The real Black power: with more than $400 billion in income, African Americans have grown into a powerful force. But are we spending our dollars wisely?

Tim Gipson of Los Angeles went to a Bullocks department store in Pasadena to return some extra china pieces that he and his wife, Denise Moret-Gipson, had received as wedding gifts. After waiting as other customers made returns and received refunds, Gipson attempted to do the same. The store clerk stalled, and then told Gipson that he could not get a cash refund but that the store would mail him a check.

"Since my husband didn't remember which branch of the store we were registered in, they couldn't check the registry. Instead, they called around to check every single store to see if this Fitz and Floyd china had been stolen," remembers Denise, a pediatrician at Universal Care Medical Group, an HMO in nearby Torrence, California. Tim is a veteran detective in the forgery and white collar (a.k.a. "bunco") crimes division of the Los Angeles Police Department.

"Imagine my husband's surprise when he conveyed the story at work the next day. A white officer who moonlighted at another Bullocks told him that the store had called to find out if the china was stolen," she explains. "Since then, we've never gone back to Bullocks. Between the two of us, we spent at least $3,000 a year there. Now that business goes to Nordstrom's, and the service is definitely better."

Most African Americans expect, and accept, the fact that their patronage is often not valued in the same way as others. When we are mistreated, many of us, like the Gipsons, are willing to vote with our feet and take our business elsewhere.

And when African Americans are egregiously wronged, we have proven ourselves capable of making companies, cities, states and even entire countries pay via targeted boycotts and economic sanctions as well as the civil court system. Prominent examples include the successful class-action discrimination suit against the Denny's restaurant chain, the boycotts of Miami (after city leaders snubbed future South Africa President Nelson Mandela) and Arizona (after the state voted against a holiday in recognition of Dr. Martin Luther King Jr.) and the economic isolation of South Africa under apartheid. A more recent victory is New York publishing company Essence Communications and the National Urban League's successful effort to get newly elected Louisiana Governor Mike Foster to reconsider his declaration of war against race-based affirmative action policies in the state. The stick: the threat to pull the NUL Annual Conference and Essence's popular music festival - representing a combined economic impact of $93 million - out of New Orleans.

These individual triumphs, though productive, have not translated into a root change in attitude toward African Americans as a critical economic force. Forty years after a tired seamstress named Rosa Parks triggered the Montgomery Bus Boycott, the economic status of African American has improved, but our economic clout has not. Some might even argue that it has declined.

While corporate America benefits from the dollars African Americans spend, we haven't done enough to leverage that spending clout. The fact is that, once harnessed, African American dollars +can be the difference between profit and loss for any consumer product on the market today. Even more important: Given our current socio-political climate, aside from our voting power, our buying power is the only major leverage we have left. If we can't speak to American business' and government's bottom line, they simply will not listen.

"Black spending power has been largely ignored," says Darlene Edwards-Beacham, president of the Black Consumer Organization of America (BCOA). "There has been no voice to take a pulse and provide collective data on the black consumer so that that information gets disseminated. We underestimate the power we do have. We need to figure a way to muscle that power."

Punishing negative behavior, such as with boycotts, is not a substitute for encouraging positive behavior. It's how we make our spending decisions when there is no boycott that counts. To be taken more seriously by American business, an increasing number of public policy, business and community leaders believe, black Americans must begin to forge a "conscious" consumer agenda.

Like any consumer group, we must demand diverse and better quality products offered at competitive prices that meet our individual needs and interests, and we should expect to find these goods conveniently located near where we live.

However, as African Americans, we must also establish expectations for how we can leverage the value of our dollars. After we know that we've found the right product at the right price, with an acceptable level of customer service, we need to ask ourselves: What percentage of the dollars we spend will be used to boost the sales of black-owned companies who may manufacture, distribute, wholesale or retail this product or service? What proportion will be used to advertise this product or service in the black-owned magazines, newspapers and other media outlets which speak directly to my interests and concerns? What percentage will used to create jobs for African Americans in general and black professionals, managers and executives in particular? What percentage will be used to support the communities, organizations, charitable causes and public policies which are important to African Americans? Implicit in the above criteria: The necessity for African American to spend a higher proportion of their income with those businesses that demonstrate clear and sustained support for African American interests.

