Why US retailers are walking back their DEI efforts and what the future holds

Diversity, equity and inclusion (DEI) in retail is at a “critical moment”, according to Nikki Porcher, the founder of Buy From A Black Woman, a non-profit that aims to bring awareness to Black women business owners in the US. 

Porcher’s comment comes in response to last month’s announcement by Tractor Supply Company that it was backtracking on its DEI efforts. 

In a statement released on June 27, the “rural lifestyle retailer”, which sells agricultural and home improvement products, said that it would no longer submit data to the Human Rights Campaign, stop sponsoring “nonbusiness activities” like Pride festivals and voting campaigns in favor of “rural America priorities” like ag education, animal welfare, veteran causes and being a good neighbour, and eliminate DEI roles and retire its current DEI goals while still ensuring a respectful environment, among other actions.

Tractor Supply said the changes were driven by customer feedback, but the announcement was met with criticism from some within the company’s customer base.  

John Boyd, the president of the National Black Farmers Association (NBFA), a non-profit organisation that represents tens of thousands of African American farmers and their families nationwide, said the move showed a lack of respect for Black farmers. 

“As President of the NBFA, I am appalled by this decision, which is reflective of the ongoing racial tension and division in America. This affects our 130,000 members, many of whom regularly shop at Tractor Supply,” he said.

Just last year, Tractor Supply was patting itself on the back for the same initiatives that it is now stepping away from.  

In a report from February 2023, Tractor Supply stated that it was “committed to the principles of diversity, equity, and inclusion” and that “diversity and inclusion play a key role in moving our business forward.”

Considering the company’s latest move, it seems those earlier efforts may have been more of an example of performative activism, rather than authentic inclusion. 

Tractor Supply isn’t the only company that has been reneging on its prior promises to create a more inclusive and equitable workplace. 

Corporations including Meta, Google, and Microsoft have been dialing back their DEI efforts and/or layoffing off DEI consultants and entire departments, after proudly hiring them just a few years ago. 

In 2020, the Society for Human Resource Management reported that DEI roles had increased by 55 per cent following demands for broader racial equity and justice after Floyd’s murder. 

But in recent years, financial and structural support for Black founders and for the BIPOC community at large has been diminishing, raising serious questions about the future of DEI in retail.

Why are all the DEI programs disappearing?

“The recent shifts in the retail industry’s approach to DEI initiatives reflect both progress and challenges,” Porcher said. 

“While many companies have made commitments to diversity, equity and inclusion, the implementation and sincerity of these efforts vary widely. And the backtracking that we’re seeing signifies a critical moment where businesses are reevaluating their priorities amidst heightened social consciousness and consumer expectations, and what their shareholders are ultimately pushing for.”

Porcher said there are four main reasons why retailers are reversing their DEI initiatives:

• Backlash and fear of controversy

There has been a significant increase in backlash against DEI efforts, with some viewing these initiatives as divisive or politically motivated. This has caused retailers to retreat to avoid potential controversy or customer alienation.

• Performative activism

Many retailers initially embraced DEI initiatives in response to public pressure following social justice movements. However, these efforts were often superficial and lacked genuine commitment, leading to a rollback when the immediate pressure subsided.

• Lack of understanding and commitment

There is a fundamental lack of understanding about the true value of DEI. Without a deep commitment from leadership, DEI initiatives are often the first to be deprioritised when facing challenges.

• Economic pressures

The current economic downturn and recession have led many companies to prioritise short-term financial gains over long-term commitments to DEI. And because budget cuts often target initiatives that are perceived as non-essential, this reveals a lot about the companies that are eliminating DEI.

Sharitta Marshal, founder of Visionary Development Consulting and an employee resources group strategist, pointed out that “there is a misconception among some corporate leaders that DEI is merely a trend or a box-checking exercise rather than a strategic asset”.

“This perspective overlooks the long-term benefits of diverse and inclusive workplaces, such as increased innovation, better decision-making, and higher employee engagement as well as sustainable profitability,” she said. 

Research by McKinsey & Company backs this up.

The consulting firm disclosed that companies with greater gender and ethnic diversity on their leadership teams are much more likely to financially outperform less diverse companies. It also revealed that the economic impact of closing the workforce gender gap is estimated at $12 trillion, demonstrating a strong business case for DEI-related efforts. 

What is the future of DEI in retail?

Alison Taylor, a clinical associate professor at the NYU Stern School of Business and author of Higher Ground: How Business Can Do the Right Thing in a Turbulent World, believes there is still time for retailers to get DEI right, but they need to understand why some efforts have failed. According to Taylor, many DEI efforts to date have been conducted poorly, created without proper research beforehand, and “there’s been a lot of giving executives bonuses for hitting targets that they should have been working on anyway”. 

She also pointed out that poorly executed DEI campaigns have had the unfortunate side effect of creating the illusion that some employees were simply placed on the team as diversity hires. At the same time, research shows that C-suites in America have become more polarising as work environments, despite higher rates of “inclusive” hires across racial and gender grounds. 

Rather than trying to slap a band-aid solution on serious issues centering on diversity within the retail industry, Taylor believes that companies need to work from the ground up to create more inclusive and protected workplaces and ensure that “people feel psychologically safe in getting their ideas in the room, as well as [hiring] certain numbers of certain types of people”.

“You’ve got to provide a path from the shop floor to management so that people can advance,” Taylor said. “There’s a million things you could do that aren’t about fulfilling quotas that would actually be helpful [in a workplace].” 

In addition to focusing on creating an open work environment for staff of all backgrounds to voice their opinions and enforcing proper labour rights and benefits, such as childcare and paid parental leave, Taylor said companies need to stop listening to a loud, but limited group of bigoted voices. 

“[There] is a kind of kowtowing to loud political voices that don’t necessarily represent what young people think and what the wider population even thinks,” she said. “Running your company based on who’s yelling at you on social media is just not a good look.”

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