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The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
The Changing Consumer and the Workforce
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The Changing Consumer and the Workforce

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As diverse communities grow – and changes in the consumer base and workforce accelerate – retailers and manufacturers must find new ways to connect with their consumers. …

As diverse communities grow – and changes in the consumer base and workforce accelerate – retailers and manufacturers must find new ways to connect with their consumers.
Forging that connection rests largely on the consumer products and retail industries’ ability to create culturally competent organizations – organizations that not only
have diverse employee bases, but also capitalize on that diversity in their idea generation and decision making.
Now more than ever, gaining a competitive edge is dependent on the ability to leverage the diversity of today’s workforce.

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  • 1. The changing consumer andthe workforce imperativeExecutive perspectives on diversity in theretail and consumer products industries
  • 2. Contents Foreword 3 Executive summary 4 Opportunities in diverse communities 5 The diverse workforce imperative 12 Building diverse work teams 14 The path forward 20 Endnotes 222 Executive perspectives on diversity in the retail and consumer products industries 2
  • 3. Foreword Your consumers have changed – now it’s your turn“The business case has been demonstrated quite Diverse communities are the fastest-growing part of retail buying power – and an opportunity too big to ignore.thoroughly. When you’ve got over one-third of this But too many retailers and manufacturers are failing tocountry as people of color, a diverse workforce seize this important moment. The marketing and talentbenefits in terms of connection and creativity. management strategies of just a few years ago aren’t effectively tapping into today’s consumer preferences.Whether Latino, African American, Asian –regardless of the group – it is hard to form a brand As diverse communities grow – and changes in therelationship unless you have people that come from consumer base and workforce accelerate – retailers and manufacturers must find new ways to connectthose cultures and ethnicities that can connect.” 1 with their consumers. — Don Knauss, chairman and CEO, The Clorox Company Forging that connection rests largely on the consumer products and retail industries’ ability to create culturally competent organizations – organizations that not only have diverse employee bases, but also capitalize on that diversity in their idea generation and decision making. Now more than ever, gaining a competitive edge is dependent on the ability to leverage the diversity of today’s workforce. You’ve heard the stories: A car salesman who ignores a woman buyer and talks to her husband instead; an agency that translates its ads from English to Spanish without any cultural translation in between; a company that paints its product pink and waits for female buyers who never come. Volumes have been written about the importance of diversity to business. This report presents a different perspective. It not only outlines the opportunities presented by diversity, it explores the real-world experience of multiple industry executives who have forged the critical connection between their multicultural consumers and their multicultural workforces. Executive perspectives on diversity in the retail and consumer products industries 3
  • 4. Executive summaryOverview • Multicultural talent will drive the innovation that keepsThis study is based on one-on-one interviews with two companies relevant to a changing consumer base. On adozen retail and manufacturing executives and information strategic level, the multiple perspectives of a fully diversefrom secondary research sources. Deloitte Consulting team lead to the fresh and original ideas necessary toLLP (“Deloitte”) employees conducted these interviews in propel a business forward. Because the best consumerperson and by telephone in early spring 2010. insights come from those who share a consumer’s cultural experience, recruiting, retaining, and advancingFindings a diverse workforce are integral to creating a brand-• The consumer landscape is in transition. For the past consumer connection. Further, consumers feel most few decades and looking forward to the mid-21st comfortable doing business with companies whose century, diverse communities have represented and will employees mirror their communities, and they manifest continue to represent a growing share of consumer retail this affinity through brand-loyal behavior. spending. To remain relevant, companies must take steps • Retail and consumer products organizations must take now to drive innovation that will meet the needs of