BLACK BUYING POWER

At 12.5% of the population, African Americans are currently the largest minority in America. Collectively, we had an income of $341 billion in 1994, which rose to $373.8 billion last year, according to Andrew F. Brimmer, president of Brimmer & Co., a Washington-based financial consulting firm and a member of the BLACK ENTERPRISE Board of Economists. He projects that blacks will break the $400 billion income barrier by year-end.

In his report, The Buying Power of Black America, Ken Smikle, publisher of Target Market News, notes that African Americans are increasing their spending on consumer goods, such as personal computers, electronics, books and education. When added together, black Americans spent $6.6 billion on products in these categories last year.

For black consumers like Wanda Reid Menefee of Hackensack, New Jersey, a large percentage of purchases are made for children. "The majority of my expenses are for my nine-year-old son Reid. Since I work in New York City, I have to leave him with someone else and they drop him at school," she explains. These costs, plus Reid's after-school activities like soccer and Cub Scouts, add another $250 to Menefee's monthly expenses.

Economic forecasters point to this kind of consumer spending as the primary engines that will drive the American economy - no matter how slowly - this year. And, as the demographics for African Americans and other minority groups continue to outpace that of whites, American businesses - from corporate manufacturers to retailers - will target black and Latino consumers as a focal point of their marketing strategy - and, ultimately, their bottom line.

But with African American spending growing at such levels, are businesses taking our business and loyalty for granted?

BCOA is one group trying to define and marshal black consumer power. The Dallas-based organization is attempting to measure black consumer awareness and shopping encounters, product testing and ratings, in a formal two-way marketing feedback system.

Many consumer product companies, such as Sears Roebuck and Coca-Cola, have had formal feedback systems for years as a part of their market development strategy. Most have included African Americans within the overall context of their studies, but few have done specific segmented market research on the wants and needs of their black customers. Until now that is.

With most corporate marketing strategies focusing on expanding or creating products for niche markets, more companies are beginning to focus and think about the African American consumer as a unique "niche' market. Others, realizing that some of their biggest customers are black, have become nervous about losing market share in this area. Ideally, this new corporate focus will be unlike past efforts, which were rooted only in social causes and did not necessarily include a sound marketing rationale.

On another level, many of these corporations are also concerned about maintaining African American brand loyalty. "When there were only one or two people marketing to us, we were brand loyal," says Vincent Watkins, president of the Watkins Group, an Atlanta-based political strategy and marketing firm. "Now to market to us, you must be able to market the value of the product to us," he explains. "Since blacks now have the access - at least, theoretically - to everything white consumers have, corporations can't afford to lose that edge they formerly took for granted."

R-E-S-P-E-C-T = C-O-N-T-R-OL

Last fall's Million Man March in Washington emphasized the need for African Americans to control and strengthen the economies of their communities. Previously, many urban areas tried to foster this concept in the form of "Black Dollar Days," a day when African Americans were urged to spend their dollars only with black-owned businesses.

"But we've gone beyond a day to the importance of having control of our economic resources," explains Philadelphia's A. Bruce Crawley. As president of his own advertising agency and chairman of the city's Black Chamber of Commerce, Crawley developed an advertising campaign, "Talk Is Cheap, Buy From Black Businesses," to encourage Philadelphians to increase their spending with black-owned businesses. He would like to see it go from its current level of 7% to 50%. Local black newspapers and a radio station have run the ad as a community service every week since last November.

But perhaps no recent campaign has been quite as successful as the "Change Bank Day," held in Los Angeles in January and February. The effort accounted for $7 million in new deposits for three of the area's black-owned banks and a black credit union. A similar campaign was conducted in Atlanta, and netted about $300,000 in new deposits for Mutual Federal Bank, according to CEO Alphonso Whitfield Jr.

