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IADS White Paper - DEI at a crossroads in retail

Since its founding in 1928, the IADS has served as a collaborative platform for department stores worldwide, conducting research on their activities and supporting members as they navigate ongoing developments.

Each year since 2020, the IADS has published a White Paper on a topic considered strategically important for its members. In 2020, the paper reflected on lessons from the pandemic. Then in 2021, it examined digital transformation and its organisational impact. The 2022 edition analysed sustainability, CSR and ESG. In 2023, retail media and monetisation ecosystems were explored. And in 2024, the White Paper highlighted the crucial role of middle management.

In 2025, the IADS turned its attention to diversity, equity and inclusion (DEI), a subject that has become increasingly complex. The shift began to take shape in 2024, when DEI programmes became a visible point of political contention in the United States. The signing of Executive Order 14151 on January 20, 2025, and the rapid corporate reactions that followed made clear to companies worldwide that DEI is being tested yet again. At the same time, given the challenging economic context, retailers worldwide are asking whether DEI is a must-have rather than simply a distraction from more pressing issues related to “business as usual”. These tensions are the reason why the topic was selected for research this year.

Introduction: what this moment is telling us

During the opening keynote of the 2025 World Retail Congress in London, Ken Murphy, CEO of Tesco, remarked that “by doing the right thing, it also brings growth.” This idea has shaped much of the corporate conversation around DEI in recent years. In reality, the context in which many DEI commitments were originally made has shifted. Political polarisation, economic pressure, demographic shifts and evolving customer expectations have placed DEI under closer scrutiny.

The IADS White Paper  explains why DEI remains, in our point of view, a business imperative. Retail employs one of the most diverse workforces globally and serves an equally diverse customer base. Social justice movements and the uneven effects of the COVID-19 pandemic increased expectations that companies should contribute to fairness and opportunity. Younger consumers also increasingly choose brands that reflect their values. According to Accenture, 41% of shoppers have switched retailers because they felt a company did not prioritise DEI. This indicates that inclusion can influence consumer behaviour in measurable ways.

Research from McKinsey & Company indicates a strong association between diverse leadership teams and improved organisational outcomes. Companies with more gender-diverse executive teams were more likely to outperform financially than those with lower diversity. These findings reinforce the business relevance of inclusive leadership.

Despite widespread commitments, progress in retail remains uneven. Women constitute the majority of frontline retail workers and influence most purchasing decisions, yet they remain underrepresented in senior leadership roles. Representation of racial and ethnic minorities in top roles also lags behind the workforce’s diversity. The White Paper highlights a clear perception gap: many leaders believe they foster inclusive workplaces, while significantly fewer employees share that view.

Economic pressures and political tensions have also slowed or altered progress in some organisations, creating uneven movement across the sector. Some retailers continue to advance, while others have paused or adjusted their approaches. IADS notes that stepping away from DEI carries strategic risks. Companies that remained committed during recent crises tended to demonstrate greater adaptability and organisational strength, whereas those that retreated often experienced diminished trust. As Ken Murphy suggested, DEI can support growth in the same way as other core strategic priorities.

The human advantage: how DEI supports retail performance

Evidence from across the industry shows that DEI strengthens the everyday functioning of retail organisations when it is embedded thoughtfully rather than treated as a separate initiative. Four consistent patterns stand out:

• Diverse leadership and inclusive cultures support stronger financial and operational performance. Companies with broader representation at senior levels tend to make better decisions and avoid narrow thinking, which improves their ability to respond to changing markets and customer needs.
• Inclusion has a clear impact on retention. Retail has long struggled with high turnover, and this pressure eases when employees feel valued and connected to their teams. A sense of belonging, supported by managers who listen and foster meaningful relationships, has been shown to reduce churn and strengthen commitment. Research cited in the White Paper indicates that employees who feel their opinions are valued are more engaged and more likely to remain.
• Inclusive teams are more productive. They share information more openly, surface more perspectives and experience fewer operational errors. Psychological safety and equitable voice sharing translate into smoother store operations, better cross-functional collaboration and improved customer interactions. Even minor improvements in how employees feel heard can lead to measurable gains in performance and safety.
• Inclusion drives innovation. Many retailers say that their strongest ideas come from employees on the shop floor, who observe customer behaviour directly. When people feel able to contribute, organisations gain access to a broader range of insights, leading to improvements in merchandising, service models, and product design. This is important in a global sector serving an increasingly diverse consumer base.

Taken together, these insights form a consistent business case. DEI is not an abstract concept. It shapes how teams communicate, how customers are served and how effectively companies adapt to change. When inclusion is part of everyday practice, it supports performance, trust and competitiveness.

A global imperative, many local realities

DEI does not look the same everywhere. Cultural expectations, regulatory frameworks, workforce demographics and social norms all influence how inclusion is understood and practised across regions. Retailers operating internationally cannot assume that one approach will work everywhere and must account for meaningful variation in priorities and sensitivities.

In some markets, gender equality remains the central focus. In other cases, ethnicity, disability, socioeconomic background, religion, or national integration policies carry greater weight. Attitudes toward DEI language also differ, as do expectations around transparency and communication. Some regions emphasise compliance, quotas or reporting, while others prioritise cohesion, community engagement or workplace harmony.

