As retailers gear up for the critical holiday shopping season, many are grappling with a new challenge: navigating public perception around diversity, equity, and inclusion (DEI) initiatives. Companies are cautiously assessing how their DEI policies may be received by customers who could find their stance either too progressive or insufficiently inclusive.
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This sensitive balancing act has led some retailers to consult with external advisors on how to avoid alienating any customer groups, while others have chosen to forgo public discussions on DEI as criticism against such programs grows amid the upcoming 2024 presidential election.
In conversations with CNBC, several retail industry insiders, strategists, and staffers spoke candidly under conditions of anonymity. According to one insider, “No one wants to end up like Tractor Supply,” referring to the retailer’s recent rollback of several DEI initiatives following online criticism from conservative activist Robby Starbuck.
The insider added that while many retailers would prefer to take proactive DEI steps, they now hesitate to share these initiatives publicly to avoid political backlash, especially as the issue has become increasingly polarized.
The retail sector’s cautious stance comes in the wake of several high-profile companies, such as Lowe’s, Tractor Supply, Ford, and Molson Coors, scaling back on equity and inclusion measures. Recent changes include discontinuing sponsorship of Pride events and severing ties with LGBTQ+ advocacy organizations like the Human Rights Campaign.
In fact, several major companies have also cut DEI positions; while the number of chief diversity and inclusion roles surged by nearly 170% between 2019 and 2022, according to LinkedIn, new hires in these positions have since declined, and companies like Google and Meta have reduced DEI staff and scaled back related programs.
In explaining these changes, some companies, such as Lowe’s, pointed to the Supreme Court’s recent decision to end affirmative action as a catalyst for reassessing their DEI policies. However, behind the scenes, many retailers admit concerns about losing customers and becoming targets of conservative backlash.
Industry sources told CNBC that last year, Anheuser-Busch’s Bud Light and Target suffered significant pushback and sales losses after launching LGBTQ-themed campaigns and product lines.
This year, as retailers brace for what could be a challenging holiday season, they are especially mindful of avoiding any missteps that might provoke similar reactions.
As concerns around DEI-related events mount, some companies are rethinking their participation. For instance, during a September summit for corporate communications professionals hosted by the Retail Industry Leaders Association (RILA), the event’s alignment with RILA’s DEI Leaders Council reportedly made some retailers apprehensive about attending due to potential optics.
One former retail executive, who advises publicly traded companies, noted that attendance might be viewed negatively. “The tide is definitely turning against DE&I initiatives,” the executive said. “It’s largely tied to the election. CEOs are understandably weighing political outcomes, whether it’s Trump or Harris in office, and strategizing accordingly.”
This former executive described the situation as a “no-win” scenario for large retailers that cater to a diverse customer base spanning across political lines. They’re feeling pressure to remain neutral in order to appeal to everyone.
At a prominent advisory firm in New York City, one strategist shared that their retail clients are increasingly concerned about DEI, seeking guidance on handling potential backlash or avoiding it by preemptively modifying DEI policies. These discussions often involve decisions about participation in events like annual Pride parades and considerations on how best to communicate policy shifts internally.
Sonia Lapinsky, who leads the global fashion practice at consulting firm AlixPartners, noted that retailers are feeling especially pressured as they enter their most profitable season. “They’re extremely cautious about anything that could upset consumers or generate negative press,” Lapinsky said.
She referred to a recent consumer sentiment study from AlixPartners, which showed less than half of millennial shoppers view it as essential for retailers to reflect their personal values in marketing and interactions. She added, “The numbers drop further from there—45% for millennials, under 40% for Gen Z and Gen X, and just 16% for baby boomers.”
Nevertheless, Lapinsky argued that DEI considerations remain important for brands when shaping their business strategies. “If a company doesn’t foster diverse representation when designing product lines or services, it risks losing touch with its consumers,” she explained.
“Consumers may not demand DEI in marketing, but they do expect it in products and services that resonate with their identities and experiences.” For retailers, this means that DEI should still inform product development and customer service approaches, even if they choose to keep public messaging on the topic subdued.
