Activists Pushed Retailers to Back Black-Owned Brands. Here’s How Nordstrom Responded. | BoF Professional, News & Analysis

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Beauty entrepreneur Sharon Chuter was approached by what felt like “every retailer on the planet” last year after the Black Lives Matter movement exposed how few Black-owned brands are carried by national chains.

After many companies published messages of solidarity with the anti-racism movement, Chuter started the hashtag #PullUporShutUp, urging brands to disclose how many Black leaders they employ. That, along with designer Aurora James’ 15 Percent Pledge urging retailers to spend 15 percent of their buying budgets on Black-owned businesses and other pressure campaigns by activists and consumer groups, sent retailers scrambling to add more Black-owned brands to their shelves and websites.

But like many Black founders, Chuter found the offers that rolled in underwhelming. She had launched Uoma at Ulta Beauty and Selfridges in 2019 and wanted any new wholesale partners to take her brand as seriously as Revlon or L’Oréal. Instead, many retailers proposed short-term, high-margin commitments to sell her products, or wanted to limit Uoma’s distribution to stores in low-income neighbourhoods.

Nordstrom was different, she said. The Seattle-based department store chain made it clear her business meant more to its business than filling a quota.

“They came to the table really serious,” Chuter said.

She signed a three-year contract with Nordstrom that begins on Monday, when Uoma Beauty will start selling products like its Say What?! foundation and Double Take contour stick on the retailer’s website. In February, Uoma’s full range will arrive at Nordstrom’s New York flagship store, with marketing support that includes virtual events featuring Chuter and dedicated window space. And it will expand to 30 other stores over the course of the year.

Following Through on Goals

In August, after the #PullUporShutUp and 15 Percent Pledge campaigns garnered widespread attention, Nordstrom made public a five-year plan to become a more diverse and inclusive company. It said it would hire more diverse managers, aim to sell $500 million in products from Black and Latino-backed brands by 2025 and give more to anti-racist organisations, among other plans.

Inside Nordstrom, the initiatives were seen as an investment for the department store’s future. Survey after survey showed customers wanted to shop from businesses that aligned with their values. Stocking more Black and Latino-owned brands would potentially attract more minority shoppers.

A new “inclusive beauty” category was installed in stores and online in October and will carry an additional 12 brands with Black founders debuting in February and March, including celebrity makeup artist AJ Crimson’s namesake line and haircare line Sienna Naturals, which recently brought on actress Issa Rae as a co-founder. Uoma Beauty will be a part of this initiative, too. Nordstrom is also expanding its private-label intimates collection starting in March to cater to a wider range of skin tones.

What’s different now is the initiatives and the steps we’re taking are more fully integrated across what we’re doing.

“The customer base and society at large cares more about it now than ever, which means we care more about it, too,” said Pete Nordstrom, the co-president of his family business. “What’s different now is the initiatives and the steps we’re taking are more fully integrated across what we’re doing.”

These changes come during a difficult time for the retailer. The pandemic hit Nordstrom hard, with sales plunging in the spring and never fully recovering. During the crucial holiday season, net sales were down 22 percent year-over-year.

The department store closed 19 stores and reportedly laid off over 6,000 employees last year. The pandemic isn’t over, and it is still unclear when fashion and beauty spending will recover.

A Long Way to Go

Nordstrom aims to increase the number of Black and Latino managers in the company by 50 percent by 2025 through internships, partnerships with the National Urban League and other programmes. As of 2019, 34 percent of its front-line managers, 12 percent of its mid-level managers and six percent of executives fell into this category.

On the product side, Nordstrom aims to generate $500 million in retail sales from brands owned, operated or designed by Black and Latino people over the five year period ending in 2025. (For comparison, Nordstrom’s annual revenue in 2019 was more than $15 billion.) Nordstrom did not disclose its current sales of these types of brands, but chief merchandising officer Teri Bariquit said they represented less than 20 percent of the goal last year.

Reaching the $500 million mark will require increasing sales in the category by 25 to 50 percent each year.

The 15 Percent Pledge

Nordstrom has been in conversation with James and the 15 Percent Pledge team since last summer but has yet to sign on. Pete Nordstrom said he is “very confident” that the company will join the pledge by the end of April, however, joining competitors such as Macy’s and Sephora, which signed on last year.

