Founded by Maulanga Karenga in 1966, Kwanzaa is a holiday created to celebrate African heritage as evidenced within African-American culture. A company in which I co-founded, Ujamaa Deals, actually has its name rooted in Kwanzaa. Ujamaa — which means “cooperative economics” — is one of the Nguzo Saba, or seven principles of Kwanzaa that are derived from our pan-African heritage. One principle is celebrated on each day of the Kwanzaa period.
Given that Kwanzaa starts the day after Christmas, arguably the most commercialized American holiday of the year, it makes sense to examine the potential economic effects of Kwanzaa on black-owned businesses. Especially as cooperative economics is one of Kwanzaa’a main principles, this week between Christmas and New Year’s is the prime time for us to put Ujamaa into practice.
But, do people even celebrate Kwanzaa — or at least at a critical mass? This question is important to keep in mind. In this article, my goal is to give the reader some approximate calculations regarding the economics of Kwanzaa, which are based on the social penetration of the holiday. Black businesses can only profit from it if African-Americans truly celebrate it.
The popularity of Kwanzaa
The first question that needs to be answered to determine its economic impact is, “How many individuals actually celebrate Kwanzaa?” Through my research, I learned that the number of people who celebrate Kwanzaa may range from 250,000 to 30 million people worldwide based on various sources. Unfortunately, that range is too wide to give to much weight to the business analysis below, yet we will do our best. Here is why the range is so spread out.
Mr. Karanga said in a 2006 speech that close to 28 million people celebrate Kwanzaa internationally. This number is hard to believe, given that the holiday was started to generate African-American pride. A celebration by 28 million people would mean that Kwanzaa has spread rapidly internationally to people far beyond its base target. According to the U.S. Census Bureau, there are 42 million blacks in America. The idea that roughly two-thirds of us celebrate Kwanzaa is outlandish. So is the idea that millions outside America have taken on a tradition created by American blacks, which is the only thing that could make up the difference in these numbers.
Keith Mayes, author of Kwanzaa: Black Power and the Making of the African-American Holiday Tradition, states that the number of people who celebrate Kwanzaa is closer to two million. While this is more plausible, the number I am going to use for this article comes from the National Retail Federation, which states that about 1.6 percent of the American population (or 4.7 million people) planned to celebrate Kwanzaa this year.
While precise numbers are hard to come by, as it depends on who you ask, it is reasonable to assume that we are talking about millions of consumers. What does this mean for Kwanzaa-focused retailers?
Average household spends on Kwanzaa
In the United States, most individuals who celebrate Kwanzaa celebrate Christmas as well. It is estimated by the National Retail Federation that 93 percent of Americans celebrate Christmas. This is does not mean that all celebrants are Christians — yet they do plan on some Christmas shopping. This infographic from 2011 shows that Americans spend an average of $465.5 billion on Christmas, which is about the size of Belgium’s gross domestic product. This equates to a typical person spending $516 on gifts.
After that amount of spending, most people are too tapped out financially to provide a significant monetary contribution to the Kwanzaa holiday. According to the official Kwanzaa website, gifts are mainly to children and always include a book and a heritage symbol, which would also cut down the total amount spent. At the same time, Kwanzaa greeting cards are also popular for celebrating the period. The Greeting Card Association estimates that there were two billion boxed Christmas cards sold in 2011. That is an average of 8.4 Christmas cards per adult.
If we extrapolate this data and assume it can be applied in a similar manner to Kwanzaa, then about 39.5 million Kwanzaa greeting cards are shared during the holiday season. If we assume that the average cost of a greeting card is $4, then this would equal a value of close to $158 million. Once again this number is probably on the high side given the high prevalence of greeting cards exchanged for Christmas, yet suggests that millions of dollars are at stake when it comes to the Kwanzaa holiday.
For other gift spending, for the sake of argument let us assume that the average amount spent on Kwanzaa gifts is about 15 percent of the total amount spent on Christmas gifts. Therefore, if an average of $77 is spent for Kwanzaa gifts per person, this equals a gift spend of nearly $363 million. Combining this amount with the cards total yields almost $520 million. While not much compared to the $465.5 billion spent on Christmas, that could be a sizable amount for holiday-focused black businesses.
Given the lack of statistics on Kwanzaa shopping, there are a lot of assumptions here that are questionable. Yet, it is safe to assume that the amount spent on Kwanzaa is far less than $1 billion annually. Given that the buying power of the black community is approaching $1 trillion, this is an extremely small number, especially compared to the amount spent on Christmas.
However, we should not use sales numbers to judge the work of Mr. Karanga. He created a much needed holiday, especially for the turbulent times of the 1960s, and that is to be commended. Holidays should not be about spending anyway. As is especially the case with Kwanzaa, holidays are times to reflect on the spiritual values these times embody.
Nevertheless, given the importance of supporting black businesses, Kwanzaa is a perfect opportunity to do so. And Ujamaa, the fourth day of Kwanzaa, is the ideal value to keep in mind this Kwanzaa season and the next as we consider means to keep black buying power circulating among African-American businesses.
Lawrence Watkins is the founder of Great Black Speakers, Great Pro Speakers, and co-founder of Ujamaa Deals, which is a daily deal site that promotes black-owned businesses. He graduated in 2006 from The University of Louisville with a B.S. in electrical engineering and earned his MBA from Cornell University in 2010. Lawrence currently resides in Atlanta. You can follow him on Twitter @lawrencewatkins.