When people change banks, they usually have to be unhappy," explains Whitfield. "If some people transfer their money because of the march, then that's a plus. The greatest benefit has been raising consumer awareness of black-owned banks in the city," he adds.

Perhaps the most success was had by L.A.'s Founders National Bank (ranked No. 15 on the BE FINANCIAL 25 list). "We thought we'd raise people's consciousness about how dollars are recycled in a community where people bank with a financial institution that is a steward of those dollars in the community," explains bank president Carlton Jenkins.

The first effort raised $2 million in new deposits for the bank. Another $500,000 in CDs were placed on deposit by white-owned financial institutions in the area. The bank pulled in another $2 million and 300 new accounts with the repeat effort in February. "The Million Man March probably had a lot to do with it, but there's a different climate in the air now," adds Jenkins.

CONVENIENCE VS. COMMITMENT

L.A.'s "Change Bank Day" campaign was initiated by Recycling Black Dollars Inc. president and founder, Muhammad Nassardeen. "Only 3% of black deposits are in black-owned banks," notes Nassardeen. "But most African Americans who have checking accounts at white-owned banks can't get loans from them," he adds.

It is the same philosophy that Harlem's Florence M. Rice has been preaching for the last 30 years. "We spend our money with anyone, regardless of how that merchant treats us, except for other blacks. We don't respect our own dollar," says Rice, founder and president of the Harlem Consumer Education Council in New York.

"If I have a booth and a Korean or white guy is set up next to me, [black] people will stop and look at what I have and walk to the next table and buy the same merchandise. One of these white guys actually buys some of his merchandise from me wholesale," says Kevin Jackson of KRJ Enterprises in Sicklerville, New Jersey. Jackson is a freelance vendor who sells a variety of commodities at flea markets in the southern New Jersey-Philadelphia area. "They say my price is too high, but many times the Korean products are counterfeit," he adds. About 60% of Jackson's clientele is black, and he's grossing about $65,000 a year on his business.

Whether it's because some blacks believe the stereotype that "the white man's ice is colder" or are unwilling to pay a "black tax," i.e., higher prices, for doing business with African American businesses, "buying black" sounds better - if not easier - in theory than in practice. The bottom line gets down to a simple issue: convenience vs. commitment.

There are black business owners and activists who say African Americans should buy from other blacks, no matter what. "For the past eight years in L.A., Korea Town has had blocks and blocks of businesses that cater only to each other - it's part cultural and part language," says Nassardeen of Recycling Black Dollars. "But they've also been conditioned that even if it's higher in price, they'll pay for it to support each other. jews and Arabs think the same," he explains. "We must start focusing on the overall economic health of our communities, and not just as individuals."

In reality, Smikle points out, African American consumers are influenced by both convenience and commitment. "To create consumer consciousness about where dollars are directed, and get a person to buy based upon commitments, you must create a certain amount of convenience," says Smikle. "We can no longer `guilt-trip' companies into changing their relationship with our community any more than they can `guilt-trip' us into buying their products or services. It must be negotiated."

For many African American businesses that means employing the same marketing, advertising and customer relations strategies as major corporations. Banker Carlton Jenkins has adopted this philosophy and is trying to dispel the myths about black businesses being inferior or pricier than others. "If I can say this institution is safe and sound and has all the products of the one you have now, then there is no reason not to bank here," adds Jenkins.

SPENDING

NEAR HOME

With two careers, two cars and two children, the Gipsons are a pretty typical American family. Their 12-year-old daughter, Kimberly, attends public school near home, and Denise drops off their 18-month-old son, Quinton, at day care on the way to work each morning. By an account life is pretty routine for this African American family of four. But this is not the image of the black family most often conjured up, especially one that lives in what is now considered South Central Los Angeles. The Gipsons are, however, among the 14.8 million working African Americans carving out their piece of the American dream.

With a $160,000 household income, the couple could afford to live in several Los Angeles neighborhoods or in the outlying suburbs. Instead, they chose to be homeowners in the middle-class enclave of Leimert Park, a predominantly black neighborhood not too far from the scene of civil unrest during the '92 riots. Bordering their neighborhood is the affluent black community of Baldwin Hills and the Crenshaw shopping area.