the deliberate steps to bring diverse employees into their changing consumer segments that wield this vast and companies through ambitious recruiting efforts and growing purchasing power. strategic practices specifically tailored to attract and• One in three individuals in the United States is a person develop such talent. of color, and by 2050 that proportion is expected to • Top management must come to view workforce diversity climb to one in two. Nearly 16% of the population is not as a stand-alone program, but as an essential Hispanic.2 The size and faster-than-average growth element for their business survival. Inclusion must replace rates of diverse communities – and their rising mere tolerance for differences and be actively embraced disposable incomes – have taken them from a niche to for the value it brings. With the unwavering commitment a mainstream opportunity. Creating relationships with of their top leadership, retail and consumer products these consumers is increasingly vital to the survival of organizations can redefine the culture of their companies retailers and consumer products manufacturers. and genuinely reflect and embrace pluralism for the• Retailers and manufacturers cannot serve the changing benefit of their consumers, communities, employees, consumer without better understanding them. To build and shareholders. market share and loyalty in diverse markets, retailers and manufacturers must offer products, pricing, marketing, and in-store experiences that appeal to these customers and meet their needs. “Diversity in the workforce is a business imperative. The best leaders and the best companies will leverage and exploit diversity to help make their organizations more relevant and sustainable. Their workforce will view the world differently. They will come up with better solutions and be more effective in the market by seeing the opportunities that others in the industry do not see.” 3 — James White, president and CEO, Jamba Juice4
  • 5. Opportunities indiverse communities Multicultural is the new mainstream. The trend is clear: As the U.S. consumer market becomes more diverse, the United States is becoming an increasingly diverse products, advertising, media placement, and the shopping nation. According to the U.S. Department of Commerce experience itself must be tailored to resonate with each Minority Business Development Agency’s report, “Minority expanding market segment. Effective multicultural Population Growth: 1995 to 2050,” over the next 40 years, marketing requires cultural competency – genuinely 85% of U.S. population growth will come from non-white understanding and addressing the cultural nuances, ethnic groups. Moreover, for nearly the past two decades, preferences, and values of diverse communities. Retailers the growth in buying power of minority communities and manufacturers who fail to recognize the changing has greatly outpaced that of white consumers. While consumer landscape do so at their own peril. purchasing dollars among whites increased 139% between 1990-2008, growth was 337% among Asians, 213% Dave Dillon, chairman and chief executive officer of among Native Americans and 187% among African The Kroger Co., recently explained how he came to Americans. The difference is even more dramatic among better appreciate the diverse consumer market and its Hispanics, whose buying power rocketed 349% compared relationship to the bottom line: “At one time, we had to growth of only 141% among non-Hispanics during the men in charge of buying for the feminine hygiene product same period.4 category – they couldn’t understand why the products weren’t selling. After exploring many different options, they came to a conclusion: Men didn’t have a clue as to what mattered to the consumer who actually used the product.”“Kingsford brand was 10% of revenue and basically a brand that wassupposed to be dead because of gas grills. However, via research andinsight work with Latinos, and the general trend to staying at home,Kingsford has resurged to six percent growth. This is largely due to thefamily orientation in general and in the Latino community. Latinosbarbeque and cook outside more often, oftentimes with wood char. Wefocused on getting them acclimated with charcoal briquettes.Connecting with them and our brand and introducing charcoaltransformed what was a flat business to a growing business.” 5 — Don Knauss, chairman and CEO, The Clorox Company Executive perspectives on diversity in the retail and consumer products industries 5
