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Why Black Beauty Supply Stores Usually Don’t Have Black Owners | The Business of Beauty, BoF Professional

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NEW YORK, United States – When Wanda Hunter opened Genesis Beauty Supply, a multi-brand retailer an hour outside of Chicago specializing in black hair care and cosmetics, she knew she was facing some challenges. Even getting enough product to sell would be difficult.

Hunter would meet a distributor’s requirements to secure a shipment of hair care products, wigs, or cosmetics to her Montgomery, Illinois store, but only to provide a different set of financial documents or licenses. As a new entrepreneur who prepaid cash (because no bank would initially give her a credit limit), she became suspicious.

“Many of them outlined the criteria in a less than encouraging way,” she said. “Almost as if you were saying, ‘These are the criteria, we don’t expect you to be able to meet everything.'”

That was 18 months ago. Today Hunter’s shop is thriving. Located in a strip mall in the middle of a diverse neighborhood, she said new customers have come in even since the pandemic started.

Genesis Beauty Supply is one of thousands of independent Black Beauty Supply stores. These stores continued to flourish, even though Sephora and Ulta Beauty have expanded their footprint across the country, attracting mostly black women looking for a wider range of hair and hair care products (the “cash cow” category for beauty shops) than what could be found in the “ethnic” aisle at other retailers.

But as the black owner of a successful beauty salon, Hunter’s story is still relatively unusual. Of the at least 9,000 stores specializing in black hair care and cosmetics in the U.S., 3,000 are black owned and the majority are operated by people of Korean descent, according to a trading group, the Black Owned Beauty Supply Association (BOBSA).

The reasons for the lack of black owners go back generations, from insufficient access to credit to overt discrimination. It means that black people are excluded from much of the profits of a market that generates $ 1.75 billion a year in sales of black hair care products alone, according to data from Mintel.

Things are starting to change: In 2004, according to BOBSA, there were 15 Korean stores for every store with a black owner. However, barriers to entry for black entrepreneurs remain high. The recent civil rights protests bring new research into the way black people are treated at every level of the beauty industry. Some say that the increased attention, plus a generational shift that creates openings for new entrepreneurs in this space, could mark a turning point.

A long history

Korean immigrants gained a foothold in the beauty industry in the 1960s, said Travis Johng, CEO and publisher of CosmoBiz, a magazine for beauty product owners.

“Korean people walked door to door in African American communities selling wigs in every person’s living room,” he said. (Korea was a major producer of artificial hair at the time. Although much of the production has shifted to China and Indonesia, Koreans are often still involved in importing wigs to the US.)

At the time, black beauty product stores often had Jewish owners and were mainly sold to licensed beauticians rather than private individuals. Many of those stores were closed during the recession of the early 1980s. In their wake, Koreans opened stores that sold not only wigs, but hair care and beauty products as well as general merchandise. They also invited all kinds of consumers to shop, not just beauticians.

“Korean people have liberated the beauty industry for the general public,” said Johng.

The difference between who owns Black Beauty Supply stores and who shops there has been criticized by some in the Black Community for decades. Those voices grew louder during the protests that followed the police murder of George Floyd, as activists have highlighted discrimination and the lack of opportunity for black people.

“It’s hard to hear that the black hair industry is potentially worth billions and therefore to know that … black people are lagging behind when it comes to generating income and generating wealth,” said Antonia Opiah, the co-founder from Un-ruly .com, an online community that celebrates black hair.

Barriers to Entry

Because there were relatively few black owners until recently, new entrepreneurs are at a disadvantage to better-established Korean competitors who can take advantage of community networks going back decades, said Terry Kim, the owner of Chicago’s Beauty Up Wholesale. Kim’s company distributes hair, hair care products, and general merchandise to more than 1,000 Midwestern stores approximately equally divided between Korean and non-Korean owners. He has been in the industry for over 30 years.

For example, Korean community banks routinely provide loans and guidance to entrepreneurs who may be faced with a language or culture barrier at a national bank. Black owners often face hurdles in securing financing. (One United, which says it is the largest black-owned bank in the country, has $ 650 million in assets, while Bank of Hope, which claims status as the largest Korean U.S. bank in the U.S., has $ 16 billion. ) they rely more on personal savings.

“I didn’t get credit when I started,” said Hunter. “You pay when you make your purchases. Now that I have my shop for 18 months I can get it [credit], no problem.”

She said her business background in working with franchises helped her navigate those early hurdles.

Korean stores can also harness their power to bulk order, keep prices low, and make it easier to defend their territory from newcomers. Many Korean owners also worked in family-owned stores before venturing out to gain valuable experience and connections.

Kim said the lack of black ownership is a “dilemma” within the industry. He teams up with Dennis McKinley, a black businessman in Atlanta (known to fans of “The Real Housewives of Atlanta” as cast member Porsha Williams’s fiancé) in an effort to educate black entrepreneurs and help them secure accounts. Hunter said that when she started, Korean owners were happy to advise her.

Generational change

Opiah, from Un-ruly.com, said that a change will start with the supply chain and where the hair is produced. If moved from Asia to Africa or even the US, it would even reach a higher playing field, she said.

“The more we have control over the supply chain, the better,” she said. “It takes time and many people work together.”

BOBSA founder Sam Ennon sees a great opportunity as the Korean owners who opened stores in the 1980s are reaching retirement age. Often their children are not interested in taking over the business, creating an opening for black entrepreneurs.

“We need to be able to take over those stores,” he said.

Once black owners have made their way into the business, they can start building the kind of networks and institutions that have served Korean owners so well. Hunter said that after doing business for almost two years, the tables have turned and sellers are now contacting her to open accounts.

“I think if we can invest more dollars in owning our own businesses and have those dollars circulating through our own community, we can see and experience the wealth others are experiencing,” Hunter said.

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