By Kyle Jackson
With the impact of the African American dollar becoming more significant in the U.S. economy, the move towards ownership in industries that African Americans spend big bucks in, is becoming more of a reality than a dream, despite the challenges. African Americans have over a trillion dollar buying power in the United States. According to Nielsen African Americans spend over $1.2 trillion annually and according to recent studies this will rise to at least $1.4 trillion by 2020. According to consumer behavior expert, Dr. Yuvay Meyers Ferguson, African Americans “over-index” on spending in industries such as clothing, sports, haircare, and nails. “The African American purchasing power is strong in the United States and it would be great if we had representation in these industries.” According to Nielsen for ethnic hair and beauty aids, the yearly total is $63.5 million and African Americans spend around $54.4 million on this. That is nearly 85.65 percent of the nation’s average coming from African Americans. While some of the products in this category that are marketed towards African Americans are not black-owned, black ownership in the beauty industry has been a recent upswing. According to the U.S. Census data African American Women are the largest growing group of Entrepreneurs in the United States.
One such business is Oyin Handmade. Located in Baltimore Md., Oyin Handmade carries a line of natural hair care and body care made with “food-grade” ingredients. The owner Jamyla Bennu created this line of products because she wanted something that would be unique to her hair and skin. “Your hair is awesome, shouldn’t your products be awesome too? I’ve always had a passion for mixing and experimenting with natural ingredients to find combinations that worked for me, my family and friends,” Bennu said. Bennu said once she started, “glowing feedback” followed. This led to her products being sold in CVS, Rite Aid, Sally Beauty, and Target. The products have been selling very well and is popular for Black women, men and even children.
The success of Bennu’s business can be attributed to the resurgence of the natural hair movement. Indeed over 71 percent of adults in the Black community both male and female began to wear their hair naturally in 2016 according to research agency Mintel. This change caused smaller black owned brands to soon come into competition with larger brands. Thus creating an oversaturation in the market which often put these smaller brands in a position to either sell their company or being overlooked by consumers who are interested in purchasing from a more familiar brand name. Despite a decrease in straightening agents, a major stake of the beauty industry continues to be the hair extension and weave industries. The top business owners and exporters of human hair and extensions are from China and India thus making them the largest part of ownership in this category. Since hair extensions and wigs are not federally regulated they typically are not included in the haircare and beauty-aid stats on spending of African American women. The haircare industry in the United States is expected to be worth $13.4 billion by the year 2020. This number includes the sales of shampoos, conditioners, styling products and hair colorings and dyes. What is not included in this is beauty supply stores, hair weave, tools used to style and appliances among other things. When you think of weave and hair pieces and other products typically used by African American women you attribute that to a local “Black” beauty supply. These stores typically have been owned an operated by Koreans. Koreans had immigrated to the United States in the late 1950’s and 1960’s. The book On My Own: Korean Businesses and Race Relations in America chronicles the struggles Korean Americans had to face being immigrants in Los Angeles and how many became prominent business owners. In the late 1960’s into the 1970’s many of these beauty suppliers became prevalent because the United States had placed a ban on any hair coming from China which allowed Koreans to become the main distributors to African Americans. Today there are roughly 9,000 Korean owned beauty supplies. “Much of the ownership in the hair industry is Korean,” said Ferguson. As the beauty industry continues its growth, a by-product has been the proliferation of e-commerce sites. Currently there are hundred if not thousands of hair websites that allow you to purchase bundled extensions here in the United States. Her Hair Company is a black-owned virgin hair distributor out of Chicago, Illinois. Noel Willis, who is the Chief Operations officer of the company said the inspiration for the company came from the Chris Rock film “Good Hair”. “The hair extension industry is growing ten times over every month and is honestly very oversaturated.” When developing a culture and customer experience Willis aims for it to be “enjoyable and fun” for her clientele. “Hair honestly isn’t the gold-rush it used to be… people want to spend less and less and often times go to a Chinese vendor and think they’re getting the same thing for a lesser price.” One of the Chinese vendor sites she is referring to is Aliexpress which has thousands of vendors selling “human hair” for lower than market price. Despite Aliexpress size and success Willis believes some of her clientele wants a human touch. “The millennial range of our shoppers still wanna feel connected and want to be apart of something.” This is something that she says a Chinese wholesale vendor can not offer. Willis credits much of her company’s success to the use of social media and YouTube (link to her YouTube page) to gain new customers. One video by YouTube guru Tiarra Monet that went viral allowed the company to make a profit of $350,000 in cash in the company’s first year. The company also boasts a 65 percent retention rate of success amongst its clientele. Willis believes that her customers return because hair extensions offer instant gratification. “I get to protect my hair underneath and then I have a new look on top, It doesn't mean I don't love my self it means I have layers to myself. This represents one of the layers of me,” Willis who uses hair extensions herself said.
Men’s grooming is the 4th category in which African Americans spend more than then the size of their respective population. According to Nielsen African American males spend over $62 million of the annual $308 million dollar spend in the U.S. Michael James is one such male. In 2010 after several years of seeing Black men not knowing what products to use for grooming pushed him to form his business Frederick Benjamin. “ (A) lack of awareness was my reason for creating a line (catered to) grooming for men…. I was like why are men asking such basic grooming questions and from an educational standpoint I felt that it was necessary to teach men about grooming,” he said. James, who is a graduate of Morehouse College in Atlanta had several executive roles at both Revlon and L’Oreal. During his time in these roles he learnt much about the business. One thing that he noticed was that executives at L’Oreal had started to take notice of African Americans purchasing power as it related to beauty products. After this, he left his position at L’Oreal and developed his own line of products specifically made for men. James utilized his knowledge that he had from the beauty industry to develop the product.He would go from barbershop to barbershop to get his product line on their displays. “I wanted the products not to be marketed to an entire group but a subset of a group. Getting a great natural product and showing us in a different light.” He hopes to see more buyers at a retail level.
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