Target to Spend $2 Billion With Black-Owned Firms by 2025
(Bloomberg) -- Target Corp. will spend more than $2 billion with hundreds of Black-owned businesses by the end of 2025, making the pledge as its home city of Minneapolis is grappling with the murder trial of the former city police officer who killed George Floyd.
The cheap-chic retailer will also add products from more than 500 Black-owned companies across its aisles and help Black vendors expand their sales in big-box retail, it said in a statement Wednesday. Target currently carries more than 65 Black-owned brands, but declined to say what it currently spends with such companies.
Target’s pledge also includes spending at Black-owned companies like marketing agencies and construction firms. In terms of inventory, the commitment falls short of those made by retailers including Sephora and Macy’s Inc., who have said they will dedicate 15% of their shelf space or purchasing budget, respectively, to Black-owned businesses. Even if $2 billion went to stocking Black-owned brands alone, the plan works out to about $400 million a year through 2025, or less than 1% of the average annual amount that it spent for merchandise over the last four years.
A Target spokesman said that its commitment was broader than those of other retailers and will have a bigger economic impact because it includes investments beyond sourcing merchandise. Target also sells a wider variety of items than the retailers that have signed on to the 15 Percent Pledge, including groceries and products from sectors where Black businesses are underrepresented. This can make sourcing commitments harder to meet.
Black consumers in the U.S. have more than $1 trillion to spend annually, according to market research firm Nielsen. While earlier buy Black pushes typically faded along with consumers’ attention spans, this time it seems to have staying power, analysts have said.
The investment in Black-owned brands is Target’s latest move to advance racial equity in the wake of Floyd’s killing, which sparked nationwide protests -- and also saw widespread damage to Target stores in Minneapolis. Target doubled the number of stores featuring Black-owned products during Black History Month earlier this year, and it has also hosted Black-owned vendor fairs for the past five years.
“As a team, we’ve vowed to face pain with purpose,” Chief Executive Officer Brian Cornell said last year.
Target also established a committee last year to guide racial-equity initiatives, which include increasing Black representation and reducing turnover among its workforce.
Target’s new pledge does not include the beauty brands sold by Ulta, which is opening 100 mini-stores inside Target locations this year.
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