David Campbell
If you’ve ever dabbled in the stock market you’ve likely been told to “diversify your portfolio” or given other similar advice. And you’d be right to listen to your advisor. Diversifying your investments helps protect you from the natural swings that different sectors of the economy are prone to. In the same way, retailers who embrace diversity, equity, and inclusion (DE&I) are exposed to growth opportunities they wouldn’t otherwise have.
The Benefits of an Inclusive Workforce
By and large, companies see diversity, equity, and inclusion(DE&I) as ethical considerations, and understand them within that framework, but fail to fully understand the practical benefits of prioritizing DE&I from a performance perspective.
We have previously written about the good reasons for retail executives to focus DEI initiatives from a customer perspective. Here, we outline how committing to diversity, equit, and inclusion can result in a happier, more productive workforce and improve corporate performance across metrics.
Although the most obvious is demonstrating to your clients and the public at large that your business walks the walk when it comes to inclusivity, the ethical benefits are only one facet of how strong DE&I policies strengthen a company.
- Profits
- Innovation
- Improved hiring
- Reduced turnover
The Profitability of DE&I
Research has repeatedly demonstrated that retailers who build diversity into their corporate culture earn more profits than their less diverse counterparts. McKinsey & Company noted as early as 2010 that companies with diverse teams outperform those that were more homogenous. Similarly, Gallup discovered that retailers with gender-diverse teams earn 14% higher average revenue than their less diverse competitors.
An influential factor in retail buying decisions– and one that is increasingly being addressed in consumer brand advertising and marketing– is the ability for customers to see themselves using a product. Relatability in advertising is important, but it is crucial that the experience being promised through advertising is followed through by ensuring that the relatable brand experience seen in marketing is also felt by customers while they are shopping.
In the retail sector, promoting DE&I in hiring practices, particularly for customer-facing employees, has a direct impact on the profitability on the store level and at a corporate level. When the demographics of employees reflect those of a retail brand’s customer base, the store and their customers benefit equally.
A study in the Journal of Management analyzed the racial diversity congruence-sales performance relationship of 220 retail stores and found a direct correlation between high levels of diversity and store performance. Their study found that the opposite– low-low diversity congruence– also held true. Moreover, they discovered that stores with racially diverse sales associates even outperformed in less racially diverse communities, as well.
Outside of the increased sales that DE&I initiatives drive, there are other data stories supporting the performance boosting power that make the business case for diversity. McKinsey’s featured insight report, “Diversity wins: How inclusion matters” shows that gender and ethnic diversity have a direct impact on the likelihood for corporate financial outperformance versus national industry medians.
A Deloitte study from 2018 found that organizations that prioritized DE&I in the fabric of their corporate cultures were dramatically more likely to exceed critical financial KPIs than their less inclusive counterparts.
The study showed that inclusive organizations were:
- 2x more likely to exceed financial targets
- 3x as likely to be high performing
- 6x more likely to be innovative and operate with agility
- 8x more likely to see better overall business outcomes
Inclusion, Diversity, & Innovation
One might think it obvious that a diverse workforce with multiple perspectives from different backgrounds would be more innovative than a homogenous one, but oftentimes our intuition on these things can be overly generous. In this case, however, the research backs up the expectations; retailers who prize diversity throughout their corporate structure are generally more innovative and faster problem solvers thanks to having access to a variety of skill sets and perspectives.
In the retail sector, this is especially true as technology evolves and omnichannel shopping expands. A diverse workforce with a broad skill set is better able to respond to changing customer preferences. Retailers with strong DE&I cultures enjoy better returns on innovation and invest in new technologies that make their brand more accessible to customers.
Advancements in virtual shopping technology like those offered in Salesfloor’s virtual selling and clienteling platform, enable sales associates to connect with, guide, and sell to customers for whom shopping is often a difficult and painful experience. Salesfloor’s platform allows online shoppers to connect with local sales associates online through a variety of channels– live chat, SMS and WhatsApp, email, and social media– and even book appointments with associates so they can enjoy dedicated time with a trusted advisor who can support them in finding the right clothing, makeup, and accessories in the channel they feel most comfortable shopping.
