael Lazar, Ryan Luby, Matthew Petric, Alex Ulyett, and Tucker Van Aken, “Unequal America: Ten insights on the state of economic opportunity,” May 26, 2021, McKinsey.com. 2 Based on analyses of BLS Consumer Expenditures Surveys. 3 It’s in the bag: Black consumers’ path to purchase, Nielsen, September 12, 2019, nielsen.com. 3 persistent inconveniences, such as tacking additional travel time onto errands. It can also have more serious implications: “food deserts” that contribute to poor nutrition, a lack of affordable rental housing, fewer healthcare providers, and gaps in broadband coverage. • Food. Most Americans take for granted the convenience of a neighborhood super- market with many well-stocked aisles and a bounty of choices. But buying healthy, affordable food is a harder task for the residents of many majority-Black communities. One out of every five Black households is situated in a food desert, with few grocery stores, restaurants, and farmers markets. Unspoken “supermarket redlining” in many Black communities means that food is more expensive, choice is limited, and healthy organic products are harder to come by.4 This can reinforce poor nutrition, especially when convenience stores, whose offerings may not be considered health-oriented, are more often located in Black neighborhoods (Exhibit 1). • Housing. The US Department of Housing and Urban Development defines households as “cost-burdened” when they spend more than 30 percent of their gross income on housing—a tipping point that begins to squeeze their ability to spend on other cate- gories. In 2019, 43 percent of Black households were cost-burdened, compared with just 25 percent of White households. This is especially acute among low-income Black renters—53.7 percent were cost-burdened in 2019, and that’s before the COVID-19 pandemic disproportionately hit Black incomes.5 Furthermore, a legacy of discrimination in housing markets results in limited opportunities for families of color to live in areas with higher-quality public schools. Much of the nation’s rental-apartment stock is geographically concentrated in ways that reinforce pockets of poverty and patterns of segregation. • Healthcare. Black Americans are nearly 2.4 times more likely than White Americans to live in a neighborhood with limited healthcare services. This trend exacerbates the other challenges Black patients face when interacting with the healthcare system, which cumulatively produce worse treatment outcomes.6 One in four Black respondents to a Kaiser Family Foundation survey in 2020 reported difficulties in finding conveniently located healthcare, and almost half reported difficulties finding healthcare they could afford.7 “Safety net” hospitals in both rural areas and inner-city neighborhoods are under financial pressure, and some have closed.8 The importance of healthcare access was underscored during the pandemic, when Black Americans were less likely than White Americans to be successful in their attempts to get tested or vaccinated. COVID-19 deaths were also higher in neighborhoods with socioeconomic vulnerabilities.9 4 See, for example, Ashanté M. Reese, Black Food Geographies: Race, Self-Reliance, and Food Access in Washington, DC, University of North Carolina Press, 2019; Cultivating Food Justice: Race, Class, and Sustainability, Alison Hope Alkon and Julian Agyeman, eds., Cambridge, MA: MIT Press, 2011; Mengyao Zhang and Ghosh Debarchana, “Spatial supermarket redlining and neighborhood vulnerability: A case study of Hartford, Connecticut,” Transactions in GIS, February 2016, Volume 20, Number 1, onlinelibrary.wiley.com. 5 The state of the nation’s housing 2020, Joint Center for Housing Studies of Harvard University, jchs.harvard.edu; Out of reach: The high cost of housing, National Low Income Housing Coalition, July 20, 2020, nlihc.org. 6 See, for example, Zinzi D. Bailey et al., “Structural racism and health inequities in the USA: Evidence and interventions,” Lancet, April 2017, Volume 389, Number 10077, pp 1453–64, thelancet.com. 7 Survey on race and health conducted in 2020 by the Kaiser Family Foundation and ESPN’s The Undefeated; included 1,769 US adults with an oversample of 777 Black Americans. 8 Jordan Rau and Emmarie Huetteman, “Some urban hospitals face closure or cutbacks as the pandemic adds to fiscal woes,” NPR, September 15, 2020, npr.org; Joseph P. Williams, “Code red: The grim state of urban hospitals,” U.S. News & World Report, July 10, 2019, usnews.com. 9 Erica Coe, Kana Enomoto, Alex Mandel, Seema Parmar, and Samuel Yamoah, “Insights on racial and ethnic health inequity in the context of COVID-19,” July 31, 2020, McKinsey.com. 4 • Broadband. Black households are 50 percent more likely than White households to live in areas with limited broadband service.10 In urban neighborhoods without existing networks, internet service providers often conduct credit checks or require cash deposits from new customers, policies that disproportionately turn away Black households.11 Gaps in broadband coverage and accessibility help create a digital divide that makes it harder for Black Americans to access information, hunt for jobs, do remote work, and engage in remote learning. Yet Black consumers are actually more likely Exhibit 1 1Average in this case means matching the Black share of the population (~13%). Source: USDA Food Environment Atlas (September 2020); McKinsey Global Institute and McKinsey Institute for Black Economic Mobility analysis 100 More prevalent Less prevalent Number of options per 10,000 residents by county, 2016, average US counties with above-average Black populations tend to have fewer fresh-food options but more convenience stores. Grocery stores Convenience storesRestaurantsFarmers markets Relative prevalence in counties with above-average Black populations,1 % 47 65 74 119 Above-average Black representation In counties with: Below-average Black representation 0.3 5.5 1.9 6.8 0.7 8.3 2.6 5.7 10 We define “limited” as less than 80 percent coverage, based on FCC Census track data showing the number of residential fixed high-speed connections
Answered Same DayOct 03, 2021

Answer To: For decades and decades, Black consumers have been regularly overlooked by companies that don’t see...

Sayani answered on Oct 04 2021
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Running Head: SUMMARY AND OPINION ABOUT THE ARTICLE            1
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SUMMARY AND OPINION ABOUT THE ARTICLE
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Summary of the Article
From the mentioned article by Chui, Gregg, Kohli and Stewart III (2021), it is clear that the companies in America would earn their profit and gain the consumer’s trust through meeting up the real needs of the black consumers. It is a fact that often the black population or the minor groups are being neglected from any sort of dealings whether it is...
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