The rise of the inclusive consumer

Social values are shaping purchase decisions more than ever—and retailers that act now stand to attract consumers’ loyalty and spending.

The American consumer is undeniably becoming more inclusive. Responding to our survey 1 in October 2021, two out of three Americans told us their social values now shape their shopping choices. And 45 percent—likely representing well over a hundred million shoppers 2 —believe retailers should actively support Black-owned businesses and brands. This 45 percent represents the inclusive consumer.

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Large consumer and retail players from Nordstrom to Yelp are moving quickly to serve this group of influential customers. Indeed, while inclusive consumers tend to be younger, female, and more racially diverse, they include men and women across ethnic backgrounds, income levels, and age groups. Given this diverse and ubiquitous representation, the inclusive consumer holds the unique power to influence all demographic groups (Exhibit 1).

Reaching across age and racial lines, which often shape purchasing, the inclusive consumer has the power to influence all demographics.
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The inclusive consumer is more likely than other shoppers to buy Black-owned brands out of a desire to support diverse entrepreneurs on their growth journeys and small businesses in general (Exhibit 2). Like many other consumers today, they base their shopping choices less on traditional advertising and more on social media, friends’ recommendations, and the stories of those who founded the brands they admire. They are also more likely than other shoppers to care about sustainability and quality. 3

The inclusive consumer often seeks out Black-owned brands to support small businesses and Black businesses.
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Where the inclusive consumer may be headed

Inclusive consumers are a large and influential population, and they want to spend more on Black-owned brands, which they know are underrepresented on store shelves. However, finding the brands and the products remains a barrier. Indeed, one in five inclusive consumers cited not finding the products they wanted as a reason for not buying from Black-owned brands. This plays out in the bigger picture of US retail spending as well. While about 14 percent of the US population identifies as Black, 4 Black-owned brands rang up only about $83 billion in sales in 2020 5 —less than 1.5 percent of $5.4 trillion 6 of retail spending. In our survey, about 21 percent of inclusive consumers said they had pledged to devote at least 15 percent of their retail spending to Black-owned brands in an effort to turn the tides. 7

Most retailers will need to make changes to meet the needs of inclusive consumers. Fewer than half of these shoppers say they know which products on retail shelves are from Black-owned brands, and a third don’t know where to go to purchase Black-owned brands. 8 About 45 percent of the inclusive consumers we surveyed said they would value relevant labeling on store shelves and the ability to filter website results to find Black-owned brands. About a third would value additional sources of information, such as curated lists of products, a database of Black-owned brands, and recommendations from influencers.

Major retailers are now joining social influencers and other stakeholders to spread the word. Growing support for Black-owned brands is evident in social media and traditional media: a wide range of publications, from New York magazine and GQ to Harper’s Bazaar 9 and whowhatwear.com, published a curated holiday list of products from Black-owned brands in November 2021. In the same month, Oprah’s “favorite things” list 10 focused on products from small businesses, many of which are owned by women and people of color.

How retailers could attract the inclusive consumer

In a marketplace being transformed by digitization, social change, and a global pandemic, leading retailers and brand managers know that they must keep meeting evolving consumer preferences to stay relevant. Major retailers are now reviewing how they work—from operations and merchandising to hiring and HR practices—and starting to move the needle. Retailers should consider actions in five main areas to bring the inclusive consumer through their doors and onto their websites.

Action 1: Reshape shelves. Retailers can first and foremost demonstrate a commitment to the inclusive consumer by evaluating and reimagining the brands on their shelves. Many are already taking strong action, reimagining their merchandising mix to make shelves and the brands that sit on them more representative. For example, more than 28 national retailers, including Gap, Macy’s, and Sephora, have signed the Fifteen Percent Pledge’s call for 15 percent of retail shelf space to be dedicated to Black-owned brands. Some of these retailers have doubled their assortments of Black-owned brands in just a year, opening their doors to almost 400 brands. 11 In addition to introducing Black-owned brands, retailers could also review their planograms and product placement: for example, Ulta Beauty is intentional about placing Black-owned brands in prime locations in stores and creates dedicated efforts to increase Black-owned brands’ features in circular advertising and email marketing. 12

Retailers can first and foremost demonstrate a commitment to the inclusive consumer by evaluating and reimagining the brands on their shelves.

