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This is the second article in IADS's series expanding on themes from the January 2026 White Paper DEI at a crossroads in retail. After reviewing the Abercrombie & Fitch business case the focus shifts to the broader US retail landscape.

In 2020, following George Floyd's murder, U.S. retailers launched ambitious DEI programmes and made sweeping public commitments. By early 2026, many had eliminated or scaled back their initiatives, citing changing political realities and legal risks. Target ended its Racial Equity Action and Change initiative. Walmart wound down its racial equity centre. Nike became the first major retailer targeted by federal investigators over its diversity goals.

For U.S. retailers, the stakes extend beyond reputation to legal and financial exposure. Federal contractors face potential liability for maintaining programmes the Trump administration deems "illegal DEI." Yet enforcement remains inconsistent, with conflicting court rulings creating uncertainty about what's permissible. In late April 2026, that uncertainty sharpened. The U.S. Supreme Court's ruling in Louisiana v. Callais effectively ended sixty years of protections against racial discrimination in elections. The Trump administration's executive order barring DEI programmes among federal contractors remained in force despite legal challenges, carrying significant financial penalties for non-compliance.

The political pendulum: From 2020 to "We ended DEI”

On September 22nd, 2020, President Trump issued Executive Order 13950, curtailing federal diversity training. At the same time, America was reeling from nationwide protests over the murder of George Floyd on May 25th, 2020, prompting a wave of corporate DEI commitments. On January 20th, 2021, President Biden rescinded Trump's ban and issued Executive Order 13985 to advance racial equity. The reprieve was short-lived. On June 29th, 2023, the Supreme Court struck down affirmative action in college admissions, emboldening legal challenges to corporate diversity programmes. By the end of that year, eleven states had passed anti-DEI laws; by mid-2025, that number reached 28.

Trump had campaigned against 'woke' business practices, and his return to office brought immediate executive action. In January 2025, he signed two executive orders directing federal agencies to 'terminate any equity-related plans' and investigate private-sector DEI programmes. Executive Order 14173 required federal contractors to certify they don't operate "illegal DEI" programmes, exposing non-compliant contractors to potential treble damages. On February 24th, 2026, Trump declared victory in his State of the Union address: "We ended DEI in America." Yet between Trump's declaration and the reality on the ground lies a picture that is neither as decisive nor as uniform as his words suggested.

Corporate retreats: Target and Walmart lead the rollback

The political pressure of 2023–2025 translated quickly into corporate action. Among US retailers, the rollbacks were neither tentative nor incremental:

• Target: On January 24th, 2025, just four days after Trump's anti-DEI executive orders, Target announced it would end its three-year DEI goals and its Racial Equity Action and Change (REACH) initiative. The retailer stopped participating in diversity indices and renamed its "Supplier Diversity" team to "Supplier Engagement." Seven months later, CEO Brian Cornell stepped down and transitioned to executive chairman. Analysts disagreed on whether the DEI rollback or operational struggles drove his departure .
• Walmart: The nation's largest retailer rolled back several DEI programmes in November 2024, choosing not to renew its five-year racial equity centre and ending supplier diversity goals. Conservative activist Robby Starbuck hailed Walmart's retrenchment as "the biggest win yet. " in the movement to “end wokeness.”

Target's double bind: The ICE crisis

Target's January 2025 DEI rollback was intended to reduce the retailer's exposure to political controversy. 

Operation Metro Surge

In December 2025, the Department of Homeland Security launched Operation Metro Surge, deploying 3,000 federal immigration agents to Minnesota. The Trump administration simultaneously announced a 120% increase in ICE's workforce, adding 12,000+ officers. On January 7, 2026, ICE fatally shot Renee Good, a US citizen. On January 8, ICE agents detained two Target employees—both US citizens—at the Richfield, Minnesota, store in a widely circulated video. Target issued no public statement. Bloomberg characterised Target's silence as "overcorrection," arguing that while Target may have believed silence broadcast neutrality, "to customers and employees, it more likely suggests cooperation or collusion.”