“I do believe that Nordstrom wants to do the work in the right way,” James said. Nordstrom was an early supporter of James’ label Brother Vellies, placing orders that allowed the designer to fund production.

Meeting the bar James’ organisation has set would require a much bigger commitment from Nordstrom. Less than one percent of the 2,365 brands available on Nordstrom’s site in June were Black-owned, according to an audit by the 15 Percent Pledge.

And while James’ organisation only counts brands that are at least 51 percent Black-owned toward its 15 percent goal, Nordstrom is casting a wider net. Its $500 million target includes labels with Black and/or Latino designers or founders and operators.

“Some retailers are quicker to hop on and some retailers take a bit longer,” she said. “I think that everyone has seen in the past seven, eight months that retailers are feeling an increased pressure to stock Black-owned brands — that wasn’t a conversation before we launched the pledge.”

Getting to $500 Million

The retailer has picked up some fashion and accessories brands via the traditional wholesale model, like Uoma Beauty, while others will enter the store through pop-ups starting during Black History Month.

Some of those brands could be carried long-term if consumers respond to next month’s collaborations.

At the end of the day, the customer has to vote for the product.

“At the end of the day, the customer has to vote for the product,” Bariquit said, describing pop-ups as “an opportunity for the brand to kind of have a premiere, try things out.”

“Black_Space,” for example, will run from February through April with new men’s and womenswear drops online and in select stores. New products will be added every two weeks from mostly designer labels that Nordstrom has never carried before, including Wales Bonner, Bianca Saunders, Nicholas Daley and Armando Cabral.

Nordstrom’s New York flagship, which opened shortly before the pandemic reached the US, will also host a pop-up in February and March featuring Black-owned brands, many of which are already carried by the department store. Participants include beauty brands Briogeo, sustainable denim label Oak & Acorn – Only for the Rebelles and footwear brand Jessica Rich.

On a more permanent basis, Nordstrom has partnered with Goodee, the e-commerce multi-brand platform for ethically-minded consumers founded by Byron and Dexter Peart in 2019. Its products are focused on the homeware category.

Scaling Brands

Nordstrom is looking for new brands that can handle the increased scale and more complex supply chain, logistics and marketing that come with selling via a nationwide retailer, Bariquit said.

Many Black-owned brands suffer from a lack of funding, which makes it harder to grow quickly. Black and Latino founders received about 2.4 percent of venture capital funding in the last five years, according to Crunchbase. And Black founders are twice as likely to be rejected from banks for loans as white founders, according to the US Federal Reserve.

“Rather than sign up a bunch of brands and then say … ‘sink or swim’ … we really want to be able to provide support,” Bariquit said.

Reaching New Customers

Another challenge is navigating how to market and present the new brands to customers, specifically minority customers who have felt alienated by retailers in the past. Nordstrom connected with consumer research and consulting firm Fayetteville Road in 2019 to research the needs and preferences of women of colour, and contribute to the launch of the retailer’s new “inclusive beauty” category.

Black consumers spend nine times more on hair products than other groups, according to Nielsen, which also reports that Black consumers are more than three times as likely to post about brands they’ve bought on social media.

“It’s less about ethnicity being at the forefront of the narrative,” said Brittany Hicks, who co-founded Fayetteville Road with Jessica Couch in 2018 after working in tech and consulting. “The brands that are grassroots and growing and emerging in this space, yes, they’re Black founded. But what they’ve done is they’ve really addressed the issue of product efficacy for people who have been ignored in the market.”

You have to be in touch with the culture for it to be organic.

Brand imagery and website copy language can turn them away by not featuring their skin tones or by not addressing their specific concerns, like skin hyperpigmentation or uneven curl patterns.

“You have to be in touch with the culture for it to be organic,” said co-founder Couch.

Keeping on Track

Diversity experts agree that organisations need tangible incentives and accountability in order to meet targets, which can come in the form of bonuses for top executives when workforces reach a certain diversity target.

While Nordstrom has not implemented specific incentives, Bariquit said she will be reporting on progress to the $500 million goal quarterly to the board of directors. And the company will release annual reports on its employee demographics.

Pete Nordstrom said the company’s public status will be another way to keep it on track.

“Increasingly, investors have an expectation around companies they want to invest in … You can’t just pay lip service to it, you get measured about it and there’s context because others are doing it as well,” he said. “The diversity agenda is our business agenda as well.”

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