On April 21, 2023, a sign disparaging Bud Light appeared on a rural road in Arco, Idaho. Bud Light brewer Anheuser-Busch is facing backlash after the company sponsored two Instagram posts by a transgender woman.
Natalie Belling | Natalie Bellinghetti Photos
Retailers face a difficult balancing act as they enter the all-important holiday shopping season—this time with DEI initiatives.
Companies are bracing for backlash related to diversity, equity and inclusion policies and want to avoid alienating customers who may think brands are too woke or not woke enough. Some are seeking advice from outside consultants on how to avoid criticism, while others are choosing not to attend public events on the topic as backlash against equity and inclusion plans grows ahead of the 2024 presidential election.
CNBC spoke with a number of retail industry insiders, strategists and staff who spoke with candor on the condition of anonymity.
“There’s a palpable sentiment in retail that no one wants to buy into it tractor supply‘d,” one retail insider said, referring to the company’s decision to cancel a series of DEI initiatives after conservative activist Robby Starbuck criticized the policies online.
“Retailers who use their own equipment want to be very proactive on DEI,” the person said. “But now they don’t want to make any of their views public because they want to be able to market stuff to everyone, and it’s become a stupid political issue. ”
Retail concerns about DEI come on the heels of a number of high-profile, consumer-facing companies, including Lowe’s, tractor supply, Ford and Molson Coors – A number of equity and inclusion policies have been rolled back in recent months. The changes include ending sponsorship of Pride festivals and severing ties with LGBTQ+ advocacy group Human Rights Campaign.
Across industries, some companies are also cutting DEI positions. Between 2019 and 2022, new chief diversity and inclusion officer positions surged nearly 170%, According to a study by LinkedInbut the number of new openings for this type of role has declined over the past year, while companies like Google and Yuan Staff reductions and DEI-wide project size reductions.
In explaining their decisions to cut DEI, some companies, such as Lowe’s, cited a recent U.S. Supreme Court ruling banning affirmative action as a catalyst for reviewing their policies. Privately, many retailers worry about losing customers and becoming the target of a conservative backlash, industry insiders told CNBC.
last year, Anheuser-BuschBud Light and Target Marketing campaigns and product lines targeting the LGBTQ community faced severe backlash, and sales fell as a result. As retailers prepare for what may be a less-than-ideal holiday shopping season, they want to make sure they don’t do or say anything that might end up having the same effect.
concerns about public events
The growing focus on public DEI efforts, especially in a highly politicized election year, has cast a pall over some industry events.
In late September, the Retail Industry Leaders Association hosted its annual summit for corporate communications professionals. This year’s event was held in conjunction with RILA’s Diversity Equity and Inclusion Leadership Council, which led some retailers to worry about the appearance of attending the event, according to a person who attended and spoke with participants who expressed reservations.
RILA declined to comment.
A former retail executive who did not attend the event but often advises publicly traded retailers said some companies were right to be worried about attending because “it might not be as effective.”
“The tide is definitely turning against the DE&I plan,” said the former executive, who requested anonymity in order to do so candidly. “I do think it has a lot to do with the election… If you’re a CEO and you’re thinking, is (Donald) Trump going to win or is (Kamala) Harris going to win, And you’re being selfish…then I understand why you need to hedge your bets.
This person called it a “win-win situation,” especially for large retailers with large customer bases that span both sides of the political spectrum.
Get ready for a rebound
A strategist at a top advisory firm in New York City recently told CNBC that the main concern facing their retail clients is DEI and how they should prepare for a potential backlash or preemptively roll back certain policies and policies. practices to completely avoid this situation. Some discussions include whether to participate in the annual gay pride parade and how to communicate any policy changes to employees.
“Retailers are always focused on what they’re selling out there. I think they’re under more pressure,” said Sonia Lapinsky, global fashion practice leader at consultancy AlixPartners. “If you think about this time of year, they’re going into their biggest moments right now. sales season. If we look at a certain point in time, the last thing they want to do is potentially upset consumers or generate some negative publicity about their product.
Labinski points to a recent Less than half of Millennial consumers believe it is important for retailers to reflect their values in messaging, interactions and marketing, according to a consumer confidence survey released by AlixPartners.
“Then we go down from there. So 45% for Millennials, less than 40% for Gen Z and Gen 16 percent,” Lapinsky said.
However, that doesn’t mean retailers shouldn’t consider DEI when developing business strategies, Lapinsky said.
“If I were designing a product line or even a service or something like that, and I didn’t have broad representation of the people who are creating those products, I think I would quickly miss the pulse of what my consumers are thinking,” Labinski said. “So even if they say they don’t need to see it in the messaging, they need to see it in the product that resonates with them, the experience that resonates with them, and the level of service that resonates with them, and that’s going to make a difference. Based on who they are and where they come from.
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