National Black Summit conference July 2022. With the Executive Director of ACBM Mr. Ryan Knight (extreme left), sponsor of the first-ever Rapid Labour Market Needs Assessment in Canada

This article is referenced against “The Black Unicorn … Changing the Game for Inclusivity in Retail” by McKinsey Consulting 2023 (USA) and compared with the Canadian environment.

Overview of Systemic racism in Canada

In April 2022, Dunn Pierre Barnett and Company, Canada Limited (DPBA), conducted the first-ever Black Labour Market Needs Assessment in Ontario. In conducting their research, similar experiences as those identified in the article by McKinsey Consulting were also encountered by DPBA while interviewing Black entrepreneurs during the three (3) months of the study. It was also revealed that many of the challenges Black Americans encounter in the USA paled in significance to what Black Canadian businesses encounter.

Researchers and community agitators have long believed that systemic racism in Canada is more significant than in the USA due to the size of the population (5.5%), with over 1.5 million people, compared with the USA (13.6% US Census Bureau 2022) with approximately 41.6 million (2020) people. Furthermore, there are many richer Black Americans than they are Black Canadians and have a more unified voice owing to the sheer numbers. In addition, there are over 40 lending institutions in the USA which provide funding for Black Americans, compared with only about four (4) providing support for Black businesses in Canada. This gives the perception that financial institutions in Canada in general, lack the will and or the interest to support Black businesses. Further research is needed to determine the reasons behind this perception.

In Canada, Black people have a saying which goes: “Canadian Banks do not lend money to Black businesses.” The situation is even more complicated for Black people in Canada than elsewhere. The analysis of Labour Market Needs Assessment data reveals that it is more difficult for a Black business to succeed in Canada compared with similar businesses in predominantly Black countries. It can be argued that this is attributed to decades of systematic racism and lack of funding for Black Canadian businesses. The lack of funding for Black Businesses in Canada is so severe that the Government of Canada has had to create funding opportunities specifically for Black people.

There is also the global belief that a higher level of education and home ownership are guaranteed ways of getting out of poverty; however, in Canada, this is not necessarily the case for Black people. A recent study conducted by Statistics Canada (2020) , for example, reveals that despite Black women having higher levels of education than the general population in Canada (Fig.1) they remain underemployed and continue to face challenges in getting promoted in their jobs, to the extent where several incidences have been reported of individuals (women in particular) returning to their country of origin, or seeking jobs in other countries.

Figure 1. Percentage of Individuals with Postsecondary Education (Statistics Canada) (https://www150.statcan.gc.ca/n1/pub/89-657-x/89-657-x2020002-eng.htm)

Another major obstacle Black people face in Canada due to systemic racism is that of acquisition of housing and mortgages. Data from Statistical Canada and the Canada Mortgage and Housing Corporation revealed that approximately half of Canadians (54.55% ) have a mortgage (https://www150.statcan.gc.ca/n1/daily-quotidien/220921/dq220921b-eng.htm). However, data from the recent Rapid Labour Market Needs Assessment Survey revealed that only 7.8% of Black Canadian couples have a mortgage, (i.e., a Black husband and Black wife or a Black couple). However, when the data is cross-tabulated using data with couples with one Black and one white spouse, home and mortgage ownership collectively among Black households increased from 7.8% to 31.2%. This data seems to suggest that there is a strong correlation between home ownership and race among Black Canadians (https://www.alchemer.com/resources/blog/cross-tabulation/#:~:text=Cross%20tabulation%20is%20used%20to,correlation%20between%20the%20different%20variables).

These are a few other examples of the data derived from conducting Labour Market Needs Assessments. However, such a detailed assessment has never been conducted for Black people in Canada. Labour Market Assessment surveys are conducted worldwide, particularly in developing countries, to determine the strategic directions for training and workforce development. These surveys are often sponsored by multinational corporations such as the World Bank owing to the high costs involved. Hence, Canada urgently needs to conduct a Labour Market Needs Assessment within the Black community.

The ACBN Labour Market Needs Assessment Survey

In the survey conducted for the African Canadian Business Network (ACBN), DPBA interviewed 1583 Black businesses which had a participation rate of 83%. This was the largest study ever conducted on Black businesses anywhere in Canada. The full report is expected to be released at the end of March 2023 (see Figure 2 for summary) https://acbncanada.com/first-ever-labour-market-needs-assessment-for-black-businesses-in-canada-has-been-launched/

Fig 2: Summary Statistics from the ACBN Labour market Needs Assessment 2022.

Black Brands and Retail Business

As it pertains to retail shopping, Black brands and businesses in Canada are often subject to racism and discrimination; from customers not wanting to buy from Black-owned businesses, to store owners refusing to carry and stock products from Black-owned brands. This is the major reason why it is believed that racism is a pervasive problem in the retail industry. It has been known for many years that white-owned brands have long dominated the retail industry. This has meant that Black-owned businesses have been excluded from many opportunities afforded to their white counterparts, such as access to capital. In addition, Black brands are often overlooked and underserved, and Black Canadian retailers struggle to find the same level of distribution and visibility as white-owned brands.

Why Black Business fail in Canada

One of the questions emerging from the research on the Black retail industry was why so many Black businesses fail in Canada.

All businesses need financing to expand. Black businesses are rejected or denied financing at eight times the rate of regular businesses. This is also twice the average of Black businesses in the USA. In addition, most Black businesses are too small to compete with white businesses (Fig.3).

