Black History: Special Delivery!!
Using data from online consumer business ratings, researchers have now been able to quantify the dollar value impact on revenue growth for businesses located in black neighborhoods. The research suggests that businesses in black neighborhoods face a negative stigma because of their location within black communities. The stigma centers around businesses being considered as less capable, having less quality, etc.
“Five-star Reviews, One-Star Profits: The Devaluation of Businesses In Black Communities” is a new report released by the Brookings Institution on February 18, 2020, looks at businesses in black neighborhoods that are highly rated in online reviews. The research looked at Yelp ratings of businesses. Yelp is an online platform that allows consumers to rate businesses and share feedback.
According to the Brookings Institution data, businesses in black neighborhoods that are highly rated by customers using the Yelp platform experience a significantly lower rate of revenue growth than businesses not located in black neighborhoods. The report indicates that the unrealized revenue equates to approximately $3.9 billion in lost revenue annually for businesses with high ratings located in black neighborhoods. According to Brookings Institution lead researcher Andre Perry, “These businesses in black neighborhoods that have high ratings should experience higher revenue growth, but they are not.” He goes on to also say, “Our model shows that it’s the concentration of blackness in the neighborhood that correlates with the lack of revenue growth.” Continue reading “Location, Location, Location: The Cost of Racism for Businesses In Black Neighborhoods”