What the 15% Pledge for Black-owned business will look like in action

Sephora, Rent the Runway, and West Elm have signed on to Aurora James’ 15% Pledge, but the industry has significant work to do if it wants to support Black-owned brands for the long term.

In early June, as millions of people around the world took to the streets to protest police brutality and show their support of the Black Lives Matter movement, retailers took to Instagram to post statements of solidarity and contrition. 

Brother Vellies founder Aurora James was looking for something more, however: She asked the industry to commit to allocating at least 15% of their shelf space to Black-owned brands. According to her calculations, if just four companies — Sephora, Whole Foods, Shopbop and Target — signed on to the 15% Pledge, it would put $14.5 billion back into the Black community.

Six weeks later, Sephora is still the only one of them to take the pledge. (“We are (not so) patiently waiting on the other three,” said James.) But other companies have taken up the mantle: Rent the Runway and West Elm both signed on, as well as smaller multi-brand retailers like Credo Beauty, Violet Grey and Loho Bride. MatchesFashion has promised to publish an annual diversity report of its brand partners, with the first set to be released by the end of August, and Nordstrom has assured people on social media that it, “can and will do better” and will be “sharing more details on next steps with our customers soon.”

Behind these statements, though, is the stark reality of retailers’ current numbers: Only 21 out of the 2,365 brands Nordstrom carries is Black-owned, per the 15% Pledge’s calculations. For Sephora, the ratio is seven out of 290. Montreal-based Ssense stocks 17 Black-owned brands out of 426 total, while Hudson’s Bay Company lists only nine Black-owned brands in 1,832 on its website, according to The Toronto Star

“Unfortunately, I don’t think that supplier diversity has been a metric [most retailers] have considered,” said James. “That’s why we have to advocate for Black-owned brands now.”

Macy’s, one of the few retailers to publish supplier diversity goals and impact reports online, aims to surpass 5% spend on underrepresented suppliers by 2021 — though that figure encompasses “diverse, women, veteran and LGBTQ -owned enterprises,” and includes non-retail suppliers such as IT firms and consultants. 

If retailers want to provide customers a mix of vendors more representative of the racial makeup of the U.S. population, it will mean bringing, at minimum, hundreds of new brands to shelves. 

That can’t — and shouldn’t — happen overnight, said DeAnna McIntosh, a global retail and e-commerce consultant and founder of Diversify Retail. Typically, negotiations between a retailer and a brand may take six months to a year, or longer, before a deal is closed, she said. 

Textured hair brand Adwoa Beauty, which launched with Sephora in May, first began talks with the retailer in February 2019, according to a Beauty Independent interview with founder Julian Addo. The Lip Bar, a Black-owned cosmetics line, landed at Target in 2018, a deal two years in the making, founder Melissa Butler said when she announced the partnership.

With retailers under pressure from customers to prove their allyship, she’s concerned some may cut corners. “When I first heard about the 15% Pledge, I heard about it because Black brands were reaching out to me to ask me what I thought about terms that a large retailer had sent them via email. This retailer was saying, ‘Please let me know if you agree to these terms, so I can announce your participation tomorrow,’” McIntosh said.

While this kind of arrangement may have given the retailer an opportunity for a PR boost, it would have stuck brands with 60-day payment terms and marketing fees that, while standard for larger companies, can quickly put small brands out of business, said McIntosh. 

Few have the cash available to front manufacturing costs to meet the scale required by major retailers, she said: “A purchase order is nice, but if you can’t come up with the funding [for the production], it gets canceled and you lose a lot of money… There are just so many steps and layers to doing wholesale for the first time, and you can’t go from zero to Sephora in a day.”

One of the systemic problems that the 15% Pledge seeks to address is the lack of funding available to Black entrepreneurs. According to a Brookings Institution analysis of 2018 data from the Small Business Credit Survey, large banks approve only 29% of loans sought by Black small business owners, compared with about 60% of loans sought by white small business owners. Black founders also receive less than 1% of venture capital funding — a number roughly equivalent to the share of Black decision-makers at VC firms in 2018, according to reports by Silicon Valley Bank and The Information.

“Walking into a bank with a purchase order from one of these retailers lends a huge amount of credibility,” said James. 

Uoma Beauty founder and CEO Sharon Chuter said in June that she managed to raise $5.5 million before launching last year partly because, “I had already had POs [purchase orders] with 203 Ulta stores and Selfridges.”

On the 15% Pledge’s website, it explains that retailers should think of the pledge as a long-term commitment, which is why, in part, it does not prescribe deadlines for those that sign on. 

McIntosh suggests that one way retailers can diversify their merchandise responsibly is to invest in incubator programs that support Black-owned brands: Macy’s, for instance, has The Workshop at Macy’s, a vendor development program founded in 2011 “to foster growth in the next generation of diverse-owned merchandise suppliers.” Sephora has Accelerate, a startup incubator for female-led beauty businesses. And Net-a-Porter launched The Vanguard in 2019, providing four designers per season mentorship and support.

None of these programs has been explicitly geared toward Black founders, however: Christopher John Rogers was the first Black designer to land a place in The Vanguard this spring, while nine of the 50 brands in Sephora Accelerate 2020 are Black-owned — though the beauty retailer has promised to shift the program’s focus for 2021 to support women entrepreneurs of color.

For the majority of retailers, the change will likely have to start at the trade show level, where buyers from all around the world travel each season to place orders with new brands, said McIntosh. Along with Instagram, it’s also a key source of discovery. Of course, Instagram is also a key source of discovery. During the Covid-19 pandemic, online wholesale platforms such as NuOrder and Joor have also become more relevant than ever — though so far it has been their smaller peers that have stepped up to support the aims of the 15% Pledge. Faire, a wholesale platform for small business owners and independent brands, created a tab for retailers to order from 88 Black-owned businesses, while Bulletin, a curated online marketplace, devoted its Summer Showcase to connecting retailers with emerging Black-owned brands like Golde and O’Dolly Dearest. 

Involving trade shows and wholesale platforms will be essential, said McIntosh, because “that’s how the majority of buyers buy. So if we’re not in those places, then you can kind of see why and how we’ve gotten to this point.” 

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