Action 2: Switch up sourcing. Retailers, especially those who are vertically integrated, could also demonstrate commitment to the inclusive consumer by doubling down on diversity in their supply chain. For example, Best Buy has committed to spending at least $1.2 billion with businesses owned by members of the Black, Indigenous, and people of color (BIPOC) community and other diverse businesses by 2025. 13 The commitment includes plans to increase all forms of spending with businesses from nearly every corner of the company—from how it brings goods and services to stores to where and how it advertises. Supplier diversity is not limited to retailers and can also be considered broadly by most brands and companies. For example, in 2020, the Coca-Cola Company committed to spending an additional $500 million over five years with Black-owned suppliers, more than doubling the company’s previous commitment. 14 These actions show an increasing commitment to diversity across the supply chain, and these types of commitments will likely grow in future years as consumers begin calling for similar levels of diversity in the supply chain as they are calling for on shelves.

Action 3: Map it out. Inclusive consumers consistently say that not knowing which brands are Black-owned or where to shop for them are barriers to spending as much as they would like on brands from diverse founders. And wayfinding is their resounding answer. Retailers could help consumers identify Black-owned brands with clear labeling on shelves and websites, the ability to filter website search results, and curated lists of products, for example.

Sephora responded to these needs by creating a dedicated tab on its website to share Black-owned brands’ stories and products and by enhancing its online site, which features Black-owned brands on its browsing pane, provides a filter for shoppers looking for Black- and BIPOC-owned brands, and provides curated lists of recommended products, including a “Sephora Favorites” bundle in Black-owned beauty. 15 Google is also actively working on multiple initiatives to support Black-owned brands, including a tool that allows Black-owned businesses to identify themselves in maps, listings, and Google business-profile searches. 16 Additionally, Google has launched the ByBlack platform, which consists of both a national Black business directory (powered by the US Black Chambers) and a national certification as a Black-owned business (in partnership with American Express). This tool provides Black entrepreneurs access to a community with valuable business resources (including Google trainings) and a way to help reach new customers.

Action 4: Share the stories. Inclusive consumers care about what is on shelves, but they want more. They want to learn about founders’ stories, for example, and support the missions of small businesses. Further, our research shows that inclusive consumers are more likely than other shoppers to buy Black-owned brands based on recommendations from friends, and retailers that incorporate founder stories into marketing and digital placements are more likely than those that don’t to attract the inclusive consumer’s eye. Nordstrom, for example, introduced “Concept 012: Black_Space,” which includes a dedicated shop developed, designed, and curated by Black voices to amplify Black representation through in-store buildouts and merchandising. The concept is further supported with an online site experience that includes video content created by Black curators to represent their perspectives. 17

Action 5: Ditch the big-brand playbook. Introducing and cultivating smaller brands takes different capabilities and mindsets than retailers may be accustomed to when working with larger, more established brands. Unlike big brands, small brands come with more variability in experience and know-how, as well as growing pains as they enter the bigger retail stage. Retailers that are committed to fostering smaller brands will need to work differently, creating teams that understand how these brands operate. For example, those with experience working with small brands know that everyday requirements from retailers, such as buy sizes and inventory systems, can have large-scale repercussions on small brands with limited working capital or team capacity to meet these terms. A retailer that seeks to help smaller brands can boost the odds of success by adapting its playbook and its teams to suit their needs.

The time is now

In the years ahead, millions more consumers will likely join the ranks of inclusive consumers, rewarding businesses that pursue inclusion and avoiding those that don’t.

Businesses that meet the needs of inclusive consumers will likely do more than raise revenues and loyalty—they may also earn dividends in other areas of the business, including attracting and retaining talent. About 70 percent of the US-based employees we surveyed in August 2020 said their sense of purpose is largely defined by work, and nearly two-thirds said COVID-19 had caused them to reflect on their purpose in life, and nearly half were reconsidering the kind of work they do. (For more on this topic, please see Naina Dhingra, Andrew Samo, Bill Schaninger, and Matt Schrimper “Help your employees find purpose—or watch them leave.”)

Whether employees or customers, the inclusive consumer is changing the imperative for retail. The evidence is overwhelming: the inclusive consumer is leading the pack, influencing consumers across demographics, and voting with their pocketbooks for retailers that support diverse entrepreneurs and their products. (For more on this topic, please see “The Black unicorn: Changing the game for inclusivity in retail.”)

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