Employee activism and corporate fear 

More than 300 Target employees signed an internal letter urging executives to deny ICE access to Target properties without a warrant. Workers at multiple stores called out sick, fearing for their safety. On January 24th, Alex Pretti, a US citizen, was shot and killed during a Minneapolis protest. The next day, more than 60 Minnesota CEOs (including Target's incoming CEO) issued a cautious letter calling for "de-escalation" but neither condemning the killings nor calling for concrete action. The New York Times reported the muted response reflected "corporate fear of retaliation from the administration.

For Target, the silence contrasted sharply with its vocal 2020 response to George Floyd's murder. The company's trajectory from DEI champion (2020) to DEI sceptic (January 2025) to silent bystander (January–February 2026) illustrated what some call a "double bind": the DEI rollback failed to insulate Target from conservative criticism while alienating progressive customers and employees.

Broader retail impact

Target's predicament was not unique. Federal immigration enforcement targeted retail stores nationwide—Home Depot parking lots became a focal point for ICE sweeps, while hotel chains faced similar pressure: at least one franchisee's decision to decline rooms to ICE agents triggered a public rebuke from the authorities and the severing of its franchise agreement. Consumers organised multi-front boycotts. The "Resist and Unsubscribe" campaign targeted Amazon, Apple, Google, and others for ICE-enabling contracts. Target faced boycotts from both progressives, angered by the DEI rollback, and community members outraged by its ICE silence. Foot traffic fell 2% in Q4 2025.

In Worthington, Minnesota, where one in three residents is an immigrant, businesses reported sales declines of 50–70%. Latino grocery stores remained open but with locked doors, requiring employees to visually confirm that customers were not federal agents. The ICE surge threatened economic viability in communities where immigrant entrepreneurs had revived downtowns hollowed out decades earlier.

Legal uncertainty: When courts and agencies contradict each other

By early 2026, the legal landscape became a patchwork of competing rulings. On February 21st, 2025, a U.S. District Judge blocked key provisions of both executive orders, finding them "facially unconstitutionally vague." Nearly a year later, the U.S. Circuit Court of Appeals delivered a contrasting ruling in a separate case, vacating a preliminary injunction, ruling that Trump could direct agencies to terminate equity-related funding based on policy priorities.

For retailers, uncertainty crystallised when the Equal Employment Opportunity Commission (EEOC) targeted Nike on February 4th, 2026, investigating alleged discrimination against white employees based on Nike's public commitment to fill 30% of director positions with racial minorities. Yet six days later, EEOC backed down from investigating 20 major law firms, acknowledging compliance was "voluntary."

Later that month, the EEOC sued Coca-Cola, alleging that a two-day employer-sponsored networking event violated Title VII because only female employees were invited, excused from work, and paid, while male employees were excluded. The case suggested that the new enforcement climate was not limited to race-conscious targets or hiring goals; it could also reach sex-specific leadership and networking initiatives framed as inclusion efforts.

Private litigation compounded the pressure. A conservative legal strategist filed lawsuits challenging diversity fellowships at major law firms; three subsequently changed their eligibility criteria to allow any applicant to apply. McDonald's settled a lawsuit by opening its scholarship programme to "any student who can demonstrate an impact on or commitment to the Latino community."

The message was contradictory: DEI programmes faced heightened scrutiny, yet government enforcement authority remained contested and inconsistently applied. Federal contractors operated under strict prohibitions while non-contractors navigated murky guidance.

Holding the line or letting go: How department stores responded

Retailers responded with varying strategies. Macy's and Nordstrom maintained DEI commitments and chief diversity officers. Kohl's took a middle-ground approach, rebranding its role to "Chief Inclusion & Belonging Officer" in March 2025 while continuing related efforts. TJ Maxx maintains that "inclusion and diversity have been an important part of who we are." Smaller retailers like Faherty and Mason Dixie Foods publicly doubled down, framing DEI as core to company identity. Costco continues to support DEI initiatives, citing brand value alignment.