The White Paper examines these differences across Europe, the Middle East, Asia-Pacific, Africa, Latin America, and North America. It highlights that North America faces a mix of stakeholder pressure and growing backlash. Europe places strong emphasis on gender parity and disability inclusion, shaped by established regulations. The Asia-Pacific region reflects a more diverse landscape, in which demographic complexity and varying levels of comfort with DEI concepts shape corporate practice. The Middle East and Africa illustrate rapid workforce changes and localisation efforts, while Latin America presents contexts where racial, indigenous, gender and LGBTQ+ inclusion intersect with longstanding social inequalities.

However, across these regions, one insight stands out clearly. Retailers succeed when they tailor their approaches to local expectations while upholding universal values of fairness, dignity, and equitable opportunity. Balancing this global consistency with regional nuance has become one of the most critical operational challenges for international retail groups.

Lessons from the field

DEI is illustrated in the White Paper through real examples from IADS members and retailers around the world. These cases show how inclusion efforts succeed in practice, and where they fall short. Retailers that embedded DEI into hiring, leadership expectations, daily management and operational systems saw stronger engagement and trust. Those that treated DEI as a stand-alone programme, or relied on statements rather than action, often struggled to maintain momentum and, in some cases, faced reputational or operational setbacks.

Across these examples, several patterns emerge:

• Clarity matters: employees trust DEI efforts when goals, responsibilities and expectations are explicit.
• Consistency matters: progress is more durable when initiatives continue even as external conditions shift.
• Listening matters: understanding how underrepresented groups experience the workplace helps reveal blind spots.
• Action matters: practical steps such as fair hiring practices, equitable promotion pathways and inclusive meeting habits carry more weight than broad declarations.

When DEI is implemented in a practical and structured way, organisations experience improved communication, stronger team collaboration, enhanced customer interactions, and a more resilient culture. These field insights reinforce a central message: DEI drives performance when it is built into the organisation’s routines, not when it is treated as an isolated initiative.

Taken together, the retailers examined in the White Paper illustrate how these principles play out across different organisational models and regional contexts. Some companies, such as John Lewis Partnership and Wegmans, demonstrate how deeply rooted people-centred cultures can create strong foundations for inclusion. They also revealed that values alone are insufficient without explicit leadership accountability and measurable progress at senior levels. Other retailers, including Falabella, The Mall Group, and Marks & Spencer, demonstrate that DEI is experienced most powerfully through everyday management practices. Their emphasis on well-being, flexibility, intergenerational inclusion and psychological safety is closely linked to lower turnover, higher engagement and more consistent service quality in labour-intensive retail environments.

Several cases highlight the importance of addressing equity through systems and structures. Bloomingdale’s experience with commission models, along with Galeries Lafayette’s and El Corte Inglés’ focus on internal mobility, disability inclusion, and data-driven targets, demonstrates that inclusion challenges often lie within pay, promotion, and progression mechanisms rather than intentions or culture alone. In another set of examples, Chalhoub Group, Target and Best Buy, illustrate how inclusion can be leveraged to support innovation, brand relevance and growth. In these examples, diverse perspectives inform merchandising, marketing, supplier relationships, and community engagement, thereby strengthening customer connections and, in some cases, supporting broader business transformation.

Finally, the White Paper documents instances in which DEI was neglected, inconsistently sustained, or poorly managed. Cases such as Abercrombie & Fitch, H&M and periods of perceived pullback at Walmart underline the reputational, operational and trust-related risks of exclusion, cultural blind spots or inconsistency. They also show that progress is not fixed: retailers can move forward or backwards depending on leadership focus and sustained commitment. Seen collectively, these examples reinforce that DEI in retail is neither uniform nor static. Its impact depends on how clearly it is defined, how consistently it is applied, and how closely it is integrated into the systems and decisions that shape everyday work. In a context of continued uncertainty, these patterns help explain why DEI increasingly functions less as a statement of values and more as a contributor to organisational resilience.

Conclusion: DEI as part of retail resilience

DEI continues to act as a stabilising force for retailers navigating political tension, labour shortages and rapid technological change. Inclusive organisations make more informed decisions, adapt more readily and maintain higher levels of trust across their teams. In this sense, DEI is not simply about meeting expectations. It is part of what enables an organisation to remain steady when conditions shift.

The advantages become visible in everyday operations. Inclusive workplaces see stronger collaboration, fewer barriers between frontline teams and headquarters and smoother execution during periods of operational pressure. Employees who feel respected and able to contribute are more likely to remain, thereby reducing turnover in a sector where continuity is essential to service quality. These practical elements of inclusion, such as how meetings are conducted and how opportunities are shared, become habits that strengthen overall performance.

DEI also supports innovation and customer relevance. Retailers consistently report that diverse perspectives help anticipate changes in consumer behaviour and generate ideas that improve products, services, and the store experience. When employees feel comfortable sharing insights, problems are addressed sooner, and teams adjust more quickly to new trends. These capabilities are becoming increasingly important as AI, sustainability demands and demographic shifts change how teams work and how customers engage with retailers.

The IADS believes that retailers who approach DEI with clarity, consistency and long-term focus will be better positioned to face future challenges. Inclusion strengthens resilience by grounding organisations in fairness, opportunity and belonging, qualities that support people and performance at the same time. At this crossroads, retailers who integrate these principles into their everyday decisions will be best prepared to remain connected to both their employees and their customers.

Credits: IADS (Maya Sankoh)