Inclusion remains the nut to crack: tracking progress on D&I in UK retail

Four years ago, we started a partnership with the British Retail Consortium to hold a mirror up to the UK retail sector – asking how diverse, and how inclusive, retail businesses really are. With nearly four million employees – and contributing over £100bn to the UK economy – changing the D&I dial within the retail sector felt like a particular priority for British society.

In our first year of research in 2021, still in the national lockdown, we found that companies were receptive to the idea of D&I, but many retailers were failing to take the necessary steps to really embed DE&I in their organisation. The sector was far from gender parity at any leadership level, and the proportion of leaders from an ethnic minority background remained in the low single digits.

Happily, a lot has changed since then. This week, it was fantastic to launch the 2024 edition of our joint report with the BRC: Tracking progress on D&I in UK Retail.

The report, as always, draws on three sources. First, MBS research, which encompasses data captured from the industry’s leading businesses through conversations with Chairs, CEOs and CHROs, and analysis of retailers’ leadership teams. Second, workforce data from the BRC survey of D&I Charter Signatories, which includes 53 retailers comprising a workforce of more than one million (almost 40% of the total UK retail workforce).  And third, an assessment of inclusion based on the views of individuals across different demographic characteristics in retail, using the Retail Trust’s “Better You” tool.

On Wednesday afternoon, Helen Dickinson, CEO at the BRC, and I were joined by hundreds of retail leaders for a virtual event exploring the findings and sharing best practice. And as part of the event, it was inspiring to hear from Sarah Boyd, CEO at Sephora UK & Ireland, about how the beauty retailer is moving the dial.

Our research, as I explained on Wednesday, paints a mixed picture.

Positively, D&I is now being treated as a core business priority across the sector. Last year, we found that a very high level of D&I activity was not making a tangible impact to leadership diversity or feelings of inclusion among employees. We recommended that companies target investment towards the most impactful initiatives and assess the impact of their efforts – and this year, we found that this is happening.

In our latest research, we found that more companies than ever are collecting data on the diversity of their organisation (85%); building initiatives to drive up representation of specific minority groups (65%); and setting goals and targets related to D&I (50%). In some cases, retailers are scaling back their raft of programmes to focus on the proven actions which are driving real change.

There are also real signs of progress on leadership diversity. Looking at the representation of women, for example, the proportion of senior roles held by women has edged up since 2023, to 42.3% on the Board, 40.9% on the executive committee, and – most encouragingly – 55.2% at direct reports level.

It was interesting to hear from Sarah some of the steps that Sephora is taking to empower women, and ensure that female representation does not drop off at the more senior levels. “It’s about listening to your teams and really understanding what they need to succeed,” she explained giving an example from their Indian business where they found that they had lots of women working in their stores, but very few women in store manager or area manager roles. As Sarah explained, “We asked for feedback, and learnt that one factor was the danger of travelling alone on public transport at night for women. And to be a store manager, you have to work late shifts. So, we organised a network of taxis for women store managers to get home, and within nine months, 80% of our store managers were women.”

On ethnicity, Board-level ethnic diversity has risen to 12%, nearly tripling from since our research began in 2021. However, at the levels below Board, representation of leaders from an ethnic minority background has flatlined on the executive committee at 9%, and dipped by 1% at direct reports level to 10.3%.

Progress is also not universal across the retail sector. Some smaller companies told us they had deprioritised D&I this year amid a challenging commercial landscape, and while Board-level ethnic diversity has increased overall, the proportion of companies with all-white Boards has actually increased to 35%, as ethnically-diverse NEDs step down from smaller Boards.

“I am proud to see the strides retailers have made in just three short years to improve diversity… But, inclusion is the nut the industry still needs to crack.”

But beyond leadership teams, our report paints a worrying picture about the experience of the workforce in UK retail. The Retail Trust’s survey found that feelings of inclusion are not high among retail workers, and are lowest among those:

– who chose ‘other’ or ‘prefer not to say’ to describe their sexual orientation;

– those who described their ethnicity as Black/African/Caribbean;

– and those between the ages of 25 and 34.

Clearly, despite the comprehensive strategies that have been established in the industry, and the movement of the dial on leadership diversity, there is still a long way to go before everyone in the industry feels properly included. As Helen says, “I am proud to see the strides retailers have made in just three short years to improve diversity – especially at a time when D&I could easily have been relegated to the sidelines in the face of a turbulent economic backdrop… But, inclusion is the nut the industry still needs to crack.”

This is simply too big an issue not to get right. Retailers with diverse teams will find themselves making better, more creative decisions that better serve their varied customer base. And when retailers build truly inclusive environments, they’ll see an improvement in employee productivity and engagement, and a reduction in turnover and sickness absences. “You need to be immersed in D&I,” Sarah offered as a closing piece of advice: “it might not feel natural in a corporate environment, but the industry needs bold leaders who can ask tricky questions out loud. Once this starts happening, it will percolate throughout your organisation. We’ve seen it happen at Sephora, where D&I is led from the top, but felt from our stores to our head offices.”

“Retailers with diverse teams will find themselves making better, more creative decisions that better serve their varied customer base.”

The next chapter is about ensuring that targeted and considered D&I strategies are making an impact where they’re needed: not just in the Boardroom, but on the shopfloor too. Accounting for nearly 10% of employees in the UK, with collaboration and dedication, UK retail businesses can make a lasting difference not just on their own organisations, but on society in Britain and beyond. | @TheMBSGroup