Since the riots, the area has been designated an economic empowerment zone to entice new businesses and encourage other businesses to stay put. But perhaps the greatest boon to the neighborhood has been the addition of a movie theater complex to the Crenshaw Hills Mall. The 12 screen, 57,000-sq.-ft. multiplex is owned by Los Angeles Laker and businessman Magic Johnson. In a joint venture with Sony Pictures Entertainment/Sony Theaters, Johnson opened the theater last June, and in one swoop has helped to transform the mall and its community to economic vitality.

"We shot from 79% store occupancy to 95% since the opening," says Derrell Spann, mall general manager. "We bring in 30,000 people a week for the movie theater. People from Baldwin Hills who used to go to the movies in Marina del Ray or Beverly Hills are now coming here to the theater." He credits the theater with increasing mall foot traffic and business - to the tune of $65 million last year, not including the $30 million-plus each posted by its major department store anchors: Sears, Robinson-May Co. and Broadway (soon to be a Macy's).

Although the mall is not black-owned, it has more than 1,500 full- and part-time employees, 90% of whom are either black or a member of another minority. And, 30% of its businesses are owned by African Americans, from clothing and shoe stores to fast food restaurants and health-food franchises.

"Obviously, what we're trying to do had social objectives, but we analyzed it from a business perspective and decided that it made good sense," explains Ken Lombard, president of Magic Johnson Theaters and Johnson Development Corp., the parent company. "In the industry as a whole, there has been an overall reluctance to be in urban locations. There is a high level of discomfort because corporations don't understand the patrons, the location or how to make it work," says Lombard.

That's where Johnson, Lombard and company offered familiarity and expertise. "We and Sony felt that a minority partner was really necessary to run the component. And the community sees that minorities are involved and running the company. Other industry players have not done that," he adds.

The presence of the theaters has not only boosted community patronage, it has brought in people from outside. "We're drawing racially mixed people, including whites, Hispanics and Asians. And we're getting our share of celebrities and people coming from Orange County to go to the movies here," says Spann.

Count the Gipsons among the mall's customers. "Since the mall is within walking distance, I'll take my son in the stroller and go to the stores there. I'm there once a week, even just to browse through," says Denise. "If I can't find it there, then I'll go elsewhere," she adds.

The key to leveraging black income is African Americans moving from being passive (spending indiscriminately) or reactive (responding only to blatantly poor treatment) spenders to being proactive consumers focused on building the wealth that keeps black people and communities vibrant, healthy and thriving. That way, we can do more than merely get a racist sales manager in the housewares department reassigned to another store. We can make corporate America compete for black consumer dollars, instead of taking them for granted - or ignoring them altogether.

HOW MUCH DO WE EARN?

African American buying power has increased along with other income. While we still don't have as much money as the average American - the average American household income is $43,133, versus $29,259 for black households - the gap narrows when we're college educated and/or married. And college educated black women are doing it for themselves, edging out white, college-educated, female-headed households.

Average household income
Married couples, both college graduates
(all races):          $86,340
  Black:              $73,443
  White:              $87,126

Female-headed households, college graduates
(all races):         $43,086
  Black:             $43,486
  While:             $42,685

Source: Current Population Survey, Bureau of the Census, March 1995

BLACK BUYING POWER

African Americans consume a diversified range of products and services. But what are we spending our dollars on?

(numbers in billions)
Apparel products
and services (clothing)      $19.6
Appliances                   $ 1.1
Beverages (non-alcoholic)    $ 2.2
Cars and trucks (new)        $10.8
Consumer electronics         $ 3.2
Contributions                $ 5.9
Education                    $ 3.1
Entertainment
and leisure                  $ 1.8
Food                         $41.7
Health care                  $11.1
Housing                      $92.8
Personal care products
and services                 $ 4.3
Sports and recreational
equipment                    $  .328
Telephone services           $ 9.2
Travel and lodging           $ 4.2

Source: "The Buying Power of Black America" survey, Target Market News, Chicago, 1996