Since Robin Wilson first launched her home textiles company, Clean Design Home, in the year 2000, she has had a great deal of success. Bed Bath & Beyond has carried her hypoallergenic items, and she has successfully completed significant orders for a hotel network. Additionally, her items may be purchased in fifty different Macy’s department stores located all across the United States; this has led to sales of several million dollars.
However, Ms. Wilson is mostly self-funded, and as she tries to extend her company into other categories, such as mattresses, she thinks that she will require at least one million dollars in funding. Currently, she is focusing on expanding her business.
It’s possible that Ms. Wilson and other owners of small businesses now have a new option for securing the kind of funding they need. The largest department store chain in the United States, Macy’s, has announced their intention to invest a total of thirty million dollars over the course of the next five years into three distinct financing avenues designed to assist retail businesses that are owned and operated by members of underserved communities. It is collaborating with Momentus Capital, which will serve as the fund’s manager for the loan. The company, which had annual sales of $25 billion in 2021, estimated that the overall funding for these activities would amount to $200 million.
In addition to providing expansion equity capital, the funds will be made available in the form of loans for both working capital and commercial real estate. The management of Macy’s said that they want for the initiative to include not just the current merchants that the company collaborates with but also new vendors. They think that their consumer base will grow and become more diverse as a result of the project, which is one of the reasons why they anticipate an increase in earnings for the firm.
It has been obvious for years to many companies that are managed by company owners who are neither white nor male that they need access to additional finance in order to develop their operations and meet the expectations that come with partnering with large retailers. Despite the fact that people of colour, Latinos, and women make up a substantially bigger proportion of the overall population in the United States, these groups earn just single-digit percentages of venture capital. Only one percent of venture capital funding were allocated to black entrepreneurs, while two percent each were allocated to Latina and female founders.
Macy’s has been looking for ways to make its vendor base more reflective of the population of the United States as well as the customers who shop there. It started a programme called Mission Every One in the spring of this year, and as part of that programme, it made a commitment to spend $5 billion through 2025 on activities that promote diversity and sustainability. Late in the year 2020, it joined the 15 Percent Pledge, which requests that shops provide 15 percent of their shelf space to products originating from firms that are controlled by people of African descent. Since then, the firm reports that the number of brands owned by people of colour that are carried on its shelves has climbed by a factor of eight, although it has not yet hit the 15 percent target.
Ms. Wilson is one of approximately 200 business owners who have graduated from The Workshop at Macy’s. The Workshop at Macy’s is an intensive programme that was established 12 years ago in which underrepresented suppliers learn business skills such as how to reach investors and assess pricing strategies, as well as how to receive feedback and gain insights from the department store’s executives. Ms. Wilson is one of the business owners who has graduated from the programme.
However, the management at Macy’s came to the conclusion that teaching business concepts was not sufficient on its own. Numerous small enterprises struggle to make a profit and hire a dozen workers or fewer on average. The availability of financial resources is required for employment at major department stores. Smaller firms sometimes require additional manpower or equipment to execute bulk orders in order to sell their products to larger merchants that have hundreds of outlets. Additionally, there are expenses involved with extensive marketing.
When officials at Macy’s were looking through various spreadsheets and data around a year and a half ago, they came to the conclusion that something wasn’t quite right. They discovered that some merchants from underrepresented groups were highly regarded by Macy’s merchants and consistently provided quality service; however, despite this, these merchants were only doing less than $10 million in business with the department store when they could have been doing more.
For instance, Macy’s desired to increase the amount of business given to a Black female-owned trucking firm so that the corporation could better move items between its distribution hubs and its retail locations. According to Adrian Mitchell, Macy’s chief financial officer, the firm was unable to take on the additional work because it lacked the financial resources necessary to purchase the additional vehicles that would have been required to do so.
Wisdom Walker, who launched her home décor company, Strokes of Wisdom, in 2020, is in the process of expanding it and is seeking for a combination of financial backing and expert guidance while she does so. This year, a buyer for Macy’s contacted her and asked if she would be interested in selling her crystal-studded mirror and eye-catching wine holders in a pop-up shop located inside one of the department store’s locations. Ms. Walker seized the chance with both hands, and she is currently working toward the goal of having her items sold at Macy’s. But she is aware that in order to do so, she will want retail coaching as well as grants or loans.
