McKinsey Identifies the Gaps in Black Beauty

The global beauty industry is missing a $2.6 billion opportunity by not meeting the needs of the Black consumer, according to McKinsey. In a new study, the consulting firm concludes that Black people's experience within the beauty industry is markedly more frustrating than that of non-Black people and filled with multiple friction points.

For example:
• Black brands make up only 2.5% of revenue in the beauty industry. Yet Black consumers are responsible for 11.1% of total beauty spending.

• Black consumers are three times more likely to be dissatisfied than non-Black consumers with their options for hair care, skin care and makeup.

• Black consumers show an affinity and preference for Black beauty brands and are 2.2 times as likely to conclude that products from those brands will work for them. However, only 4-7% of beauty brands carried by specialty beauty stores, drugstores, grocery stores, and department stores are Black brands.

• From entry-level to the C-suite and from retailers to beauty houses, only 4-5% of all employees in the US beauty industry are Black.

• Black brands in the beauty industry raise a median of $13 million in venture capital, substantially less than the $20 million that non-Black brands raise. Yet today, the median revenue of those Black brands is 89 times higher than what non-Black beauty brands return over the same period.

McKinsey concludes that better serving Black consumers and supporting Black beauty brands could lead to greater equity across the entire beauty industry—for shoppers, entrepreneurs, large beauty houses, retailers and investors.

To help remedy the situation, McKinsey offers insights for research, marketing and sales departments.

When it comes to market and product research, Black populations are often overlooked, according to McKinsey. For decades, large multinational beauty brands were focused primarily on non-Black skin and hair. The beauty executives McKinsey interviewed said they had trouble hiring Black chemists to do research in labs and also that there was underrepresentation of Black participants in clinical trials.

For Black entrepreneurs, they’re more likely to be excluded from receiving information about high-potential opportunities. Black representation in the beauty industry lags far behind Black representation in the share of beauty spending and the population at large: Black employees make up only a small percentage of employees in the beauty industry and are also underrepresented among employees at retailers selling beauty products. In fact, McKinsey estimates it will take 95 years for Black employees to reach talent parity across all levels of the private sector.

According to Nielsen, only 2% of the total money spent on advertising in the US from 2011 to 2019 went toward Black-oriented TV stations, magazines, and websites. In its focus groups, McKinsey learned many beauty advertisements didn’t resonate with Black audiences because they neither portrayed a diverse population nor spoke to people with more melanin in their skin and curls or kink in their hair.  McKinsey's focus group research suggests that 75% of Black beauty consumers can be persuaded to purchase beauty products by ads that feature various skin tones across all races. Conversely, 75% can be dissuaded from purchasing a product when an advertisement does not reflect racial diversity. According to McKinsey, Black consumers have an affinity toward Black brands and are 2.2 times more likely to conclude that products from Black brands, as compared with non-Black brands, will work for them.

Lack of availability is another problem in the Black beauty industry. Many Black neighborhoods are in “consumer deserts.” On average, Black consumers travel 3.36 miles to a specialty beauty store, about 21% further than White consumers. Black consumers also need to travel more than 17% further than White consumers to department stores to access expert customer service from behind a makeup counter. Once they get to the store, here aren’t enough brands on the shelves suitable for melanated skin or Afro-textured hair. When stores do carry them, oftentimes, Black beauty brands are out of stock, and what’s in stock is often poorly placed on shelves. Forty-seven percent of McKinsey survey respondents said they typically buy beauty products at a mass-market retailer or a grocery store, yet only 13% said it’s easy to find beauty products that meet their needs there.

If Black consumers find what they're looking for, they often have a poor sales experience, according to the McKinsey survey. Sales associates were not knowledgeable about products for Black consumers. Only 23% of respondents said that salespeople could have sophisticated discussions about Black beauty brands and products. And only 13% said that sales associates could make knowledgeable recommendations for Black consumers. McKinsey concludes that may stem from a lack of diversity among store associates combined with insufficient systemized training of associates on Black customers’ needs and interests. McKinsey found that when there is at least one Black sales associate in the store, Black consumers are almost twice as likely to find someone who provides a very or somewhat helpful answer regarding products designed for darker skin tones.