African American Consumers and COVID-19

Existing research in the public domain features information on general American consumers, with few reports profiling American consumers based on ethnicity. In this regard, most of the information uncovered speaks for the general American consumer, including African American consumers. In this regard, the report borrows heavily from data for the American consumer since the reports examined lack that segmentation based on demographic factors.

1. AFRICAN AMERICAN CONSUMER SENTIMENT AND BEHAVIOR

Since the COVID-19 pandemic struck, most Americans, including African Americans, have had to adjust their spending habits and daily routines to accommodate the new changes brought by the virus. Some negative impacts the pandemic has brought to African American consumers include job & wage losses and increasing demand for brands to speak up on social and environmental issues.

• Many Americans, especially African Americans and Hispanics, have lost their jobs and wages due to COVID-19. As of April 2020, Hispanic adults were hard hit at job and wage losses.
• About 61% of Hispanic Americans and 44% of African Americans said in April that “they or someone in their household had experienced a job or wage loss” because of COVID-19, versus 38% of white adults.
• In March, the numbers were down, i.e., 49% of Hispanics, 36% of blacks, and 29% of whites, indicating that more adults of color are likely to lose more jobs and wages as the pandemic progresses.
• In this regard, people of color are more affected by job and wage losses in the U.S., indicating that their current conditions are worse than the pre-COVID-19 era.
•  Racial discrimination tensions in the U.S. amid the COVID-19 pandemic are forcing the U.S. to ask companies to extend support to social and environmental causes. About 68% of U.S. consumers expect brands to clearly define their values and stand by them.
• Different U.S. ethnicities and demographic groups share varied expectations from brands to act on social and environmental issues. 82% of African Americans show strong support for brands to speak up, versus 79% among Asian Americans and 71% among the LGBTQ+ community.
• Millennials and Gen Z consumers have expressed concerns regarding brands taking a stand on those issues in order to feel comfortable purchasing from them.
• Approximately 46% of Millennials and 42% of Gen Z consumers want brands to be brave; however, African-American Gen Xers had a 46% higher composite score than White Gen Xers.

Noticeable Changes in Behaviors towards Big Purchases

Across America, the COVID-19 pandemic has shifted the American mindset regarding making big purchases. While most consumers intend to postpone making big purchases, some are taking advantage of the current incentives or saved vacation money to buy big-ticket items like cars, home appliances, homes, etc.

• According to a report published by AAAA, some U.S. consumers are maximizing on the current opportunities to make major purchases, like automobiles and major appliances.
•  24% of those planning to make major purchases now claim they are taking advantage of the current incentives, whereas 12.5% are using their free time to research products thoroughly before making a purchase.
• Some consumers anticipate the days when they can shop in-person, with 21% reporting that they are waiting to make major purchases when they can shop in-person.
• Overall, U.S. consumers, including African Americans, are undecided between making big purchases now or in the future, with some citing that they want to shop in-person for their major purchases.
•  47% of African Americans and Hispanics say they have reduced spending to buy only essentials, while 56% claim they would cut back spending for the rest of 2020.
• During the lockdown, U.S. consumers spent the most on household cleaners & soap, vitamins & supplements, hair color, coffee, etc., while they spent the least (25% decline) on cosmetics and sun care products.
• Importantly, consumers are no longer doing bulky shopping, as was seen during March and April, because that “scarcity mindset has calmed down significantly, according to Nielsen.”
• With few Americans opting for a vacation, most are spending the money they saved for vacation on luxury items since the pandemic has affected summer holiday gatherings and travels.
• In this regard, people who saved for vacation and are unable to travel safely are instead spending the money on luxurious items to compensate for the entertainment and travel experiences they could have incurred.
• According to Scott McKenzie, Nielsen Intelligence Unit Leader, Americans who can afford it are spending money saved for vacation on items like expensive bottles of wine, artisan bread, facial skincare, nicer cuts of meat, etc.

Major Themes Arising Due to COVID-19 that Best Describe African American Consumers

Major themes have emerged as a result of COVID-19 and its impact on Americans, especially its disproportionate negative effects on people of color. Nevertheless, these minor communities remain optimistic that their lives will get back to normal once the pandemic is over. Some themes that have emerged during this period are analyzed below.

