The expanding middle- and higher-income segment of African-American consumers has become a critical part of growth in financial services. For example, between 2006 and 2016 the number of African-Americans with checking accounts increased 30%. And while the African-American population continues to face daunting economic challenges, as President and Lead Strategist of Culturally Connected Communications, Pam Jones, points out, “Key social and economic indicators point to a significant increase in the number of middle- and higher-income African-Americans over the past ten years.”
The spending habits of black consumers also reveal some compelling opportunities for growth in consumer spending categories. For example, although African-American homeownership rates remain lower than average, blacks homeowners are just as likely as other homeowners to have spent between $1,000 and $2,000 on home improvements within the past year. African-American households also provide a unique opportunity for marketers and retailers of home electronics because they dedicate 63% of their entertainment expenditures to audio and visual equipment, while other households dedicate only 36%. According to the latest Nielsen report, African-American buying trends also show an emphasis on family and cooking ingredients tied to cultural traditions, and an expectation that the brands they buy will support social causes.
In crafting media messaging that resonates with middle- and higher-income African-American consumers, local businesses should bear in mind not only current spending habits, but also where this demographic is most likely to shop in Central Arkansas: Ashley Square Shopping Center, Lakewood Village Shopping Park, McCain Mall, McCain Plaza, Midtowne Little Rock, Park Plaza Mall, River Market District, and Shackleford Crossing.
Hispanics controlled $1.3 trillion in buying power in 2015 - an amount larger than the GDP of Australia or Spain, according the Selig Center for Economic Growth. The center’s projections show U.S. Hispanic buying power continuing this trend, reaching $1.7 trillion by 2020. It has become clear that Latino consumers have become the most important driver of growth in a wide variety of consumer expenditure categories. For example, between 2012 and 2015 increased spending by Latino households represented around 40% of the growth in aggregate spending for household equipment such as computers and telephones and 25% of the growth in aggregate consumer spending for new cars and trucks. Latino households also accounted for double-digit shares of growth in aggregate expenditures for furniture (20%), major appliances (18%), audio-visual equipment and services (17%), and small appliances (16%).
Similarly, the use of financial services by Hispanic individuals has risen exponentially.
These two basic variables - more rapid household growth plus higher growth in average spending - add up to a higher rate of growth in aggregate spending by Latino households than non-Latino households in recent years. Over the past ten years the percent of Hispanic individuals - the demographic that is growing and getting younger - and households using a diverse variety of financial services has grown faster than it has among non-Hispanic consumers. Consequently, Hispanic consumers have become pivotal to growth in the financial services industry. For example, between 2005 and 2015 growth in credit card use by Latinos grew 11 times faster than it did among non-Hispanics (44% vs. 4%). The 5.1 million additional Latinos with credit cards accounted for around half (49%) of the growth in the number of consumers using credit cards.
The Millennial “Multiplier Affect”
Notably, 42% of U.S. Millennials are people of African-American, Asian American and Hispanic heritage. As the newest independent ‘contenders,’ multicultural Millennials are making a name for themselves as ‘commercial champs’ in several ways: They are bridging gaps between their own generation and others; and they are finding ways to make their birth cultures relevant and relatable to others. This demographic’s adaptability to different scenarios and fluidity across cultures creates a virtual “multiplier effect,” a key distinction from non-Hispanic white Millennials and a notable factor when companies consider their messaging and marketing tactics.
Guest blog post by Pam Jones, president and lead strategist of C3 Culturally Connected Communications.