Diversity & Inclusion in Consumer Companies Today: Where Do you Stand?

Introduction

As customer demographics shift and social values take center stage, consumer-facing companies are under unique pressure to get diversity and inclusion (D&I) right. One measure of how high the stakes are: Forty-two percent of customers would pay a premium of 5 percent or more to shop at a retailer with a visible commitment to D&I. Yet Russell Reynolds Associates’ recent D&I Pulse Survey shows that many are struggling to meet this challenge. While some have started a dialogue around diversity, inclusion and other social issues, few have embedded it into their strategies, products and experiences. We look at some of the specific challenges facing the industry based on responses from about 150 global consumer executives, as well as three ways companies can make their efforts more successful.¹

While some consumer-facing companies have started a dialogue around diversity, inclusion and other social issues, few have embedded it into their strategies, products and experiences.

Shifting Customer Expectations

As customer demographics are shifting, embracing D&I is essential for growth. Millennials now represent 30 percent of the population and are the most diverse generation in US history, with about 44 percent ethnic and racial minorities.² Considering that demographics are changing, customer attitudes are shifting as well: Sixty percent of shoppers want retailers to be a part of the dialogue around social issues, something brands have avoided in the past.³ That means customers aren’t just attracted to brands that prioritize D&I, but will distance themselves from those that fail to embrace it. In particular, ethnic minorities, members of the LGBTQ community and younger generations have shown a higher frequency of D&I-driven brand switching.⁴

These consumer-facing companies are going through a transformational change as they adapt to new customer dynamics and attitudes. Silence is no longer an acceptable strategy and an interactive dialogue is necessary for growth. Brands are catering to a more diverse consumer with a much broader set of needs, habits, traditions and values than in the past and therefore need to reinvigorate their missions to effectively communicate and connect with their customers. 

Consumer D&i Strategies Often Do Not Align With Consumer Expectations

Although customers prioritize D&I when choosing where to shop, RRA’s research suggests that few consumer companies have a robust D&I strategy. More than half of consumer organizations are in the early stages of D&I strategy or have no strategy at all. 

Across all industries, two of the biggest barriers to D&I are a lack of clear goals and accountability from the leadership. This is particularly true in the consumer sector. Only 32 percent of consumer executives said their leaders make a visible commitment to D&I, only 32 percent communicate the importance of D&I goals and less than a quarter see leaders actually setting goals and holding themselves and others accountable. 

Not surprisingly, few consumer executives feel their organizations are heavily invested in D&I. Forty percent of executives in consumer organizations said they were aware that their organization had an official diversity strategy; however, only 24 percent had a broad understanding of what that strategy actually was. They felt equally as negative when it came to inclusion, as only 23 percent said their organization had an official strategy to foster an inclusive culture.

These troubling numbers point to the fact that even if consumer companies are willing to commit to D&I in ad campaigns or press releases, there is often an inherent lack of commitment from their leadership to make more foundational changes. 

The Cost Of Getting D&I Wrong

For consumer companies, diverse workforces and leadership teams translate into better customer representation and more relevant perspectives for decision-making around product innovation, customer experience and overall strategy. By failing to promote D&I on the inside of their organizations, brands risk alienating a huge portion of the external market, leaving potential new business on the table.

Consumer companies also miss important internal benefits by not investing more deeply in D&I. Our research shows that companies with advanced D&I strategies tend to see higher levels of employee loyalty, engagement and performance than others. With an inclusive culture, employees are able to provide more effective customer service, encourage innovation and expand creative thinking.

Looking ahead

To move the needle on D&I initiatives, consumer organizations must make meaningful change. Investing in D&I is not a quick fix or a short-term strategy. Instead, it needs to be rooted in a holistic mission that incorporates inclusive practices to fuel diverse cultures and foster a variety of solutions to changing customer needs. While advanced D&I organizations will experience better business outcomes than other organizations, those that take a reactive, check-the-box approach to D&I often do more harm than those taking no action. Although no organization can prevent every misstep, it’s important to have a foundation in place to drive business initiatives around a central purpose that threads D&I through every nook of the organization. 

Authors

GREG HODGE leads Knowledge for Russell Reynolds Associates’ Consumer sector. He is based in London.

KATELYN SCHOENHOLTZ is a member of the Russell Reynolds Associates’ Consumer sector Knowledge team. She is based in New York.

EVAN SHARP is a member of Russell Reynolds Associates’ Consumer sector. He is based in Chicago.

ULRIKE WIEDUWILT co-leads Russell Reynolds Associates’ Diversity & Inclusion Practice in Europe, the Middle East and Africa and is a member of its Consumer sector. She is based in Hamburg.

Footnotes:

1. “All In: How inclusion and diversity drive shoppers’ behavior,” Accenture, 2019, https://www.accenture.com/_acnmedia/Accenture/Conversion-

Assets/Secure/pdf-no-index-3/Accenture-Inclusion-and-Diversity-in-Retail.pdf#zoom=50.

2. Kasey Lobaugh et al., “The consumer is changing, but perhaps not how you think,” Deloitte Insights, May 29, 2019, https://www2.deloitte.com/us/en/insights/industry/retail-distribution/the-consumer-is-changing.html.

3. Accenture, 2019.

4. Accenture, 2019.

5. “Four Companies That Are Getting Diversity & Inclusion Right—And How They’re Doing It,” Forbes, 2018, https://www.forbes.com/sites/patsydoerr/

2018/11/05/four-companies-who-are-getting-diversity-inclusion-right-and-how-theyre-doing-it/#2dc50cf57a2b.

6. “Advancing Diversity & Inclusion,” Unilever.com, 2019, https://www.unilever.com/sustainable-living/enhancing-livelihoods/opportunities-for-women/advancing-diversity-and-inclusion/.

7. “Strategy,” Loreal.com, 2019, https://www.loreal.com/group/diversity-and-inclusion/strategy.

8. “L’Oréal USA Named to Highest Level of Diversity Best Practices Inclusion Index,” Cision PR Newswire, 2019, https://www.prnewswire.com/news-releases/loreal-usa-named-to-highest-level-of-diversity-best-practices-inclusion-index-300892650.html.

9. Forbes, 2018.

10. Accenture, 2019.

11. “Chobani Offers Moms, Dads 6 Weeks of Parental Leave at Full Pay,” NBC News, 2016, https://www.nbcnews.com/business/business-news/chobani-offers-moms-dads-6-weeks-parental-leave-full-pay-n660701.

12. “2025 Sustainability & Social Impact Goals,” Marriott, 2019, http://serve360.marriott.com/wp-content/uploads/2019/10/Serve-360-goals-pagetabloid_2-updated-20180916-English.pdf.