For retailers seeking a middle path, the evidence points toward inclusive universalism. Research by NYU suggests that opening diversity initiatives to everyone can encourage allyship, reduce backlash, and engage all employees in an inclusive culture. However, employees from historically marginalised groups may lose spaces for frank peer conversation—requiring acknowledgement of "what's been lost" rather than "toxic positivity."

From rollback to redesign: New DEI frameworks for retail

The question facing retailers in 2026 is not whether to pursue inclusion, but how to do so in ways that are legally defensible, genuinely effective, and able to survive the next political shift.

Levelling vs. Lifting

NYU research distinguishes between "lifting" strategies (targeted programmes for specific marginalised groups) and "levelling" strategies (removing bias from systems so processes become fairer for everyone). While lifting strategies face mounting legal challenges, levelling initiatives—structured interviewing, anonymised résumés, clear evaluation rubrics—create fairer processes and carry less legal risk. "The Supreme Court is never going to say it's illegal for an organisation to level the playing field by removing unconscious bias," a researcher notes.

The FAIR Framework

Inclusion consultant Lily Zheng's FAIR approach (Fairness, Access, Inclusion, Representation) prioritises "outcomes over intentions, systems over self-help, coalitions over cliques, and win-win over zero-sum." Rather than heritage month celebrations, FAIR demands interventions that solve problems by changing systems. Zheng reframes representation itself—shifting from demographic boxes to measuring trust: leaders who, regardless of identity, "understand our needs" and "speak with true understanding of what I care about." This emphasises the development of skills: critical thinking, relationship-building, and handling disagreement.

Targeted universalism

The most powerful concept is targeted universalism, developed by UC Berkeley's Othering and Belonging Institute: acknowledge group disparities while using that understanding to fix shared environmental problems. Zheng illustrates with a company where men dominated leadership but reported the worst well-being, while women had better outcomes but were underrepresented. Rather than framing it as a gender battle, they discovered that the underlying problem was a culture of overwork designed around the assumption that employees had stay-at-home spouses and few responsibilities outside work. Addressing the broken system improved outcomes for both men and women.

This embodies the "curb-cut effect"—when designing for those with the worst experiences, improvements benefit everyone. For retailers: rather than "How do we get more women into store management?" ask "What systemic barriers prevent excellent employees from advancing—and how do those barriers disproportionately affect certain groups?" Solving scheduling inflexibility or childcare support may disproportionately help women and parents while creating stronger talent pipelines for everyone.

As Target's experience illustrates — from DEI champion to rollback to ICE silence — attempts to sidestep inclusion through "neutrality" can backfire spectacularly. Trump's February 2026 declaration that "we ended DEI in America" glossed over a complex reality: while many companies rolled back targeted programmes under legal and political pressure, the work of creating fair, inclusive workplaces continue under different frameworks.

As documented in IADS' 2026 White Paper: DEI at a crossroads in retail, the retailers that weathered this period most effectively shared a common approach: DEI embedded in operations rather than siloed to HR, visible CEO backing, transparent communication during setbacks, and systems redesigned for their most marginalised employees — creating improvements that benefited everyone. The frameworks offered by various researchers suggest a clear direction: not abandoning the goal of fair workplace creation but reshaping how that work gets done. Systems-level changes removing bias don't just survive legal challenges — they build workplaces where everyone can contribute and advance based on actual merit. For retail facing persistent labour challenges and shifting consumer expectations, that is not just ethically sound — it is strategically essential.

By mid-February 2026, as Operation Metro Surge wound down, Target was left rebuilding trust on multiple fronts: with employees who felt abandoned, with customers questioning the company's values, and with a hometown that watched the retailer retreat from civic leadership. The lesson resonates beyond Target: the retailers that emerged from 2025–2026 with both credibility and capability intact were

Credits: Maya Sankoh