A people-driven business, the retail industry caters to (and often defines) the needs of its consumers.

As an early adopter with regard to formal corporate diversity initiatives, the retail sector used to be considered a high-profile innovator and driver of diversity recruitment programs, while supporting the needs of a diverse employee-base.

But does that remain the case today?  Did the retail sector rest on their laurels following early diversity “wins”, only to become less proactive in advocating and innovating in the diversity arena? 

This would appear to be the case, with the retail sector falling behind other service-based industries such as healthcare and financialservice providers in regard to innovation around diversity and inclusion.  For example, the 2009 DiversityInc Top 50 companies for Diversity® list does not feature a single retailer.

(For the sake full disclosure, JCPenney, Macy’s and Target did make it onto the 2009 “Top 25 Noteworthy Companies” list, which is defined as “rising diversity-management leaders” that are close to earning spots on the Top 50 list.)

Of course, one might argue that, as an early adopter, diversity has been woven into the day to day operations of the retail sector and no longer requires proactive focus (has it really?). Or that the retail sector has suffered significantly in the current economic crisis and therefore lacks budget to fund significant diversity programs (a short-sighted excuse).

But all is not yet lost. There is a crystal clear business case for re-energizing retail diversity programs.  One that becomes more important during times of economic challenge, not less so: BUYING POWER.

Women’s Wear Daily recently published an article in its business section on this very subject. Citing a study conducted by the Selig Center for Economic Growth at the University of Georgia’s Terry College of Business, WWD journalist Dick Silverman notes that:

- Hispanic-Americans are by far the fastest growing minority population in the US and, as such, have almost doubled their 2000 purchasing power to $951 billion in 2008.

- The buying power of 39 million African-Americans is $913 billion; of 14 million Asian-Americans is $509 billion; and of 3 million Native Americans is $61.8 billion. Forecasters predict that these numbers will increase considerably by 2013.

The implications of these continued demographic and economic shifts are highly significant for retailers. How they stand out from competitors in connecting with a diverse consumer base is a key economic driver that they will ignore at their peril...and the solution is not simply to focus on multicultural marketing campaigns. 

In order for retailers to attract diverse customers, they must work to establish a relationship with those customers.

The first step is to do some homework - acknowledging, studying and understanding the variances in generation, geographic location, style, size and personal needs/preferences of a diverse consumer-base.  Natalie Weathers Nixon, associate professor in the fashion industry management department at Philadelphia University, is quoted in the WWD article: “The misperception that all minorities in America live in the same place and do the same types of things is slowly but surely starting to break down.”

But even with the right merchandise at the right time, price and location, companies that lack diversity in their employee base will remain a step behind their competitors who have built diversity into the framework of their corporate culture.  Consumers are more likely to shop and spend where they feel most comfortable and welcomed, which is reflected not only in the merchandise displayed but also in the environment – the store location, the demographic of the sales associates, the signage and the store format. 

Retailers that are struggling to find a competitive edge in today’s tight economy might find significant opportunity in reviewing their diversity and inclusion practices (or lack thereof). What does the executive leadership team and board of directors look like? Is it representative of the current US demographic? How diverse are the store management teams? Are they knowledgeable of the local population’s cultures and preferences? What brand messages are being communicated to consumers both in-store and in the media?  Are buyers, visual merchandisers and product development/design teams being included in existing multicultural and diversity initiatives?

This article does not wish to suggest that no one is considering these issues, but there is still so much more that retailers could do to innovate with regard to multicultural and diversity initiatives.

Investing in a diverse leadership team will help retailers recruit and retain a diverse employee base, as well as (re)connect with a rapidly growing, diverse consumer-base. Certainly, if retailers do not innovate in the face of a clear population trend, they will be left behind.