• More African Americans continue to suffer the most regarding the COVID-19 pandemic, with 28% saying they know someone who has died from the virus than their Hispanic and White (11%) counterparts.
•  African American’s trust in the U.S. healthcare system continues to dwindle, and that attitude is expected to exacerbate with the current pandemic. 75% of African Americans are more concerned about the pandemic significantly damaging the lives of people of color versus 42% of Hispanic respondents and 30% of White respondents in the survey.
• Further, African Americans are more devastated by the pandemic, and an estimated 70% claim they are concerned that COVID-19 response is biased against certain ethnic communities, compared to 32% of White respondents expressing the same.
•  Trust issues remain a key issue among the African American demographic, with only 18% of Black respondents in a survey saying they trusted the federal government to advocate for their concerns, 52% trusted their state, and 46% their local governments.
• The majority of U.S. consumers are worried about COVID-19, with many expressing various concerns regarding the negative effects it has had on society. As of April, about two-thirds of U.S. adults were concerned about unknowingly spreading the virus to others.
• Moreover, there exist sharp racial and ethnic variations in personal experiences with COVID-19 and worries about catching and spreading the virus.
• In April, about one-in-four African American adults (27%) said they knew individuals who had been hospitalized or died because of COVID-19, almost twice the rate among Hispanic or white adults (13% each).
• During that month, Hispanic Americans expressed greater concern versus other ethnicities about contracting COVID-19 and getting hospitalized. Likewise, Hispanics were more concerned about unknowingly spreading the virus to others.
• According to a September 2020 report, about 35% of all U.S. consumers say they will travel outside their communities to celebrate the coming holidays. Of those planning trips, 57% intend to use personal cars, with 35% taking a plane.
• Further, more than half (56%) of Americans expect to keep their holiday celebrations small, saying that they feel “somewhat” or “very comfortable” with attending or hosting a small gathering of five or fewer people.
• About 24% of U.S. consumers expressed feeling “somewhat” or “very uncomfortable,” attending a large holiday gathering of 20 or more participants.
• Overall, research suggests the 2020 fall and winter holidays will likely remain muted, with few consumers showing interest in engaging with big crowds or traveling outside their communities.

2. HOW THE AFRICAN AMERICAN CONSUMPTION MINDSET HAS SHIFTED

The general American consumer mindset has been shifting since the onset of the COVID-19 pandemic. Consumers are mitigating the adverse effects of unemployment resulting from COVID-19 impact on the economy by altering their shopping and consumption mindsets. African Americans, too, are following suit by closely monitoring their shopping and consumption habits, considering this is the most affected demographic by the pandemic.

•  Consumption priorities have changed among U.S. consumers, who are more centered on the most basic items, increasing demand for cleaning, hygiene, and staples products, with non-essential categories seeing declining demand.
• Consumers are also not buying from specific brands, as was the norm before the pandemic. The post-COVID-19 consumer is more interested in purchasing locally, a new trend that is accelerating.
•  Grocery consumption has also migrated to digital commerce as more consumers are ordering groceries online, a change expected to continue post-outbreak. According to research, during times of crisis, basic necessities are prioritized over anything else.
• In this regard, African Americans are more likely to prioritize personal health, followed by the health of family members and friends. Other leading priorities include food, medical security, financial security, and personal safety.
• American consumers are gradually embracing local consumption, which is reflected in both the items they buy, e.g., locally sourced, artisanal foods, etc., and their choice of shopping venue, e.g., local community stores.
• Consumer packaged goods brands would need to find new ways to connect with the American consumers locally, whether by “highlighting local provenance, customizing for local needs or engaging in locally relevant ways.”
• Post COVID-19 consumers are finding new ways to make positive change, hence the emergence of conscious shopping. For instance, Adidas has a new product line of trainers made from 100% old recycled materials.
• With increasing public awareness regarding conscious consumption, including buying items sourced from eco-friendly materials, African American consumers, and the general American consumption mindset has shifted and prefers clean and locally sourced items.
• During the great recession, deep consumption per capita income declined greater than 4% to the lowest. Consumption declined significantly and took more time to recover than did disposable income.
• The decline was stronger for durables, including vehicles, spending on nondurables, such as services, also dropped significantly compared to previous recessions. The credit crunch during the recession also inhibited many Americans, including African Americans households, from purchasing goods typically obtained through borrowing, like cars and other big-ticket products.
• Equally, during the COVID-19 pandemic, Americans, including African American consumers, are not spending on big-ticket items like cars. Only those who saved for vacation could spend the money on big-ticket items, as is the case with the current COVID-19 pandemic.
• Overall, the great depression resulted in a significant loss of purchasing power among African Americans, resulting in more income loss and economic inequality. Likewise, the COVID-19 pandemic impacts African Americans just like the recession, particularly undermining their ability to make big purchases.
• Therefore, during the great recession and the current COVID-19 pandemic, African Americans and the general American consumer exhibit almost the same consumption and shopping behaviors, characterized by prioritized spending on basic items and avoiding spending on big-ticket items like vehicles, homes, appliances, etc.
• During the 2008 recession, about 67% of American consumers, including African Americans cut back spending on non-essentials, 58% started buying fewer individual serving packages, 55% bought smaller quantities of favorite treats.
• Another 55% purchased fewer meals at grocery stores, and 52% bought organic products (slightly expensive). Regarding brands, about 50% of consumers shopped more private labels and tried lower-priced brands, while 42% gave up their favorite brands.
• An estimated 32% of Americans purchased fewer healthy products as they are pricey, and another 30% bought less fresh produce due to price.
• Likewise, during the COVID-19 pandemic, Americans are shopping locally, meaning they promote private labels, which are often found locally. Moreover, Americans are prioritizing important items, including basic foods and health.
• Generally, during a pandemic, U.S. consumers are more likely to exhibit the same behaviors as previous recessions because they affect their incomes and ability to spend.

