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  • How Much Can ‘Buy Black’ Shopping Lift Black-Owned Businesses?
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    Some Americans looking to send a message with their holiday-shopping dollars are heeding a call that has resurged in popularity since the summer: Buy Black.

    Companies including Facebook Inc., FB -0.76% and celebrities such as rapper and entrepreneur Sean “Diddy” Combs are urging shoppers to spend at Black-owned businesses. Oprah Winfrey’s powerful “Favorite Things” list, which has earned a reputation for boosting the sales of featured products, included mostly Black-owned or Black-led brands for the first time this year.

    Yet consumer-driven efforts can do only so much when it comes to leveling the playing field for Black-owned small businesses or addressing economic inequality, economists and business owners say.

    “Me spending money is critical,” said Raegan Mathis, a Black project manager and artist in Washington, D.C., who recently bought a T-shirt from Harriett’s Bookshop, a Black-owned merchant in Philadelphia. “But being able to make a business sustainable and being able to help enough people do that to where you can build an economy, that is the key.”

    The Buy-Black movement, which originated before the Civil War, has gotten wide attention this year amid a national conversation about racial inequities following George Floyd’s killing at the hands of Minneapolis police and the coronavirus pandemic’s disproportionate toll on Black communities.

    Mr. Goins packing orders for his business in his basement in Washington, D.C.

    “Buying Black is, in effect, a statement of survival on the part of the African-American community,” said Molefi Kete Asante, a historian and chair of the Africology and African-American studies department at Temple University. “I don’t think that any African-American person seriously believes that buying Black will erase the wealth gap between white people and Black people.”

    Business soared during the summer at Harriett’s Bookshop, where owner Jeannine Cook said orders for titles by Black authors like Ijeoma Oluo and Brit Bennett rose faster than she and her team of three part-time volunteers, all high-schoolers, could keep up with.

    “It has felt like a tsunami at times,” she said. By the end of July, Ms. Cook said, the demand had subsided.

    “ ‘All of this messaging around buying power and Black capitalism and entrepreneurship is ultimately a distraction from the reality that it’s public policy that needs to be dealt with and addressed.’ ”

    — Jared Ball, a professor at Morgan State University

    The holiday season has brought another surge in interest amid social-media conversations directing shoppers toward Black-owned businesses and an NBC News video report featuring the store, Ms. Cook said, adding that orders rose over the Black Friday weekend.

    “There are many people who see that they were not being intentional with their dollars,” she said.

    Data from Yelp Inc. Show that searches containing the words “Black owned” have declined each month since spiking in June, although such searches remain above 2019 levels, said a spokeswoman for the business-reviews website. Searches for Black-owned firms on Google show a similar trend line, according to Google Trends.

    Black-owned small businesses closed at higher rates than other businesses early in the pandemic, according to Census Bureau data. Some 44% of 419 minority-owned small businesses that responded to an October poll by Alignable, a small-business social-networking firm, said they didn’t have enough on hand to cover November rent.

    Many of those firms have also struggled to access emergency capital, research suggests. Harriett’s Bookshop received a $2,000 grant through a Philadelphia Covid relief fund for small businesses, which covered one month’s rent, Ms. Cook said. She said her business didn’t qualify for the Paycheck Protection Program, and has received no other government funding.

    Ms. Mathis, 45 years old, said her family instilled in her the importance of supporting Black-owned businesses. “I’m Black and so I want to see us do well,” said Ms. Mathis. Yet, she added, consumer behavior is just one part of addressing the structural challenges Black-owned businesses face.

    Sheri Pavelich, of Cortez, Colo., ordered two books from Harriett’s after becoming aware of the store and Buy Black efforts through the Twitter feed of author Jason Reynolds.

    “I hadn’t thought of buying Black as a thing. I was just looking to support a business that could use it,” said Ms. Pavelich, who is white. “It’s an interesting perspective to have now, so I think that’s going to further inform my future decisions.”

    Black small-business owners have faced hurdles accessing the Paycheck Protection Program. Here’s how the African-American owners of MahoganyBooks in Washington, D.C., have kept their small business afloat. Photo: Zach Wood for The Wall Street Journal

    Jeffrey Humphreys, director of economic forecasting at the University of Georgia’s Terry College of Business, said Buy Black campaigns could have a broad impact on the economy if they gain traction both within and outside the Black community, because consumer spending is a key driver of economic growth.

    Personal-consumption expenditures account for more than two-thirds of U.S. Gross domestic product. In the third quarter, a rebound in consumer spending helped the U.S. Economy recover ground lost during the deep downturn brought on by the coronavirus pandemic.

    Jared Ball, professor of communication studies at Morgan State University, said estimates of African-American buying power are often cited to argue that the Black community has untapped economic potential.

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    The idea is “that if Black people used their buying power differently, they could do something differently with their economic condition,” said Mr. Ball, who wrote the book “The Myth and Propaganda of Black Buying Power.”

    Mr. Ball said while he supports Buy Black campaigns and other collective efforts to support Black institutions, such action has little impact on issues such as Black businesses’ ability to access financing or the racial wealth gap.

    Although the median wealth of Black households has grown at a faster pace than white households in recent years, the net worth of white families is still nearly eight times that of Black families, according to Federal Reserve data.

    “All of this messaging around buying power and Black capitalism and entrepreneurship is ultimately a distraction from the reality that it’s public policy that needs to be dealt with and addressed,” Mr. Ball said.

    Mr. Goins says it is hard to turn shoppers who buy through Amazon into loyal customers. Photo: Farrah Skeiky for the Wall Street Journal

    Matthew Goins, owner of Puzzle Huddle, said he was grateful to be included on Oprah’s list, and is currently receiving more than 100 orders a day for puzzles—a logistical challenge since he runs his fulfillment operation out of his home in Washington, D.C.

    “Storage space for the holidays has become the basement, living room, dining room and kitchen,” he said. “My family has to live above and around all the boxes.”

    He said he is working hard to turn those shoppers into loyal customers. That task is tougher, because some people are buying through Amazon.Com Inc., which sponsored Ms. Winfrey’s list, and Amazon doesn’t share email addresses that direct-to-consumer businesses like Puzzle Huddle rely upon to market products, Mr. Goins said. “Amazon is wonderful, but there are pros and cons to when you sell a product to a person on Amazon,” he said. “That’s Amazon’s customer.”

    An Amazon spokesperson said it supports minority-owned businesses and that sellers on its platform have access to customer data and insights.

    Adam Glassman, creative director at O, The Oprah Magazine, which publishes Ms. Winfrey’s list, said supporting small businesses, including Black-owned ones, has long been a priority of the publication.

    —Ruth Simon contributed to this article.

    Write to Charity L. Scott at Charity.Scott@wsj.Com and Amara Omeokwe at amara.Omeokwe@wsj.Com

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