Fig 3: Number of Black businesses surveyed in the Study (2022)

According to a recent study, there are many reasons why banks do not finance Black businesses. Apart from racism and lower credit scores (640), most Black business owners do not separate their personal finance from their business finances. They also lack proper record-keeping procedures and are non-compliant in filing income tax documentation to the Government. Black businesses also use more cash transactions than other businesses, conduct little to no research, and declare lower salaries than others. Most Black businesses employ fewer or less qualified staff than regular businesses in Canada. However, the most important and overwhelming reason Black businesses fail, is that most white and non-Black business owners (approximately 70% of the population) do not conduct business with Black people. They are mostly shut out of many of the country’s important financial, economic and industrial activities in Canada.

DPBA conducted another recent poll of 1,439 businesses in Ontario in July 2022 for the ACBN (ACBN Rapid Black Labour Market Needs Assessment). In that poll, Non-Black businesses were asked to identify three (3) Black suppliers. On analysing the data, 76% of the respondents could not identify one Black supplier (Fig.4).

Figure 4: Number of non-Black businesses in Ontario, indicating that they have had black suppliers in the past year.

The real question is: Why is it that most Canadian businesses do not engage with Black suppliers? The answer makes a strong case for the Government to implement policies to protect Black businesses and members of the Black ethnic group in Canada.

Racism and retailing in Canada

Racism in retail is often subtle and hard to detect, but it is still present. Black-owned businesses may not receive the same advertising or promotion as their white counterparts. Store owners may be more likely to stock white-owned brands over Black-owned ones. Customers may be more likely to purchase from white-owned businesses than Black-owned ones. Racism faced by Black-owned Canadian brands is not only hurtful but is also costly. Studies have shown that Black-owned businesses often have to pay more for advertising and promotion than their white counterparts and are less likely to receive the same customer service. As a result, many Black-owned brands have difficulty competing in the retail industry.

The Supply of Black Brands is lagging due to Systemic Challenges.

According to McKinsey, despite rising demand and a clear consumer call for change, Black brands encounter many challenges to scaling and meeting the demand. While Black Americans and Black Canadians are more likely to start businesses than any other ethnic group, they are up against tougher challenges from the get-go, with capital of only about $35,000, on average, compared with $107,000 for white entrepreneurs. Only 1% percent of venture-capital funding goes to Black founders. Many note that they lack the social capital and networks needed to tap flexible capital to invest in technology, Research and Development and innovation. Convincing partners and investors that products by Black-owned brands are for everyone is a battle that Black entrepreneurs face daily.

Too often, these and other barriers lead to shortfalls: just 4% of Black-owned businesses are still in operation after three and a half years, compared with an average of 55.5% for all businesses (Fig. 5).

Fig. 5 Barriers faced by Black-owned brands

Leading Retailers are starting to Act Post Covid-19

COVID-19 has provided a once-in-a-generation opening to reimagine how retail meets evolving consumer preferences, such as representation and inclusivity in retail. Margin pressures are rising in the retail industry, and while the pandemic has raised the stakes, it has also required retail brands to revisit strategies, marketing approaches, product and service portfolios, and more. Without the ability to lean on business as usual, retail leaders are taking steps to experiment and invest for the long term. To close the gap between supply and demand for Black-owned brands, for example, some are moving upstream to find brands instead of waiting for brands to come to them.

The popular company Amazon launched its Black Business Accelerator program in June 2021, committing to provide $150 million along with mentorship, marketing, and promotional support to Black-owned third-party sellers. The Federation of African Canadian Economics, more commonly known as FACE, has also received funding from the Federal Government in Canada and has distributed these funds to Black businesses, including retailers. https://ottawacitizen.com/news/feds-unveil-400-million-investment-in-black-entrepreneurs-and-businesses

Fortunately, steps are being taken to combat the racism faced by Black-owned businesses. Many retailers are actively working to increase their support of Black-owned brands by stocking their products and promoting them in their stores. The Government of Canada, the Business Development Bank, FACE (https://facecoalition.com/), the Black Opportunity Funding scheme and other Black-supported entities are also coming together to support Black-owned businesses and encouraging others to do the same.

It is important to remember that racism in the retail industry is still a problem and has a real impact on Black-owned businesses. It is hoped that by supporting Black-owned brands, a more equitable and inclusive retail industry will be created and sustained.

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Credits

McKinsey

Data was used from the McKinsey report:

Jocina Becker and Jihye Gyde are consultants in McKinsey’s Washington, DC, office; Pamela Brown is a partner in the New Jersey office, where Tyler Harris is an associate partner; Tiffany Burns is a partner in the Atlanta office.

Statistics Canada

https://www.statcan.gc.ca/en/start

About Dr. Pierre

Dr. Cleophas Justine Pierre is an ILO Trained Labour Market and Migration Consultant in Canada and the Caribbean Region. His primary area of expertise is in Migration, Labour Market Research (human trafficking, migrant smuggling, labour rights, employment, unemployment, underemployment, data analytics, labour market needs assessments, and Labour Market Information Systems). Between 2016 and 2023, Dr. Pierre as a leading researcher through DPBA, conducted 14 comprehensive studies involving Labour Market Needs Assessments, Labour, Migration and Human Trafficking in the Caribbean Region and Canada. (https://dpbglobal.com/). He can be reached at cjustinepierre@gmail.com or office: 4169154277