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Retailer DEI backlash: Where do we go from here?Retailer DEI backlash: Where do we go from here?
Lawsuits, pressure from attorneys general, and disgruntled workers—retailers and grocers aim to find their way in a fractured landscape
6 Min Read
“I think what this really comes down to is an erosion of trust.” —Marcus Collins, University of Michigan’s Ross School of BusinessSupermarket News Staff
President Donald Trump has taken a firm stance on Diversity, Equity, and Inclusion (DEI) policies—the new administration wants the programs gone, and fast. This pivot from years of DEI being the norm has left retail divided—with some (Walmart, Target) following orders and others (Costco, Trader Joe’s) refusing to back down on DEI. And still others (Aldi, Kroger) are teetering somewhere in the middle, waiting to see which way the wind blows.
Walmart, Target among early leaders who ditched DEI
In the grocery sector, Walmart announced its DEI pivot not long after the election results rolled in, and since then giants like Amazon and Target have both followed suit. Backlash from consumers has been particularly strong against Target, with some shoppers calling for a boycott of the Minneapolis-based retailer. All three companies have additionally faced criticism on social media.
How invested were Target and Walmart in DEI to begin with? Shaun Harper, a professor of business, public policy, and education at the University of Southern California, believes many retailers were not fully committed to DEI initiatives.
“Companies have been doing DEI on the cheap for years,” Harper said. “They’ve been trying to do as little of it as possible, as inexpensively as possible. These programs and policies started decades ago. There was tremendous opposition to their creation, and over the years, they’ve never been properly funded or staffed.”
But Target, for instance, was one of corporate America’s most diligent supporters of DEI, lending support of Black Americans after George Floyd’s 2020 murder by police in Target’s home city of Minneapolis. Months after the murder, the retailer pledged to increase its Black workforce by 20% throughout the company over three years. In 2021, Target started Forward Founders, even offering a curriculum to educate emerging brands (with a focus on brands owned by people of color) about how to get into major retailers. That same year, Amazon started its Black Business Accelerator.
Regional grocers have been a mixed bag
Costco, Kroger, Giant, and Trader Joe’s are among the grocery retailers holding firm to their existing DEI policies. Costco in particular made headlines recently after it faced pressure from some shareholders to step away from DEI programs. After a vote at its annual shareholder meeting, an overwhelming majority of shareholders ended up pivoting, saying they now support Costco sticking to its DEI framework.But some grocers have been more nebulous. Aldi says it still believes in DEI policies but simultaneously has removed any mention of DEI from its websites. Amazon has scaled back some of its DEI programs and says it now plans to focus on those with proven outcomes.
“I think brands that aren’t as committed but don’t want to face backlash, boycotts, or loss of business are more likely to wait it out until they are forced to make a decision,” said Marcus Collins, clinical assistant professor of marketing at the University of Michigan’s Ross School of Business. “But those brands will probably lean to decide on convenience more than they will on conviction.
“And in the long term, I think those brands will be the ones that will continue to have a transactional-based relationship with consumers as opposed to the more meaningful ones, he added.
What about Black-owned companies—CPG and otherwise?
Minority-owned CPG brands are also affected by the move. Some have pulled their products from stores that have rolled back DEI policies, while others remain in place, fearful of hurting their business. Tabitha Brown, who sells her organic popcorn at Target, is encouraging shoppers to still shop at the retailer but only buy products from brands that stand behind their values, according to reporting from The New York Times.
Target in particular promised to spend more than $2 billion with Black-owned businesses by 2025—from advertising firms that market the Target brand to construction companies that build and remodel stores. Currently, it remains to be seen as to whether these types of initiatives will remain in place—and whether smaller Black-owned CPG companies will still have a path to success within bigger retailers pulling back on DEI.
When asked to comment regarding the shift in its DEI policy, Target noted that it would be ending all of its three-year goals around DEI, as well as stopping all external diversity-focused surveys, in addition to changing the name of its “Supplier Diversity” team to “Supplier Engagement” to “better reflect our inclusive global procurement process across a broad range of suppliers, including increasing our focus on small businesses.”
Representatives from Walmart and Amazon did not respond to a request for comment.
Retail DEI: Where do we go from here?
Being sued over DEI policies is also on the table, whether you’re cutting or keeping your policies as a retailer. As is facing shareholder wrath. Last week, 19 Republican attorneys general urged Costco to remove its DEI policies, citing fears of discrimination and legal risks. The group of AGs has demanded that Costco notify states within 30 days whether it will repeal its DEI policies or explain why it plans to maintain them.
In a letter addressed last month to Walmart CEO Doug McMillon, a group of more than 30 Walmart shareholders asked the company to dig into the business impact of abandoning DEI initiatives. Simultaneously, a group of 13 Democratic state attorneys general expressed a similar sentiment in a separate letter sent to McMillon a day later.
Those retailers which stick by their DEI policies could also face lawsuits.
“Retailers rolling back their DEI commitments are making their employees, customers, and overall businesses vulnerable to costly litigation,” Harper said. “Some lawyers are convinced that maintaining DEI initiatives actually makes them more susceptible to lawsuits.” Harper also noted that retailers want to avoid any federal investigations into those initiatives—for fear that they may be punished by the current administration.
Trust also plays a crucial role in how a retailer is perceived regarding DEI. Retailers who have abandoned these programs have likely damaged the trust of both shoppers and employees. In fact, some workers may be more willing to leave or refrain from applying for positions at stores without DEI standards, according to Harper.
“I think what this really comes down to is an erosion of trust,” Collins said. “Trust is a mechanism that absorbs uncertainty, and for brands to lose trust, it is unbelievably consequential to their ability to be more than just a retailer or a consumer…The ramifications are long-lasting, not just in this moment.”
For those retailers choosing to cut ties with their DEI policies, it may not be a permanent arrangement. Analysts that spoke to Supermarket News say they believe these companies will likely return to some degree of DEI later.
“I imagine they’ll probably stay with their decision until the winds change, until it’s more in vogue to focus on DEI again,” Collins said. “The strongest brands transcend their category and operate at an ideological level, but when you pump fake or step back on what you said you were all about, it reduces you to just a place.”
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