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This Instagram post could unlock hundreds of millions of dollars for Black-owned businesses

VIDEO1:2801:28Retailers pledge 15% of shelf space to Black-owned businessesThe Path Forward

In the days following the death of George Floyd, Brooklyn-based entrepreneur Aurora James was skeptical of the deluge of corporate support for the Black community.

"As a Black woman, and also as a business owner, I was reading it, but I wasn't necessarily feeling it to be true," said James, who runs Brother Vellies, a company that sources handmade shoes and accessories from artisans around the world.

She wanted to create a metric for companies that would show how they were following through on their statements of support.

In a handwritten note posted to her personal Instagram page, James made a simple ask to retailers: Commit to having 15% of suppliers be Black-owned businesses.

"So many of your businesses are built on Black spending power," she said. "So many of your stores are set up in Black communities. So many of your posts seen on Black feeds. This is the least you can do for us. We represent 15% of the population and we need to represent 15% of your shelf space."

James called out large retailers by name, including Whole Foods, Target, Walmart, and Sephora. With a commitment, from these companies, she wrote, "Small businesses can turn into bigger ones. Dreams can turn into realities. Real investment will start happening in black businesses which can subsequently be paid forward into our black communities."

The message went viral, garnering over 34,000 likes on Instagram. Within a week, she registered the 15 Percent Pledge as a government-recognized non-profit.

"I posted it on a Saturday, we had a website launched by the following Monday, and were a 501(c)3 by Wednesday," said James.

The 15 Percent Pledge saw a blitz of media coverage from the New York Times to CNN to Vogue. It quickly caught the attention of some major retailers, which are now doing what James had hoped: They are laying out concrete goals that are measurable. And industry watchers expect these decisions will be good for business by potentially opening doors to successful new products and by bringing in new customers.

Taking the pledge

On June 10, Sephora was the first to take the pledge.

"When Aurora called for Sephora to join this Pledge, we recognized the opportunity to take meaningful action," Artemis Patrick, the cosmetics retailer's executive vice president and chief merchandising officer, wrote in an email to CNBC. "We quickly began discussions about how we could make this happen from an operational perspective."

Committing to the 15 Percent Pledge consists of three steps. First, a company must take stock of the percentage of shelf space and contracts given to Black-owned businesses and suppliers. Then, it needs to take ownership of its findings, rooting out blind spots and biases and how those have led to the disparities. The third step is to take action.

"I had a wonderful, honest discussion with Aurora, and we talked at length about the best way to go about this to ensure we are not just rushing to meet a deadline, but laying the groundwork for long-term success," said Patrick.

Rent the Runway, a fashion rental company, was the next major retailer to take the pledge. It detailed steps it would take to achieve the goal, including increasing the representation of Black designers on its platforms from 1.5% to 5% within a year. It also promised to diversify models, stylists, production crews and other aspects of its business, and pledged $1 million to support Black designers.

"Aurora's work with the 15 Percent Pledge is vitally important — and so long overdue for our industry," Rent the Runway CEO and co-founder Jenn Hymann wrote in an email to CNBC. "We're collectively reckoning with the fact that for far too long, fashion has co-opted the style, inspiration and ideas of Black culture without ensuring that the people behind the work are properly compensated."

Furniture retailer West Elm followed. The Williams-Sonoma unit released a statement pledging to increase the company's design collaborations with Black designers and artists to 15%, the share of Black businesses within its West Elm LOCAL branch to 15%, and Black employees within its corporate work force to a minimum of 15%.

Executing the pledge

Part of what makes the 15 Percent Pledge attractive is its simplicity. Execution, however, is not easy.

"These are huge national retailers, so they're not going to be able to commit to the pledge overnight," said James. "Nor would we want them to."

Aurora JamesPhoto: Grace Miller

Based on her conversations with companies so far, James estimates that on average Black-owned businesses make up 0.5% to 2% of their product offerings. The work needed for retailers to reach the 15% target could take years.

"It can be done, it's just over what time frame," said Morningstar equity analyst Jaime Katz, who added that onboarding a new vendor could take between six to nine months. "There will be a time lag between making the pledge and getting inventory on the books."

The next challenge will be ensuring that the products can scale. Central to the 15 Percent Pledge's goal is support for small business. James said she hopes that her organization will help large retailers set up the structure that will help these brands thrive.

"Maybe it starts off as local and then grows to national, and they're going to be able to scale with you in a way that's also sustainable for business," said James. "My hope is that if these companies are actually onboarded in the right way at these major retailers, that we'll also be able to see them grow and thrive because they're just great products too."

Impact of the Pledge

Maeva Heim is the founder and CEO of textured hair care brand Bread. Her startup's products will hit shelves at 110 Sephora stores on Aug. 28.

"I think [the pledge] will have a huge impact, and I think it will open up doors that have been closed because of one reason or another," she said. While Heim's company targets Black customers, the pledge will be particularly useful for Black-owned brands that do not, she said.

"It will take down that unconscious wall, I think, that if you're a Black founder, you must be speaking to a Black audience," said Heim. "It will open up the floodgate."

Industry watchers say the decision is not just good PR, it's also good business.

"They're willing to make this pledge because they know if they're really going to remain relevant and broaden their customer base, they're going to have to expand," said Morningstar equity analyst David Swartz.

With four companies signed up so far, and startups like Bread's products coming to stores soon, it's clear the pledge is starting to make a real impact.

"The most important thing is that people are trying to do the right thing and elevate access to capital for traditionally underfunded businesses," said Katz. "It's good to see that there's some humanity in business right now."

Meanwhile, James continues use social media to call out new retailers to take action.

"My hope is that they're all going to take the pledge and we'll be able to work with them on what that accountability looks like," said James.

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