The $835 Billion African American Consumer Story.

One of the largest consumer groups on the planet.

According to the sources [1][2],3], the consumer expenditures by Black households totaled approximately $835 billion in 2019. African Americans are the second-largest consumer group, with a population of 47.8 million, presenting businesses with a $300 billion opportunity stake in this community.

Although Black household spending was just under 10 percent of the nation’s total in 2019, it was outpacing the growth rate of combined spending by White households, driven mostly by faster population growth. However, the Black share of the US population is 13.4 percent, and this gap is primarily due to lower average incomes and wealth.

According to recent consensus data, African Americans in the United States are a significant consumer group, with increasing buying power and a strong interest in luxury goods.

In 2019, Black households spent a total of approximately $835 billion, with the highest spending categories being food away from home, women’s fragrances, and luxury watches [1]. Affluent African Americans are a particularly important market for luxury brands, spending almost $250 billion across a range of luxury and style products [2].

Moreover, the African American market has seen a 114 percent increase since 2000, with 11% of African American females and 13% of males preferring to buy luxury or designer brand clothes [3]. This data suggest that the African American community represents a significant opportunity for businesses in the luxury market, with the potential to tap into a large and growing consumer base.

According to several news articles, the split between Adidas and Kanye West had a negative impact on the company’s stock price and revenue forecasts. After the split, Adidas reportedly took a $247 million loss related to Yeezy, and Bernstein cut its 2023 revenue forecast for Adidas by about $398 million due to the end of the Yeezy partnership.

The messy split with West is cited as the biggest reason for the company’s stock price dropping by nearly 30 percent from the closing price of €158.10 in early February 2023, with one analyst cutting Adidas share price target to €110, implying nearly a 30 percent drop from the closing price. Furthermore, a warning about the revenue loss from the Yeezy partnership sent Adidas stock price tumbling down by 11.5% to $138.50 a share.

According to a McKinsey report, some of the major luxury car players in the $150,000-to-$299,000 and $300,000-to-$500,000 price bands observed an average EBIT of 38% in 2021, compared to less than 20% in 2016. Some of the most expensive luxury car brands saw average EBIT increases from 20 to 35% between 2016 and 2021.

This is due to African Americans’ participation in the luxury car market, the fact that African Americans have seen a significant increase in buying power (up to 114%) suggests that they are a strong consumer of luxury cars.

Additionally, in a broader sense, luxury brands have recognised the power of the affluent African American market in terms of expenditures, with affluent African-Americans spending almost $250 billion in a variety of categories including luxury and style.

However, it is important to note that affluent African Americans may face unique challenges in the luxury consumer market due to racial biases and limited credibility [2].

It is evident that the African American community’s impact on the luxury consumer market is complex and multi-faceted, and it is important for luxury brands to understand and address the unique needs and challenges of this market.