  • 6. Dillon continued, “Then there was a personal experience “It’s critically important to understand customerI had in Hutchinson, Kansas. I was approached by anAfrican-American customer who didn’t like shopping in needs in the retail industry. If there is product notDillon stores. She said, ‘Because you don’t have people selling in a particular store, there is usually a goodworking in the store that look like me and you don’t carry reason. Most likely, it’s because the product is notproducts that I like, I won’t be shopping here anymore.’This insight made us value and appreciate the needs of our right for that store and its customers. At Sweetbay,shoppers. We became intentional about hiring from the we are focused on making sure that we merchandisecommunity and ensuring that the right products were in and assort our stores appropriately based on storethe store. As a result, we grew our sales in this area.” 6 and customer needs. While we continuously workFour communities with our vendors and suppliers to negotiate lowA large part of future retail growth will come prices, it is equally important that we offer the mostfrom four communities: women, Hispanics, AfricanAmericans, and the lesbian, gay, bisexual and relevant products to our customers. For ourtransgender (LGBT) community. These markets each suppliers, it’s critical that they are investing in thepresent a valuable opportunity to savvy retailers and same commitment, whether it’s through the peopleconsumer products manufacturers. they hire, the research they conduct or in theThe Hispanic market will increasingly represent a products they sell.” 7larger proportion of all buyers as it is expanding insize more rapidly than other groups, according to U.S. — Mike Vail, president and COO, Sweetbay SupermarketCensus figures. Women’s market Women control $4.3 trillion of the $5.9 trillion in U.S.The U.S. Department of Commerce Minority Business consumer spending, making them “the largest singleDevelopment Agency reports that the African-American economic force in the world,” according to the U.S.population is seeing gains in disposable income, giving Women’s Chamber of Commerce.8 Factors affecting theirthat segment the ability to spend more. buying clout include increased rates of higher education, greater levels of entry into and advancement withinMembers of the LGBT community are tech-savvy early- the workforce, more small business ownership, andadopters, brand loyal, and more willing than some other responsibility for 85% of consumer-buying decisions.9segments to use their substantial buying power forincreased discretionary spending, according to “The Gay It’s little surprise that shopping attitudes and behaviorand Lesbian Market in the U.S.: Trends and Opportunities split along gender lines. Many women opt to go to thein the LGBT Community” by Packaged Facts. computer instead of the mall; it’s been reported that more than one in five – 22% – shop online at least once a day.10And women really do control the purse strings. They Wharton marketing professor Stephen J. Hoch describesare not only experiencing social gains that are positively the difference in gender attitudes this way: “Women thinkimpacting their purchasing power, but they also make of shopping in an inter-personal, human fashion and menmost of the buying decisions, even in traditionally male treat it as more instrumental. Its a job to get done.” 11categories such as automotive. Understanding and catering to the female purchasing mindset will be a critical advantage in successfully wooing this enormously powerful buying segment.6
  • 7. Hispanic market Two important factors distinguish the Hispanic communityU.S. Hispanic purchasing power has grown from $212 from others. First, Hispanic buying power is much morebillion in 1990 to $489 billion in 2000 and $978 billion geographically concentrated. The five states and 10 statesin 2009. It is projected to reach as much as $1.3 trillion with the largest Hispanic markets account for 66% andby 2014.12 Factors such as rapid population growth and 80% of Hispanic buying power, respectively, with Californiaimmigration, as well as a rise in high school graduation alone accounting for 27%.16 Second, there are importantrates and the number of Hispanic-owned businesses, all differences among various segments of the Hispaniccontributed to the surge in Hispanic purchasing power.13 community. Mexican-American, Cuban-American, Latin- American, and Puerto Rican consumers all have differentThe spending habits of Hispanics differ from those of cultures, preferences, and needs. A common error thatthe average U.S. consumer. According to the most recent many companies make is to market to them as aConsumer Expenditure Survey by the Bureau of Labor single group; understanding the individual nuancesStatistics, Hispanic households spend only about 82% of each target audience is essential to making aas much as the average non-Hispanic household,14 but positive connection.spend relatively more in areas such as groceries, telephoneservices, furniture, men’s and boys’ apparel, children’sclothing, and footwear.15Figure 1. Hispanic buying power in the 10 states with the largest Hispanic markets, 2009These 10 states account for 80% of Hispanic buying powerIn Billions of Dollars$300$250$200$150$100 $50 $0 California Texas Florida New York Illionis New Jersey Arizona Colorado New Mexico Georgia StatesSource: “The Multicultural Economy 2009, Selig Center for Economic Growth, Terry College of Business, The University of Georgia” Executive perspectives on diversity in the retail and consumer products industries 7
