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NEW YORK, United States — When Wanda Hunter opened Genesis Beauty Supply, a multi-brand retailer located an hour outside of Chicago that specialises in Black haircare and cosmetics, she knew she was in for some challenges. Even securing enough product to sell would be difficult.

Hunter would meet a distributor’s requirements to secure a shipment of haircare products, wigs or cosmetics to her Montgomery, Ill. shop, only to be asked for another set of financial documents or licenses. As a new business owner paying cash upfront, she was met with suspicion.

“Many of them outlined the criteria in a less than encouraging way,” she said. “Almost as if to say, ‘Here’s the criteria, we’re expecting that you won't be able to meet it all.’”

That was 18 months ago. Today, Hunter’s store is thriving. Located in a strip mall in the middle of a diverse neighbourhood, she said new customers have been coming in even since the pandemic began.

Genesis Beauty Supply is one of thousands of independently owned Black beauty supply stores. These shops have continued to thrive even as Sephora and Ulta Beauty have expanded their footprint nationwide, attracting primarily Black women customers who are looking for a wider range of hair and haircare products (the "cash cow" category for beauty supply stores) than what would be found in the "ethnic" aisle at other retailers.

But as the Black owner of a successful beauty supply store, Hunter’s story is still relatively uncommon. Of at least 9,000 shops specialising in Black haircare and cosmetics in the US, 3,000 are Black-owned, and most of the remainder are operated by people of Korean descent, according to the Black Owned Beauty Supply Association (BOBSA), a trade group.

The reasons for the lack of Black owners goes back generations, from inadequate access to credit to open discrimination. It’s meant that Black people have been shut out of much of the profits from a market that generates $1.75 billion a year in sales of Black haircare products alone, according to data from Mintel.

Things are starting to change: in 2004, there were 15 Korean-owned stores for every shop with a Black owner, according to BOBSA. But the barriers to entry for Black entrepreneurs remain high. The recent civil rights protests are bringing new scrutiny on how Black people are treated at every level of the beauty industry. Some say the increased attention, plus a generational change that is creating openings for new entrepreneurs in this space, could mark a turning point.

A Long History

Korean immigrants got a foothold in the beauty industry in the 1960s, said Travis Johng, CEO and Publisher of CosmoBiz, a trade magazine for beauty supply store owners.

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

At the time, Black beauty supply stores often had Jewish owners, and sold primarily to licensed cosmetologists rather than individuals. Many of those shops closed during the recessions of the early 1980s. In their wake, Koreans opened stores selling not just wigs, but also haircare and beauty products, as well as general merchandise. They also invited consumers of all types to shop, not just practising cosmetologists.

“Korean people actually liberated the beauty supply industry to the general public,” Johng said.

The disparity between who owns Black beauty supply stores and who shops in them has drawn criticism from some in the Black community for decades. Those voices have grown louder amid the protests that followed the police killing of George Floyd, as activists have highlighted discrimination and the lack of opportunities for Black people.

“It is hard to hear that the Black hair industry is worth potentially billions and then also know that... Black people are behind when it comes to generating income and generating wealth,” said Antonia Opiah, the co-founder of 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 tap community networks that go back decades, said Terry Kim, the owner of Beauty Up Wholesale in Chicago. Kim’s company distributes hair, haircare products and general merchandise to over 1,000 stores across the Midwest, split roughly equally 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 might face a language or cultural barrier at a national bank. Black owners often face hurdles securing financing. (One United, which says it's the largest Black-owned bank in the country, has $650 million in assets, while Bank of Hope, which claims status as the largest Korean American-owned bank in the US, has $16 billion.) Therefore, they are more likely to rely on personal savings instead.

“When I started, I did not get a line of credit,” Hunter said. “It was you pay as you make your purchases. Now that I’ve had my store for 18 months, I can get [credit], no problem.”

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

Korean-owned stores can also leverage their strength in numbers to make bulk orders, keeping prices down and making it easier to defend their territory from new entrants. Many Korean owners also worked at stores operated by family members before venturing out on their own, gaining valuable experience and connections.

Kim said the lack of Black ownership is a “dilemma” within the industry. He has partnered with Dennis McKinley, a Black businessman in Atlanta (he’s known to fans of "The Real Housewives of Atlanta" as cast member Porsha Williams’ fiancé) in an effort to educate Black entrepreneurs and help them secure accounts. Hunter said when she was starting out, Korean owners were happy to offer her advice.

Generational Change

Opiah, of Un-ruly.com, said a change will start with the supply chain and where the hair is being manufactured. Moving it away from Asia to Africa or even the US would even up the playing field, she said.

“The more we can have control of the supply chain, the better,” she said. “It’s something that takes time and a lot of people working together.”

BOBSA founder Sam Ennon sees a major opportunity as the Korean owners who opened stores in the 1980s reach retirement age. Often their children aren’t interested in taking over the business, creating an opening for Black entrepreneurs.

“We need to be in a position to take those stores over,” he said.

Once Black owners find their way into the business, they can start building the sort of networks and institutions that have served Korean owners so well. Hunter said after being in business for almost two years, the tables have turned, and vendors now reach out to her to open up accounts.

“I think if we can invest more dollars in owning our own businesses and keep those dollars circulating throughout our own community then we can begin to see and experience the wealth that others experience,” Hunter said.

Editor’s Note: This article was revised on 10th July 2020. An earlier version of this article stated that Wanda Hunter could not get a bank loan. This is incorrect. She never applied for a bank loan to start her business.

THIS WEEK IN BEAUTY

High-touch salons begin to cautiously reopen in New York. As part of the city's third phase of easing lockdown measures, venues such as spas, tanning salons, nail salons and massage parlours are allowed to resume operations at 50 percent capacity.

UK beauty salons are given the green light to reopen July 13. However, facial treatments, including procedures like eyebrow threading and eyelash extensions, are not yet permitted.

Augustinus Bader is almost doubling its SKUs. The cult favourite, which brought in an estimated $24 million in sales off with just three products in 2019, is venturing into cleansers with a cream cleansing gel, as well as body lotion and body oil later this month.

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