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It is no secret that the millennial and Z generations are having a significant and varied impact on the retail industry. These generations have pushed retailers into the world of last mile delivery, have demanded brands reduce their carbon footprint, and have driven organizations to offer products that address consumers’ diverse and evolving needs.

Even more impactful has been the demand that retailers represent positive contributions to society. Employees and consumers alike want to purchase from and work for retailers that align with their values and beliefs. In a study conducted by Accenture in early 2019, 42% of ethnic minority shoppers would switch to a retailer committed to D&I and 41% of LGBT shoppers would switch to a retailer committed to D&I. Along with environmental and sustainability actions, the call to create diverse, equitable, and inclusive workplaces is top of mind. And the call for action goes beyond making a statement. Retailers must show they are taking measureable actions to improve diversity, equity, and inclusion to demonstrate their commitment to change.ii

As we approach the end of 2020, we can acknowledge that the global pandemic and widespread social unrest has led retailers to look inward and evaluate their current practices and culture to understand where they need to invest and make improvements.

Where does diversity, equity, and inclusion (DE&I) fit into your reinvention priorities for 2021?

Retail today, in comparison

“In 2014, Gap, Inc. became the first Fortune 500 firm to publicly confirm it pays men and women equally for the same jobs.”

While other common household names have achieved the same status, Glassdoor found and published in its��Progress on the Gender Pay Gap: 2019��that retail and media tied for the largest gender pay gap across industries. The report also showed that, in both industries, women in the US earn on average 93.6 cents per dollar earned by men working in the same job title, same company, and with similar background and experience.

Gap, Inc. laid down the challenge in 2014. But, just like other industries, retailers have not made a lot of change in the past six years. In fact, more than 80% of employees can’t cite a concrete initiative their company has implemented to address gender inequity.iii

According to Mercer’s����report published in 2019, 74% of retail organizations (n=42) indicated that their organization is focused on improving diversity and inclusion. This is slightly lower than, but does align with the global, all industry, findings which were collected from over 1,000 organizations. However, another point of alignment with the full survey group is that less than half of retail organizations have a documented D&I strategy. Additionally, while senior leaders in retail organizations are reported as being engaged, as you move further down in the organization, the engagement appears to wane.

Imagine how different an employee’s, even a customer’s, experience within one retail outlet versus another can vary. A public statement from a company with leadership commitment is great. Yet, the commitment made by a woman CEO gets your attention. PricewaterhouseCoopers’ 2019 study, Unraveling the Fabric Ceiling, showed that in the U.S., just 12.5% of apparel and retail apparel companies in the Fortune 1000 are led by women.iv��Yet 73% of the industry’s entry-level employees are women. Even though data and recent public focus is diversity, pay equity, and inclusion, without a well-designed multi-faceted approach to diversity, equity, and inclusion that is implemented and measured throughout the organization of a retailer, it’s all just talk and no measurable action.

Changing thoughts about DE&I

Historically, pay equity meant looking at people in the same job and in the same role and asking, “Are they paid fairly considering experience and performance?” Today, organizations have realized that uncovering inequities and making pay adjustments is not even addressing the root of the problem, but rather just treating a symptom of a larger issue.

Organizations need to ensure there is equitable opportunity for all employees to advance their career and achieve health and financial wellness. In order to do that, we need diverse perspectives in leadership positions to help shape programs and policies that provide the same opportunities for all.

When considering the employee lifecycle, all aspects must be examined to identify opportunities for improvement.

Some considerations for the recruiting process include:

Before an employee is even hired — how and where do you advertise to recruit for that role? Is it in ways that make the position available to all races, genders, ages, socioeconomic backgrounds, and geographies?

During the selection process, is there a diverse candidate slate? Is there a diverse group of interviewers to lend their expertise toward selecting a candidate? Does your selection process protect against unconscious bias?

What about your employee value proposition? Is it designed to be attractive to a wide variety of candidates, or does it cater to a particular demographic?

In light of the social unrest in 2020, along with Millennial and Gen Z dominating both the employee and consumer population, retailers are having intense discussions about race and representation. Retailers are realizing that they need to commit to DE&I initiatives in order to both attract and retain talent but also to enhance their brand and reputation. Not doing so could cost them, greatly. Last year, an incident in a coffee house of one well known retailer suffered a revenue loss of nearly $16 million due to widespread coverage of a racist incident.v

Steps to take now

Here are some actions to consider when reviewing your organization’s diversity and inclusion initiatives:

• Engage in the conversation with leadership — what is their level of commitment to improving DE&I? How can that level of commitment be enhanced? Where are their roadblocks?
• Conduct an internal labor market analysis using career levels to identify where you have opportunities to improve representation, hiring, turnover, and promotions by various dimensions of diversity (e.g., gender, race/ethnicity, age, geography)
• Examine all benefits, wellness, and rewards programs to identify any design flaws that would promote disproportionate gain or reward from one employee group to another.
• Conduct pay equity analysis, remediate any gaps uncovered, and consider becoming more transparent about your pay practices.
• Evaluate your mentorship opportunities. Does your succession program have a highly talented pipeline that is diverse?
• Publicly document actions you are taking to improve DE&I both for employees and consumers; incorporate statements of your commitments whenever possible.
• Seek advice and feedback from those that are impacted the most — your employees. Actively listen and engage business resource groups focused on diversity and inclusion. Conduct internal focus groups across all races and ethnicities to really connect with your people.

Regardless of where your organization is on their journey toward a diverse, equitable, and inclusive culture, taking a fresh look at your programs and practices as we head into 2021 is a good idea. Identify where you need to take action and put in place a roadmap to start closing the gaps.

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iii. Pamela Brown, Stacey Haas, Sophie Marchessou, and Cyrielle Villepelet. Rep. Shattering The Glass Runway. McKinsey & Company, Council of Fashion Designers of America (CFDA), Glamour, October 4, 2018.��.

iv. Unraveling The Fabric Ceiling. PricewaterhouseCoopers, 2019.
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