On April 21, 2023 in Arco, Idaho, a sign disparaging Bud Light beer is seen along a country road. Anheuser-Busch, the brewer of Bud Light, faced backlash after the company sponsored two Instagram posts by a transgender woman.
Natalie Behring | Getty Images
Retailers are facing a tough challenge as they head into the important holiday shopping season – this time because of DEI initiatives.
Companies are bracing for backlash over diversity, equity and inclusion policies and hoping to avoid alienating customers who may find the brands too woke – or not woke enough. Some are turning to outside consultants for advice on how to avoid criticism, while others are opting out of public events on the topic as opposition to equity and inclusion programs grows ahead of the 2024 presidential election.
CNBC spoke with a number of retail industry insiders, strategists and executives, who spoke on the condition of anonymity to speak candidly.
“There is a clear sentiment in the retail community that no one wants to get it Tractor offer“d,” said a retail insider, referring to that company's decision to roll back a series of DEI initiatives after conservative activist Robby Starbuck criticized the policy online.
“Left to their own devices, retailers are eager to be very proactive about DEI,” the person said. “But now they don't want their views made public because they want to be able to sell things to everyone, and it's become such a stupid political issue.”
The retail industry's concerns about DEI come on the heels of a number of high-profile consumer-facing companies – including Lowe's, Tractor offer, Ford And Molson Coors – have rolled back some of their equality and inclusion policies in recent months. The changes include ending sponsorship for Pride festivals and severing ties with the Human Rights Campaign, an LGBTQ+ advocacy group.
Across industries, some companies have also eliminated positions for DEI functions. According to a study by LinkedIn, the number of new jobs for Chief Diversity and Inclusion Officers increased by almost 170% between 2019 and 2022, but new jobs for such positions have fallen over the past year, while companies like Googling And Meta have cut staff and downsized programs covered by DEI.
In explaining their decision to cut back on DEI, some companies, like Lowe's, cited the recent U.S. Supreme Court ruling banning affirmative action as a catalyst for overhauling their policies. Privately, many retailers are concerned about losing customers and becoming the subject of conservative backlash, industry insiders told CNBC.
Last year, Anheuser Buschowned by Bud Light and Goal faced severe backlash for marketing campaigns and product collections targeting the LGBTQ community and saw sales decline as a result. As retailers prepare for a potentially less-than-stellar holiday shopping season, they want to make sure they don't do or say anything that could have the same effect.
Concerns about public events
Growing concerns about public DEI efforts, especially during a highly politicized election year, have overshadowed certain events in the industry.
In late September, the Retail Industry Leaders Association hosted its annual summit for business communications professionals. This year's event was tied to RILA's Diversity Equity & Inclusion Leaders Council, which led some retailers to raise concerns about the optics of participating, according to a person in attendance who spoke to participants who raised concerns.
RILA declined to comment.
A former retail executive, who did not attend the event but regularly advises listed retailers, said it makes sense that some companies would be concerned about attending because “the optics of it might not be that great.”
“The tide is definitely turning against DE&I initiatives,” said the former director, who spoke on condition of anonymity so they could speak candidly. 'I think it has a lot to do with the elections. If you're a CEO and you look at [Donald] Trump is going to win, or he is [Kamala] Harris is going to win, and you're self-interested… then I understand why you need to hedge your bets.”
The person called it a “no-win situation,” especially for major retailers with large customer bases spanning both sides of the political spectrum.
Prepare for counter-reaction
At a leading New York City consulting firm, a strategist recently told CNBC that one of their retail clients' top concerns is DEI and how to prepare for potential backlash, or avoid it altogether by preemptively dialing back certain policies and practices to turn. Some of the discussions included whether to participate in the annual gay pride parades and how to communicate any policy changes to staff.
“Retailers are constantly worried about what they're putting out into the market. I think there's more pressure on them,” said Sonia Lapinsky, head of the global fashion practice at consultancy AlixPartners. “If you think about the time of year, they're going into their biggest sales season right now. If we look at any point in time, the last thing they want to do is upset consumers or generate bad publicity about what they're doing.” to do or not to do, so they are very sensitive and very concerned.”
Lapinsky pointed to a recent consumer sentiment survey published by AlixPartners, which found that less than half of millennial consumers thought it was very important that a retailer embodied its values in messaging, interactions and marketing.
“From there we go further down. So 45% for millennials, less than 40% for Gen Z and Gen Lapinsky.
However, that doesn't mean retailers shouldn't think about DEI when it comes to their business strategies, Lapinsky said.
“If I design a product line or even a service or something like that, and I don't have a broad representation of the people who created that, then I think very quickly I'm going to lose the pulse of what my consumer is thinking about,” Lapinsky said “So even if they say they don't need to see it in the messaging, they're going to need to see it come through in products that resonate and experiences that resonate and service levels that resonate with them, and that will differ based on who they are and where they are. they come from.”