  • 8. African-American marketThe Selig Center for Economic Growth at the University ofGeorgia’s Terry College of Business reports that African- “One miss that I still see in many companies isAmerican buying power has grown from $318 billion that they don’t really approach multiculturalin 1990 to $590 billion in 2000 to $910 billion in 2009, markets from an aspect of cultural competency.and projects it will reach $1.2 trillion in 2013. This is a54% gain between 2000 and 2009 and exceeds both In other words, they don’t really demonstrate anthe 46% increase in white buying power and the 49% understanding of cultural nuances or history ofincrease in the total buying power of all races combined. multicultural markets. You still see lots ofThis segment’s rising spending power is spurred by manyfactors, including higher-than-average population growth, translating instead of truly interpreting theimproved access to education resulting in better job cultural perspective – merely taking aopportunities, an increase in the number of black-owned mainstream perspective and translating it canbusinesses,17 and the community’s relative youth.18 really miss the mark.” 19 — David Casey, vice president and diversity officer, CVS Caremark, Inc.Figure 2. Top 10 states with the largest African-American market share, 2009The District of Columbia and Mississippi have the largest African-American market sharePercentage30%25%20%15%10% 5% 0% District of Mississippi Maryland Georgia Louisiana South Carolina Alabama Delaware North Carolina Virginia Columbia StatesSource: “The Multicultural Economy 2009, Selig Center for Economic Growth, Terry College of Business, The University of Georgia”8
  • 9. Compared to other segments, African Americans spend a significantly higher proportion of their money on groceries, housing, natural gas, women’s and girls’ clothing, and gasoline.20 Despite the country’s economic recession, this market’s purchases related to the home – including appliances, computers, and electronics – have continued to increase in recent years.21 The 10 largest African-American markets by state – New York, Texas, California, Georgia, Florida, Maryland, Illinois, North Carolina, Virginia, and New Jersey – account for 61% of the group’s total buying power.Executive perspectives on diversity in the retail and consumer products industries 9
  • 10. LGBT marketAbout 15 million adults in the general U.S. populationidentify themselves as gay, lesbian, bisexual or transgender, “To win in the marketplace, we must understandaccording to “The Gay and Lesbian Market in the U.S.,” a what motivates the purchasing choices of ourreport published by Packaged Facts in collaboration with customers and position ourselves to quickly respondWiteck-Combs Communications, Inc. The buying powerof LGBT consumers in the United States will grow to an to their changing needs. To be relevant, our leadersestimated $835 billion by 2011.22 And while research making the decisions must mirror the customers weindicates that gay men actually earn slightly less than want to attract and retain. Success is defined bytheir heterosexual counterparts, the fact that gays andlesbians are less likely to have children and more likely to customer satisfaction, which can only be achieved ifhave two-income families translates to higher per-capita we are diversified, inclusive, and engaged with ourhousehold income.23 workforce, so that the best decisions and outcomes are achieved. Everybody wins when diversity is embraced by the organization and becomes part of the culture…it’s the right thing to do!” 24 — Donna Giordano, president, QFC (Quality Food Centers), The Kroger Co.Figure 3. Projected growth in gay and lesbian buying power, 2007-2011 Per capita Aggregate Year Population Cumulative growth buying power buying power (thousands) (millions) 2011 16,314 $51,204 $835,337 26.5% 2010 16,115 $49,415 $796,317 20.6% 2009 15,919 $47,686 $759,120 15.0% 2008 15,726 $45,298 $712,368 9.4% 2007 15,535 $44,407 $689,858 4.5%Source: “Buying Power of Gay Men and Lesbians in 2008,” Witeck-Combs Communications, Inc.10
  • 11. Geographically, the LGBT market is concentrated in major metropolitan and suburban areas.25 Research indicates a high percentage of gay consumers are college-educated, shop online, and purchase the latest technology. Approximately 80% of gay men and 76% of lesbians actively use the Internet. Some 63% of gay and lesbian consumers have made purchases online, compared to 53% of heterosexual consumers.26 Gay and lesbian consumers are more optimistic than other Americans about the overall direction of the country and the economic recovery, which may lead them to increase their spending despite the country’s slow progress in rebounding from the recession.27 LGBT consumers are loyal to LGBT-friendly brands; consumer data indicates that 78% of gay online users prefer to buy from companies that specifically advertise to the gay market.28Executive perspectives on diversity in the retail and consumer products industries 11
