.6 billion opportunity to fight racial inequality in beauty: McKinsey – WWD

$2.6 billion opportunity to fight racial inequality in beauty: McKinsey – WWD

Despite the commitments companies across industries have made to diversity, equity and inclusion in recent years, meaningful change that supports Black Beauty brands, Black Beauty founders and the experiences of Black Beauty consumers remains a largely untapped one Market.

A recent report by consulting firm McKinsey & Co. found that tackling racial inequality in the beauty industry represents a $2.6 billion opportunity.

The report highlights the barriers Black Beauty founders and employees face, from entry-level to the C-suite, as well as friction points that affect Black Beauty buyers’ experiences.

The institute conducted more than 7,400 surveys of black beauty consumers and a virtual focus group of 110 black consumers in the US on their spending habits, their satisfaction with current beauty offerings, and what qualities and aspirations would convince them to buy more for a issue product , among other topics.

McKinsey also visited 102 US retail locations frequented by black beauty shoppers to assess how well in-store product placement and accessibility meet the needs of black consumers.

“Rather than just doing interviews, what we actually wanted to do was send people shopping and looking for products from black founders or products that black consumers might be more interested in to see how available they are – and when they find them, how knowledgeable the seller was about the product,” said Tiffany Burns, senior partner at McKinsey & Co. and one of the report’s authors.

McKinsey & Co. also surveyed more than two dozen beauty industry insiders, including retail executives, Black chemists, and Black Beauty founders such as Tracee Ellis Ross, Nyakio Grieco, Lisa Price, and Desirée Rogers, about their experiences and the obstacles facing the Black’s successes hamper beauty brands.

Ross, who founded Pattern, a hair care brand for curly, curly and tightly textured hair, in 2019, spoke about the lack of available data that is hampering Black Beauty’s founders’ efforts from the very beginning of their journeys. “What I have found in personal work and in one-to-one sessions with a chemist is that the effectiveness of products is actually based on what straight blonde hair does,” Ross said in an interview with McKinsey & Co.

“Clumping, slipping, and hydrating your hair — those three terms were something these chemists had never heard of — and unless they knew what those things were, there was no way I could translate the information I needed.” ”

Rogers, who is co-owner and chief executive officer of beauty brand Black Opal and prestige makeup brand Fashion Fair Cosmetics, noted that the responsibility for creating a more equitable beauty market does not rest solely on Black-owned companies and entrepreneurs can be laid is to be done at all levels.

With this report, McKinsey & Co. has identified factors impeding a supportive environment for black beauty companies and black beauty consumers.

Among the key findings of the report:

  • The US beauty industry was worth $60 billion in 2021, with a projected value of $73 billion by 2025.
  • Brands owned and founded by Black people account for just 2.5 percent of sales in the beauty industry, even though Black consumers are responsible for 11.1 percent of total beauty spending and Black people make up 12.4 percent of the US population.
  • Black consumers demonstrate an affinity and fondness for Black beauty brands and are 2.2x more likely to conclude that their products will work for them. However, only 4 to 7 percent of the beauty brands stocked by beauty specialty stores, drug stores, grocery stores and department stores are owned or established by blacks.
  • Black consumers are three times more likely to be dissatisfied with their haircare, skincare, and makeup options than non-black consumers.
  • From entry-level to C-suite and retailer to cosmetics house, only 4 to 5 percent of all employees in the US beauty industry are black.
  • Black owned and founded beauty brands raise a median of $13 million in venture capital, significantly less than the $20 million that non-Black owned or founded brands raise. Yet today, the sales of these Black owned and founded brands are 89 times higher than the sales of non-Black founded beauty brands in the same period.
  • 75 percent of black beauty consumers can be persuaded to buy beauty products by ads featuring different skin tones of all races. Conversely, 75 percent can be deterred from purchasing a product if an advertisement does not reflect racial diversity.

Disproportionate private equity funding, a lack of diversity in brand employees and ads, and inadequate access to products and services are among the outstanding issues that are inhibiting progress for black beauty brands and black beauty buyers’ experiences.

“Growing up, some of the keywords that were part of beauty campaigns, particularly in relation to hair, were ‘light, airy, beautiful’ and ‘bouncy’ and ‘behaved’ — those were two things my hair didn’t do,” said Ross. “I wasn’t trying to ‘behave’ my hair, I was actually hoping to support and celebrate it.”

The report also outlines the disparity between the revenue of Black-founded, non-Black-owned brands and those where Black-founded, non-Black-owned brands account for 82 percent of total annual Black beauty brand sales earn on the whole.

The report outlines key initiatives that can be implemented by the beauty industry to help black and founded beauty brands realize their full sales potential, support black founder success and enhance the black beauty shopping experience.

These initiatives include minimizing the occurrence of “beauty deserts,” areas, often in majority-Black communities, that lack access to specialty and department stores and higher quality beauty products.

Improving training for store associates to better serve Black consumers and receiving appropriate product recommendations, as well as increasing the amount of shelf space taken up by Black beauty brands in retail stores to at least 15 percent, as required by the non-profit organization Fifteen Percent Pledge, are also included important steps to improve the shopping experience for black people.

The report proposes increasing the number of Black beauty employees to at least 15 percent at all levels and departments, noting: “If the top 10 beauty retailers and top 10 beauty houses [by revenue] increase the percentage of their black employees to at least 15 percent — which equals or exceeds black representation in the general population — that would result in 60,000 more black people working in the beauty industry.”

The report states that if the beauty industry incubates and grows at least 500 black beauty brands through venture capital, networking opportunities and mentorship, coupled with the above steps, black consumers’ annual spend will increase from 11.7 to 12.7 percent of the total Beauty spending can increase – so will parallel the percentage of black people in the US – or $9.2 billion of the projected $72.4 billion beauty market in 2025.

“I truly believe this industry can be an absolute catalyst in alleviating systemic racism in this country,” said Grecio, who launched her eponymous skincare line in 2002, co-founded inclusive retail platform Thirteen Lune in 2020, and recently the retailer’s first featured incubated brand, relevant; Your Skin Seen, in an interview with McKinsey & Co.

“Everyone loves beauty — it’s universal and it makes a lot of money, so it’s time to make it as fair as possible,” she concluded.

The full Black Representation in the Beauty Industry report is available on the McKinsey & Co. website.

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