Challenges and opportunities

“These beauty buyers in food and drug, Walmart, Target, they are changing the paradigm for sure,” says Lisa Price, founder of haircare company Carol’s Daughter. “Target was actually the first retailer to embrace the multi-cultural community and change what the ethnic aisle used to look like in drug stores and big-box stores.”

Price, who is Black, launched Carol’s Daughter in Brooklyn in 1993. While it will always be Black-founded, it is no longer Black-owned: L’Oréal USA acquired the company in 2014. But Carol’s Daughter, which focused on natural products predominantly for Black women, was a pioneer in its space, getting into Sephora back in 2006, and then into department stores such as Macy’s and Dillard’s. In 2014, Target picked up the line—just before the L’Oréal deal, when it was still Black-owned. Walmart, Ulta Beauty, and HSN, a television network for home shopping, all sell it today.

Over the past several years, these retailers and others have come to realize the opportunity in hair, skin, and cosmetic products aimed at Black women and men. Black consumers were long underserved by the product makers that historically ruled retail shelves. But the annual buying power of Black Americans, which now totals $1.3 trillion annually according to research firm Nielsen, has motivated retailers to find products that cater to that audience, though they often find fans among non-Black shoppers too.

“First it was hair, now skin is really revving up with lots of Black-owned brands coming out, and we’re going now to makeup,” says Mahisha Dellinger, founder, owner, and CEO of Curls, a haircare company that’s widely carried at US retailers. “Now all the retailers want that business.” Dellinger adds that Target was the first big retailer to carry Curls, and once it did, others were quick to follow.

These categories are targeting a previously underserved customer, which makes them a bit different than categories aimed at the general public where there’s already intense competition, such as cereal or canned foods. For the 15 Percent Pledge to work, retailers would probably have to commit to dedicating some of that space as well to Black-owned companies, which could mean taking it from the established leaders. But that’s not necessarily an unreasonable ask. More retailers have been finding that their shoppers want new and independent brands on their shelves, not just the usual ones.

The 15 Percent Pledge hasn’t said whether any large retailers have committed to its requests yet. We have reached out to the organization for comment and will update this story with any reply.

On the prospect of any companies making the commitment, Dellinger seems hopeful but skeptical. She says she could see Target taking the pledge, as well as Sally Beauty, a chain of specialty stores. Walmart, which carries her line, is a different story. “I challenge Walmart to do this, but I highly doubt that would be the outcome,” she says. Walmart didn’t reply for a request for comment.

Still, the success in beauty could be instructive. “With my space and my retailers, I have nothing but cooperation,” Price says. “It is absolutely doable, and can be fiscally wonderful for everyone involved. But it may involve stepping outside the box a little bit, working around the parameters that are in place.”

How retailers can be true partners

Almost by definition, Black-owned companies are independent and smaller than the consumer-goods giants. Once a business goes public, a variety of shareholders own it, so with very few exceptions, it’s no longer Black-owned. There’s only one publicly traded company—Urban One Inc—on Black Enterprise magazine’s list of the 100 largest Black businesses meaning the majority of its voting shares are Black-owned. Also, one of the ways companies get big is by getting space in large retail chains. If companies aren’t already selling in the sorts of retailers the 15 Percent Pledge is calling on, they’re probably on the smaller side.

It often takes a genuine partnership between the retailer and a new company for the relationship to be successful. It could mean the retailer gives the company a break on fees it charges for certain shelf space. Supermarkets, for example, often charge what are called “slotting fees” to place products in high-traffic areas.

When Curls first started selling in Target about a decade ago, the retailer worked with it in different ways to help it find an audience. “They did things like give us that end cap for free,” says Dellinger, referring to the product display at the end of an aisle. “That’s prime real estate. You see that before you go down the aisle.” Target also started with a test of 105 stores before expanding Curls to more stores. Slowly scaling up allowed Curls to adjust gradually to the growing demand and need to increase its production.

These are the sorts of steps any retailers could adopt as they try out one of the growing number of Black-owned personal hygiene companies, such as Femly or The Honey Pot, or give space to one of the rising crop of Black-owned wine companies.

Price also points to Macy’s, which years ago launched a program under the leadership of Shawn Outler, now the company’s chief diversity officer, that prepares small businesses on doing business with large retailers. Price teaches a master class in the program. “It’s a really good example of a business saying, ‘We want to have more small businesses in our space. We want to have better representation of businesses run by people of color and more artisanal businesses. How can we make that happen?'” Price says.

It’s an important point, because it takes work for any growing, independent business to make the transition to selling at a national retailer. When Carol’s Daughter first started talks with Sephora, all its products were handmade. It needed to figure out how to scale up production just to have enough product to meet the order, which meant going to contract manufacturers and talking to chemists to scale up the product recipes too.

There are other challenges as well. “People that sell online only don’t have UPCs. Something as simple as that,” Dellinger explains. UPCs, or universal product codes, are unique 12-digit codes that retailers and distributors generally require on products. “Also the ability to scale and not making it at home,” Dellinger continues. “Making it in a plant. Having testing done. Understanding your shelf life and preservatives. Some people make stuff that they ship direct to their customers. It has to have a shelf life.”

And the demands don’t end once a company finally gets in the door at a big retail chain. “The real work that comes is getting to the 17th order, and the 27th order, and understanding what the relationship means, and not being naïve in thinking that once you’re able to enter the door, that everything else just flows,” Price says. Every product category will have its own complexities too.

But both Price and Dellinger are clear that they believe these sorts of issues are solvable. The biggest obstacle to getting more Black-owned businesses on retail shelves is generally retailers being willing to have the conversation in the first place.

“It’s going to take someone that really cares, not just an initiative just to look good on paper and have a PR story,” Dellinger says.

📬 Sign up for the Daily Brief

Our free, fast, and fun briefing on the global economy, delivered every weekday morning.