Target announced this week that its CEO, Brian Cornell, is stepping down due to slumping sales.
One contributor to falling sales was Target’s reversal on diversity, equity, and inclusion commitments. After 14 years of commitment to diversity, equity, and inclusion, Target reversed its course in January, ending its goals and removing all diversity, equity, and inclusion-related content from its website.
In the wake of this change, more than 250,000 people have signed a pledge to boycott the retailer, leading to a significant drop in foot traffic. According to RetailBrew, “in the 22 weeks following its ending some of its DEI initiatives, Target’s foot-traffic fell from 2024 levels for all but two weeks.”
Contrast that with another retailer, Costco, that doubled down on diversity, equity, and inclusion commitments in the wake of the pushback. Target saw nearly 5 million fewer shopping trips in the four weeks following its retreat from diversity, equity, and inclusion, and Costco saw 7.7 million more visits during the same period.
What can leaders learn from Target’s misstep?
Consumers are willing to hold organizations accountable for their values and commitments.
Increasingly, people shop not just for price and quality, but also with organizations aligned with their values. A new Lightspeed Commerce report found that 96% of Gen Z (born 1996-2913) shop with intention, and 66% buy aligned with their values. People expect organizations to take a stance on social issues that they care about and will hold them accountable for missteps.
It is worse to make inauthentic commitments than do nothing at all.
Performative statements and one-and-done actions are inauthentic. Because Target was so vocal about diversity, equity, and inclusion during times of peak social movements, it’s about face on those commitments elicited a strong adverse reaction from consumers. It felt like a betrayal of their core values and felt inauthentic to consumers. They likely would not have faced the strong pushback had they not been proclaiming to be so committed before.
Commitments must be aligned with the organization’s needs.
Following Costco’s defense of diversity, equity, and inclusion, Costco’s board said, “our commitment to inclusion…does not and has never included quotas or systematic preferences, nor does it mean compromising merit. The demands of our business and our steadfast commitment to serve our members mean that we cannot afford to do anything but hire and promote the most qualified individuals.” There is strong business case for diversity and inclusion, and Costco attributes their success to the diversity of its team and their inclusive culture.
Target was held accountable for waffling on their commitment to diversity, equity, and inclusion. People are more informed about their purchasing decisions, voting with their dollars and aligning loyalty with their values. Rather than ride the wave of the news cycle, organizations that remain steadfast in their commitments are likely to remain relevant to their customers. Diversity, equity, and inclusion was never meant to be a fad. As Costco continues to grow sales through their authentic commitment, leaders should take notes. Think about what your organization stands for and firmly commit to those values over time.