What African American Consumers Need to Feel Confident to Make Big-ticket Purchases

For consumers to make big purchases, there are many factors they need to consider, including interest rates, economic recovery, and disposable income. Those three items play a crucial role in big-ticket purchases, such as homes and cars. In this regard, African Americans may need more than one factor to feel confident to make big purchases once again.

• The current COVID-19 situation points to a recovering economy with sales of big items like automobiles continuing smoothly. A recovering economy means most unemployed African Americans and those that lost their jobs have a good shot at getting employed afresh to focus and plan on making big purchases.
• Equally, the economy needs an increase in the growth of services to achieve a full economic recovery. As of May 2020, consumers had increased their spending on services by 5.4%; however, in June, the increase had declined to 5.2%.
• However, positive signs are pointing towards a recovering economy characterized by increasing consumer spending on big-ticket items, including homes, vehicles, etc. A recent Wall Street Journal report indicates that sales are improving and broadly outperformed analysts’ expectations this spring and summer.
• Overall, African American consumers and the general American consumers would also want to look for low-cost financing options during the pandemic to make big purchases.
•  American consumer confidence index began declining in July as the unemployment rate, and COVID-19 cases started to climb again, undermining Americans’ ability to spend.
• Additionally, renewed fears of catching COVID-19 have kept most Americans, including African Americans, on the sidelines regarding spending, even as malls, restaurants, and retail outlets reopen.
• Another survey shows a weakening interest in public events and material items, including appliances and clothes, coupled with a new austerity, shown by “pantry stockpiling and delayed big-ticket purchases.”
• Researchers conclude by forecasting an era of fear and frugality that could push a full economic recovery out of reach. The data also expresses concerns regarding the “rising consumer confidence likely to translate into spending, which the economy heavily depends.”
• The current U.S. economic recovery does not include statistics showing the recovery rates among people of color and Whites but statistical data on economic recovery and not ethnic recovery. However, the economy is currently operating at 81% of where it was in early March.
• Americans filing for unemployment benefits have decreased from about 22 million in May to around 9.6 million in October, an indicator that American consumers, including African Americans, are returning to work.
• Hiring rates have also increased from -40% during mid-March to 4.6% in October. Other sectors of the economy, such as the housing market, have continued with their downward trend, and the 30-year mortgage rate is currently at 2.81% (October 2020).
• Overall, extensive searches across public databases did not uncover research providing a detailed breakdown of African Americans’ recovery versus other demographics because existing metrics focus on national data and have not broken it down based on ethnicities.

3. BRANDS SPECIFICALLY REACHING OUT TO AFRICAN AMERICANS AMISDST THE ECONOMIC RECESSION

Black Restaurant Week, Generation, and 54Kibo are examples of brands specifically reaching out to African Americans amidst the economic recession and helping them in many ways, including empowering them, training them to become better entrepreneurs, promoting African culture, etc., and encouraging economic recovery.

Black Restaurant Week

•  Black Restaurant Week is an example of a U.S. brand reaching out to African Americans amidst the COVID-19 pandemic.
• In October 2020, the brand established the “Feed The Soul Foundation,” a new non-profit organization aiming to support marginalized entrepreneurs in the culinary industry.
• The foundation seeks to provide “business development resources and mentorship support” to facilitate sustainable business growth.
• The movement will equip marginalized business owners, including African Americans, with business development training resources, increase access to business development resources, support the growth of minority entrepreneurs, and invest in workforce training for minority employees in the culinary industry to foster economic growth and empowerment.

Generation

•  Generation is a U.S. nonprofit currently providing opportunities for the unemployed during the COVID-19 pandemic to address the widening gap in unemployment rates, especially among African Americans.
• The organization is offering “100% free, online programs to provide individuals with technical and soft skills necessary to succeed in a variety of roles.” The organization seeks to reduce the widening unemployment rate, which in August was 7.3% lower than the national average for Whites and 13% for African American employees.
• The organization plans to train 500,000 students, especially those from minority communities by 2030 to help get more jobs to these communities that are disproportionately affected.
• Students in the program will have access to coaches and mentors who will help them write cover letters & resumes, access resources for personal and professional goals, and understand the program outcomes.

54kibo

•  54kibo is an “online home decor retailer of contemporary African design.” The platform is collaborating with Africa-based designers and the African diaspora to develop a recent Wikipedia page dubbed ‘African Design‘ to celebrate Africa’s rich design history and craftsmanship by displaying functional pieces.
• The new Wikipedia page examines many African designs and the techniques that Africans practiced for generations, such as embroidery & beadwork, metalwork, textile weaving, and woodwork.
• Overall, the brand aims to empower Africans and African Americans during the pandemic and offer an opportunity to explore and promote African design as part of its COVID-19 recovery process.