  • 12. The diverse workforce imperative “Diversity brings innovation and relevance. I think the greatest benefit we have found is that diversity drives innovation. People from different backgrounds engaged in thoughtful debate leads to groundbreaking solutions. When you have a team that is engaged and reflective of your consumer base, you can better understand, anticipate, and meet the needs of your guests.” 29 — Tracey Burton, former director of diversity, Target CorporationIn an era of global competition, retail and manufacturing The diverse workforce will be drawn, increasingly, fromcompanies must fully utilize all resources within their the same diverse communities driving retail spending.control, not the least of which are their human resources. According to the U.S. Bureau of Labor Statistics, theA diverse workforce is an essential element in developing overall labor market will grow about 6% between 2010cultural competence, without which an organization will and 2018. While white workers will increase by only 4%,likely become irrelevant and unsustainable in the changing Hispanic workers will increase by 27%, Asians by 23%, andmarketplace. It’s clear that a diverse workforce is no longer African Americans by 9%.32 For that reason alone, retailmerely an option, but a business imperative. and manufacturing organizations must focus on these groups as the key to their future workforces.A diverse workforce provides key advantages:• Multiple viewpoints and experiences lead to Although companies have found it difficult to measure innovative decision making and development the bottom-line impact of diversity and inclusion (D&I) throughout the organization. initiatives, research indicates that executives from market-• Insights by employees who understand cultural nuances dominant companies overwhelmingly agree that diversity firsthand result in more relevant products, marketing, is profitable. When asked how important diversity and and shopping experiences that directly impact the inclusion are to their company’s performance, more than bottom line. seven in 10 said it was “very important.” 33• Customer loyalty increases because diverse consumers feel more comfortable doing business with companies that employ people from their communities.30• Companies with a diverse workforce become employers “A diverse workforce leads to of choice, strengthening their ability to hire and retain better insights into consumers top talent. “Organizations that promote and achieve and customers so that companies a diverse workplace will attract and retain quality employees and increase consumer loyalty,” according can develop the right kind of to the “Best Practices in Achieving Workforce Diversity programs and products that meet Benchmarking Study.”31 their needs.” 34 — Joan Chow, chief marketing officer, ConAgra Foods12
  • 13. Women leaders and their impact The top rank of American corporate leadership remains – overwhelmingly – the domain of white men. While nearly two of three people in the workforce are female or persons of color, diverse workers have yet to break into the executive suite in numbers that come close to reflecting their size.35 The increase of women corporate officers in Fortune 500 companies over the past decade – from 11.2% in 1998 to 16.4% in 2005 to 15.7% in 2008 – is slow at best. At current rates, it would take 40 years for the number of female corporate officers to achieve parity with their male counterparts.36 The picture is only a bit brighter at Fortune 500 retail organizations, where women comprise 18.5% of corporate officers.37 This disparity not only has societal implications, it represents a missed opportunity for organizations in all sectors. Separate studies conducted by Catalyst38 and Pepperdine University39 confirm a correlation between companies with more women in senior management positions and stronger financial performance.Executive perspectives on diversity in the retail and consumer products industries 13
