How Important is Diversity for Successful Retail?

Research shows that diversity and inclusion make businesses more successful. Diversity in retail matters across leadership, workforce, workplace culture, marketing as well as from a consumer perspective.

Study after study demonstrates how crucial diversity and inclusion practices are to a company’s success. This article examines what these insights mean when applied to the retail industry.

In a nutshell, diversity refers to markers like gender, race, age, sexual orientation, religion, or disability, and to what extent they are represented within a group of people – be that the boardroom, the workforce, a retailer’s customer base, or the wider population. Inclusion, on the other hand, refers to a company and workplace culture that makes a diverse workforce feel welcome, valued, supported, and able to thrive.

Examining company leadership, the workforce, company culture, marketing, and the consumer perspective through a diversity lens, shows how important diversity and inclusion are for the retail industry.

Diverse Leadership Makes a Difference

The typical boardroom is still dominated by elderly white men, and this lack of diversity is holding companies back. While the retail sector may do better in terms of boardroom diversity than many other industries, that doesn’t mean it’s great. Company policies, like a mandatory retirement age and term limits for directors, or legal gender quotas for board members like Norway, France or Germany have introduced, have an impact.

But Diversity is much more than gender and age, and more diversity in leadership remains a key issue in retail diversity. Who is represented in leadership matters as it has a an impact on company culture, values, hiring practices, product, marketing, along with virtually all business areas, as well as public perception.

retail diversity boardroom

Who pulls the strings? (Photo: Rawpixel)

Workforce Diversity in Retail

In retail, your workforce interacts with your customers face to face and gives shoppers a very visible representation of the kinds of people your company values. We already know that diversity in the office is beneficial because it leads to a diversity of ideas and better problem solving. But a study published in the Journal of Management finds a similar correlation between diverse demographics in shoppers and diversity in retail staff.

The researchers examined racial diversity in retail and found, that the closer workforce diversity at a store matches the diversity of the customer base, the better the store performs. In fact, for each percentage point closer to a perfect match between the diversity of shoppers and store, a retailer can increase their sales by $67,000.

But the study also found that workforce diversity improves returns for stores regardless of how diverse their customer base is. Co-author of the study, Prof. Patrick F. McKay of Rutgers University, believes “this shows that a diverse staff brings different ideas about how to serve customers more effectively, which enhances overall sales performance.”

retail diversity

How inclusive is your workplace culture?

Foster an Inclusive Company Culture

An inclusive company culture is based on lived values that support employees of all backgrounds and provide a safe environment in which everyone feels welcome, heard, and is able to thrive and do their best work. A recent management study found that organisations with an inclusive culture are twice as likely to exceed financial targets, six times more likely to be innovative and agile, and eight times more likely to achieve better business outcomes.

Diversity and inclusion leader Sheree Atcheson recommends four steps to form an inclusive company culture:

  1. Listen: Listening is crucial to understand the current state of a company’s culture. “Be prepared to be comfortable being uncomfortable,” as genuinely listening to how employees from all levels experience the workplace, whether positive, indifferent or negative, is the key to a transparent view of your company culture.
  2. Take action: Listening alone is not enough, but forms the basis for taking action towards a more inclusive culture. Make sure your employees feel heard by showing that their feedback results in tangible improvements where necessary.
  3. Value all input: Company culture and what it means to belong feels different to different people. When deciding where to focus your efforts, “a truly inclusive, positive workplace culture will support both senior and junior employees, creating a sense of belonging with all.”
  4. Form two-way communication between leadership and employees:  To foster an inclusive environment, it is important that employees feel they can speak up and will be heard. And an open two-way communication between employees and leadership strongly contributes to that.

retail diversity consumers

What Does Your Customer Base Value?

Research shows that people shop based on their own values. In a large survey of shoppers across Canada, the United States and the United Kingdom, 42% of ethnic minority shoppers and 41% of LGBT shoppers report that they would switch to a retailer committed to diversity and inclusion, while 55% overall would move away from retailers who handle negative incidents around diversity and inclusion badly. Three quarters of disabled shoppers have furthermore left stores because they felt badly catered to.

Importantly, shoppers don’t just turn away from retailers that are not on top of diversity and inclusion, they turn towards those taking retail diversity seriously. Customers who themselves are part of one or several minority groups are even more likely to switch brand. Apps like the BUY UP Index help shoppers make more informed choices based on retail diversity practices.

Marketing for Diversity

You probably recognise some of the pictured marketing fiascos below from news and social media. Suffice it to say, don’t repeat these companies’ blunders in your own marketing: Don’t produce racist and sexist marketing materials. Don’t co-opt social movements for advertising. Don’t create culturally insensitive products or ads.

The single most reliable way to avoid these and similar mistakes is to hire diverse teams to design your products and campaigns and manage your online presence. And the more diverse the entire hierarchy of your organisation is, the more likely that someone along the line will spot the issue rather than simply rubber-stamping it.

Retail diversity

Don’t be these companies!

Thanks to online news platforms and social media, shoppers are often very well-informed about diversity and inclusion policy and practices of the retailers they like to buy from. And consumers can follow in real-time how companies handle being called out on the lack of retail diversity, questionable product choices, or poor judgement in advertising.

All the more reason to care about diversity in retail. Not only will doing so positively affect your business, failing to do so is a missed opportunity at best. And at worst it will lead to serious PR disasters like the ones pictured above, and severely affect how your customer base and potential employees perceive your company.


About the Author:

Nicole Shephard spends a lot of time thinking about how businesses can be more inclusive, both in their workforce and in facing their customers. In her research, writing, and consulting, she combines a critical academic angle with extensive experience from IT and HR roles. Read her other articles here and share your thoughts and questions about diversity in retail in the comments below.

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