LGBTQ buying power nears $1 Trillion according to Bloomberg. So What? Like it or not, we live in a consumer society. Our fragile economic system only functions if each one of us goes out and buys something – lots of something. Nearly all of the social and political gears that operate just under the surface of perception are prodding us to purchase goods and services in greater and greater amounts. You can decide for yourself if this is a good or bad thing. But that’s beside the point.
What matters most in the business world is how much money you have to spend. Economists call that “buying power.”
The total buying power of the LGBTQ adult population has grown in the U.S. from an estimated $790 Billion according to a 2012 study conducted by Witeck Communications, a leading strategic marketing communications firm, specializing in outreach, respect, and inclusion for diverse LGBT communities. For nearly two decades the LGBTQ community has served as a bridge between corporate America and LGBTQ consumers.
Putting his analysis into perspective, Bob Witeck, President and Founder of Witeck Communications, stresses that buying power is “not the same as affluence or wealth and there is no hint that same-sex households are more affluent than others, which is little more than a stereotype.”
$1 Trillion is a lot of money. But to understand how significant this number is, we must compare it to the purchasing power of other groups. The LGBTQ community – which represents 7% of the population – is competing in the buying power heavyweight class. That’s not including the 20% of the Millennials who identify as LGBTQ or those who are in the closet about their gender identity and sexual orientation.
According to the Selig Center for Economic Growth at the University of Georgia, in 2012 African Americans represented 13.7% of the U.S. population and had a buying power of slightly over $1 trillion.
But the buying power of Hispanics — an ethnic group (not a race) that represents 16.66% of the population — is larger at an estimated $1.2 trillion. And even though Asian consumers represent only 4.5% of the population, they have a buying power of $718 billion.
What is Buying Power?
The buying power of any group of people is defined as the total personal income of the group that is available, after taxes, for spending on everything they buy. Essentially, the buying power of the LGBTQ community is an estimated measure of the community’s disposable income.
The total buying power is calculated by assigning a proportion of total disposable personal income to the estimated population of LGBT-self identified adults.
So What Does All of This Buying Power Mean?
It means a lot.
The buying power of a group is economic clout. The more economic clout a group has, the more attention it gets from businesses and advertisers.
“Buying power projections may be seen as an accepted business measure for companies and policy decision-makers,” explains Witeck. “This estimate offers us a reasonable snapshot of the projected yearly economic contributions of America’s diverse LGBTQ population even in our gradually stirring economy.”
It means that major brands have identified the financial benefits of targeting their marketing efforts. Just look at how many national brands have come out in support of gay marriage. That list includes Expedia, Bud Light, Smirnoff, Absolute, Target, Oreo, Amazon, and Microsoft. Even Martha Stewart Living is on that list.
Show Me the Money!
Of course we’re speaking only in economic terms here. There is no insinuation that the heads of those companies are simply chasing the money. It doesn’t matter anyway, because the LGBTQ community is smarter than that.
In a study conducted by Witeck Communications in 2011, they found that brand loyalty means much more to the LGBTQ community than price. Nearly 71% of the LGBTQ adults they surveyed said they are likely to remain loyal to a brand they believe to be very friendly and supportive to the gay, lesbian, bisexual and transgender community “even when less friendly companies may offer lower prices or be more convenient.”
It’s this last finding that really matters most. Not only does buying power make changes in consumer mechanisms but also in legal policies such as the Bathroom Law in North Carolina, which limited LGBTQ protections and will cost the state an estimated $3.76 billion in lost business opportunities!
In a consumer society, when a small group has a large amount of purchasing power combined with a strong commitment to a group-centered value system, it’s difficult for anyone to take advantage of that group.