  • 14. Building diverse work teamsOrganizational diversity must be woven into the very fabric Recruiting and retentionof enterprises if they are to succeed going forward. As it Concerted efforts and outside-the-box thinking arebecomes increasingly vital for companies to connect with needed to recruit, retain, and engage diverse talent.emerging consumer segments, diversity and inclusion Target Corporation has created a diversity identity bycannot be relegated to a human resources responsibility, participating in diversity recruiting events, hiring qualifiedbut must become part of an overarching business strategy. talent, and moving talent up within the company. The“The Office of Diversity should not build stand-alone retailer recruits on historically diverse campuses and‘programs,’ ” said Cole Brown, chief diversity officer, at diversity recruiting events, including the annualWal-Mart Stores, Inc. “We must instead leverage our conferences organized by the National Black MBAapproaches into sustainable structures that change the Association, National Society of Hispanic MBAs, Out &way that people think about diversity. Diversity is critical Equal, and more. Target engages diverse leaders fromto our broader, fundamental goal of maintaining a across the company to attend these recruiting events socompetitive workforce, which requires maximizing the that candidates “are able to see employees that look likepotential and value of all our associate base, including them and get first-hand information about a companytheir diversity of thought, experience, and perspective.” 40 where they can grow.” 41 Ultimately what makes a difference, according to Tracey Burton, the organization’sTo fully capitalize on the opportunities of a diverse former director of diversity, “is the fact that at the heart ofworkforce, the very concept of diversity must be our company are the diverse perspectives and backgroundsreexamined. While the term has been limited to race, of our more than 350,000 team members.” 42gender, and ethnicity, successful leaders will needto expand the definition of diversity to include such Setting specific targets is critical to recruiting diversevariables as age, sexual orientation, language, geography, talent. Measurable goals create accountability, telegrapheducation, and physical ability. the seriousness of the initiative, unambiguously define its scope, allow for the celebration of measurable successes,Creating a truly diverse and inclusive workplace will, and clearly illuminate any need for reassessment orfor many companies, mean a shift in corporate culture improvement. Some companies have several diversityrequiring the full commitment of top management. Diverse recruiters dedicated solely to recruiting multicultural talent.talent – in all its varieties – must be actively sought out, This targeted effort maximizes effectiveness and welcomesnurtured, and given a voice at all levels of the organization. a broad range of potential employees.“To attract diverse talent, you need a plan for diversity and peoplewho are accountable to carry out that plan. You can’t say, ‘We’regoing to try harder.’ You need accountability and specific plans tomake it happen.” 43 — Rebecca Sanders, vice president, consumer insights, Brookshire Grocery Company14
  • 15. Recruiting diverse workers is one thing; keeping them is Nurturing diverse talentanother. “Many leading [diversity] practices have focused There are a number of approaches that have beenon bringing those who are different in the door,” writes successful in providing for and retaining diverse talent.Andrés Tapia in The Inclusion Paradox: The Obama Era Many companies have created employee resourceand the Transformation of Global Diversity. “Many of groups (ERGs) or business resource groups (BRGs) as athese efforts have been quite successful, and companies way of providing networking, support, and professionalhave achieved diversity – the mix. But in many places, the development opportunities to diverse talent. In additionmix is not working well. We end up with diversity without to building leadership skills, such groups help employeesinclusion. Here diversity’s promise – that greater diversity feel less isolated by connecting them to others with whomleads to greater innovation and profitability – dies.” 44 they have something in common.Diverse employees often have different motivations, Mentoring programs are another way of cultivatingattitudes, and lifestyles than the white males who multicultural employees. By exposing associates tostill dominate the executive level (“C-suite”) of most executive leaders early in their careers, mentoringorganizations. This disconnect leads some women and programs provide powerful support, presenting rolepersons of color to feel they don’t fit in. Traditional models, and giving diverse individuals a champion inmethods of retaining talent must be made germane to the organization. Succession planning, at all levels ofthe needs and values of diverse populations. Thoughtful the organization, is also critical to ensuring growthsuccession planning, strong career development opportunities for diverse talent.opportunities, employee support, and mentoring aresome of the strategies companies are using to retain In many instances, the paths that led current leaders tomulticultural talent. the top will not work with today’s diverse talent. Mike Vail, president and chief operating officer of SweetbaySuch engagement and development is key to retaining top Supermarkets, recognized the limitations for womenemployees. Companies must identify diverse high-potential to become store managers at Sweetbay, based on thetalent early and put them on a career track commensurate career-pathing structures that were in place. He explains,with their potential. Without such support, companies will “The store manager position in the retail industry can bebe unlikely to retain these valuable future leaders. somewhat demanding, inflexible, and sometimes even physically challenging. As I began to do work within Executive perspectives on diversity in the retail and consumer products industries 15