Improve Recruitment Outcomes
The labor shortage is being felt across sectors, but none more acutely than in retail. Retail chains are struggling to attract and retain sales associates at record rates and, with the holiday shopping season just coming into the rearview, the impact of these challenges are coming into focus. A recent poll from the US Chamber of Commerce suggests the labor crisis is going to continue at least until mid-2022 and may even become permanent if changes to the retail labor model aren’t made to address the underlying reasons for the shortages.
In light of this situation, proactively pursuing diverse hiring practices can help relieve some of the staffing pressures retailers are facing. Not only does a business with diverse hiring practices have a larger talent pool to potentially draw from, but they also improve their likelihood of finding the best candidates for their needs. According to a recent Glassdoor survey of jobseekers, 76% indicated that a diverse workforce was important when evaluating a company or job offer.
The Mercer 2021 Global Talent Trends report bears this out. According to their poll:
- 1 in 3 employees prefer to work for companies that show the same level of responsibility to non-financial stakeholders as they do to investors and shareholders.
- 49% of employees prefer to work for organizations that protect their health and financial well-being.
- Over one-third of employees favor companies with strong corporate values and that prioritize DE&I and sustainability initiatives.
While proactive hiring practices go a long way, the retail employment experience that prospective employees can expect will turn the tide in favor-or against– an employer. Across sectors, companies are investing in technology that creates immersive omnichannel brand experiences that differentiate their brand from competitors. This investment is an acknowledgement that we have integrated technology into every aspect of our lives.
Forward thinking companies recognize that truly immersive customer experiences connect shoppers and brand representatives at the store level as seamlessly in the digital space as they experience shopping in-store. Brands that equip their employees with virtual retail technology have observed that empowering their sales associates with these tools also increases job satisfaction and pride not only in the work they do, but the company they work for. Salesfloor’s platform was designed with the sales associate in mind and allows them to use their social media savvy and tech fluency to reach out, engage, and sell to customers in a way that is natural and reflective of the modern world.
Giving sales associates technology tools to help them succeed in their role conveys trust and confidence in them by their employer, and that confidence is repaid with loyalty and, ultimately, higher sales made by impassioned employees.
Reduced Turnover
A diverse labor force can help ameliorate the effects of the labor shortage in multiple ways. Not only does it improve your hiring prospects, but it can also reduce turnover. Fewer employees leaving means fewer positions to be filled. An inclusive culture benefits employees too, and happy employees are stable employees. According to the aforementioned 2018 Deloitte report, businesses that actively recruit for diversity and maintain an inclusive corporate culture have better retention rates than their less inclusive competitors.
In the retail sector, where attrition has been high and had a significant impact on maintaining operations, companies with inclusive cultures have seen reduced turnover because they take the personal lives of their employees into consideration. By offering more flexible schedules, wellness benefits, and recognizing the unique needs of working parents, companies like Best Buy and Carter’s strengthened their employee value propositions in such a way that decreased disruption due to attrition during the pandemic.
There are many other reasons retailers should be prioritizing both diversity and inclusion across their organization, from the executive board all the way down to store associates, so don’t consider this an exhaustive list. Instead, consider these four examples as an elevator pitch for diversity and inclusion programs. Improving profits directly, via innovation and process refinement, or reducing onboarding/turnover costs, are just the highlights helping encourage hesitant executives to discover the true value of diversity and inclusion within their brand.
The Bottom Line
Customers and employees alike favor retailers that recognise the need for inclusion and diversity, and that make their brands welcoming and accessible to everyone. Technology has become solidly entrenched into every facet of our daily lives because it offers us convenience and allows us to broaden our horizons even when disruptions restrict our movements. Technology can help brands become more inclusive, welcoming spaces for their customers and employees alike, and Salesfloor is committed to helping them do that.
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