Small businesses, and especially those owned by people of color, have faced a number of challenges since the onset of the pandemic and its resulting impact on store closings, supply chain disruptions and shifting consumer demand.
And with the impact of inflation, these challenges are not letting up.
The latest US inflation rate reported by the Bureau of Labor Statistics in June was 9.1 percent, higher than it has been since the early 1980s.
A Bank of America survey in March found that 88 percent of small business owners said inflation affected their business, 68 percent have raised prices and 34 percent have had to reassess cash flow and expenses.
And just as communities of color tend to feel the effects of inflation more strongly, businesses owned by people of color who may have less access to capital to cover some of the rising costs, as has historically been the case, may also be hit harder.
Here, WWD hears from five fashion and beauty brands owned by people of color about how inflation affects their businesses.
Cuyana, a womenswear and accessories brand specializing in sustainable handbags, has had to raise prices due to inflation, but company co-founder and CEO Karla Gallardo said customers have remained supportive despite the increases.
“Like most businesses, Cuyana is not immune to the impact of inflation. The current climate has faced challenges such as rising costs of materials, production and transportation, which has ultimately led to an increase in the price of our products. At the beginning of the pandemic, when these fluctuations were very unpredictable, we decided to take on the first increases without affecting our suppliers and customers, said Gallardo.
“With every decision we try to take the long view, recognizing that our business works in symbiosis with people at both ends of our supply chain. But as it became clearer that rising prices were here to stay, we realized that “It was unsustainable for our business to maintain this position. We shared this position openly and honestly with our customers. They responded with an outpouring of support, realizing we would only take this step if absolutely necessary,” she said.
Folklore Group, a company that creates a global ecosystem for consumers to explore, connect and shop from African and diaspora-owned designer brands, echoes a different sentiment about inflation.
“There’s an old saying that when white people get a cold, black people get pneumonia. I think that perfectly defines what is happening to black businesses right now as a result of inflation. It’s affecting the world, but it’s especially hard on black people and black businesses who have already historically been denied access to economic opportunity, says Amira Rasool, founder and CEO of The Folklore Group.
“As a business that relies on the services of other businesses, we have seen an increase in prices from some of our service providers that we did not expect. We are also a business that serves other small Black-owned businesses that face the same inflationary issues when it comes to shipping, fabric purchasing, and other areas of production. Our success depends on us being able to help these brands become more successful, and with inflation, that has become a little more challenging,” she said.
Brown girl Jane
Malaika Jones, CEO and founder of skin care, body care and wellness brand Brown Girl Jane says inflation caused an increase in the brand’s production costs and materials.
“Effective mood-boosting solutions, especially in turbulent times, remain a priority for our customers who have made self-care a ‘must-have.'” We are grateful that sales of our fragrance-centric wellness collection have not been adversely affected so far, and we that will continue as women prioritize ‘feel-good’ supplements with immediate effect,” Jones said.
“However, we have certainly experienced increased costs for raw materials, shipping and components due to inflation. We have made the choice to absorb these costs rather than pass them on to our buyers and were able to do so because of a healthy mix of direct-to-consumer and wholesale distribution, she said.
Hanahana Beauty is a pure skincare and wellness brand dedicated to uplifting women of color who have faced added pressure due to the economic situation in the country.
– We have seen the direct effects of inflation when it comes to purchasing packaging and ingredients, especially when it comes to shipping prices. For us as a brand, our main goal at the moment is how do we scale sustainably? So we are very diligent about how we spend our dollars…and what the outcome is,” said Abena Boamah-Acheampong, founder and CEO of Hanahana Beauty.
“But at the same time, we know our customers are affected, so we want to continue to educate our community about the effects inflation has on Hanahana Beauty,” she said.
Monti Saunders, the founder of luxury swimwear and womenswear brand Riot Swim, along with members of the brand’s team, say that as the business continues to experience changes due to inflation, they have learned to be more adaptable.
“In today’s climate of inflation, not only has it taken a toll on POC businesses, but all small business owners are witnessing the impact of inflation. Small businesses are thinking outside the box and seeking different opportunities to expand further. While facing difficult challenges such as has made entrepreneurs more adaptable during this time, there must now be a shift in focus to operational and strategic planning that can directly impact customers, employees and company performance,” they said in a joint statement to WWD.
“Customer purchasing needs have changed with the increase in inflation, and more people are focused on buying essentials versus clothing, shoes and beauty products. Inflation has also caused some companies to raise prices to maintain business needs due to supply chain factors. POC Business Owners are constantly looking for alternative methods to further secure their business needs, and we hope to continue to set long-term goals even with the increase in interest rates and other numerous factors that inflation has affected,” they said.