  • 16. the area of diversity, I saw this firsthand and we started Using diversity to innovatemaking immediate changes. Traditionally, women would Although the original aim of ERGs and other affinity groupshold positions within service departments (i.e. bakery, deli, was to support diverse employees, they can also offerfront end, etc.) with limited paths to growth. At Sweetbay other, more direct benefits. By tapping the innate culturaltoday, aspiring store managers can complete a customized experiences of a diverse workforce, companies may makecareer path that exposes them to all required aspects of use of ERGs to develop new products and services or bringmanagement, but in a manner that doesnt discriminate together diverse task forces to generate solutions aroundagainst any biases. Weve seen great improvement with major business issues.diversity among our store managers as well as in mid- tosenior-level management positions. Im proud of the work There are many examples of profitable products andweve begun.” 45 solutions coming out of such groups. At the Campbell Soup Company, Select Harvest was successfully developedWith all such retention programs, it is important to by women employees for women consumers.47 In anothermeasure results by keeping track of cost savings and worthy example, ConAgra Foods reached out to theirproductivity increases. Metrics provide an objective Asian ERG for input into a popular new line of Healthyevaluation of movement made and miles to go. Dr. Rohini Choice Steamers.48Anand, Sodexo’s senior vice president and global chiefdiversity officer, reports that for each dollar spent on hercompany’s mentoring program, they see a return of$2 in cost savings, increased productivity, engagement,and retention.4616
  • 17. Driving diversity: A checklist… Start at the top. Ensure your senior executives are on … Mentor them. Create one-on-one mentoring board. No real change can come without support from relationships between senior management and high- a company’s leadership. potential diverse talent. The support and counsel of… Create accountability. Hold leaders accountable by seasoned executives provides a way to develop future tying compensation to meeting specific diversity goals. leaders by giving them access to the critical intangibles Linking diversity to the performance management of corporate success. process underscores the company’s commitment to … Support your ERGs. Employee resource groups the initiative. allow people with something in common to apply… Think cultural change. Incorporate a diversity their shared experience to another thing they have in strategy into your overall corporate strategy and common – your company. ERGs foster networking, business process. Take a holistic approach rather boost morale, and build a culture of inclusiveness. than looking at D&I as an isolated effort. Embrace … Harness your ERGs. Capitalize on the unique individuality over conformity and acknowledge the perspectives of diverse employee groups to propel value of multiculturalism versus the “melting pot” your business forward. ERGs and diverse teams have mindset. been used with great success to innovate and problem… Plan to succeed. To shape a company’s future solve around both internal and external business leadership, it is important that underrepresented issues. employee groups be included in succession planning … Target diverse suppliers. Expand the culture of efforts at all levels of the organization. Develop diversity in your organization by setting goals for using and employ consistent processes to ensure the diverse suppliers. As with employees, vendors who effectiveness of these efforts. can offer diverse viewpoints provide a competitive… Set targets. Create a plan that includes unambiguous advantage to your company. goals for recruiting, retaining, and promoting diverse … Act local. Be aware of the specific consumer talent. Be specific about methods and metrics. segments you are serving at the individual-store level.… Measure results. Track progress toward achieving The needs and preferences of local consumers should diversity goals as a means of discovering which efforts inform not only the products you carry, but also your have been most effective. Revisit and update the plan marketing decisions and the nature of the shopping at predetermined intervals to improve effectiveness. experience itself.… Focus on recruiting. Assign recruiters to secure … Keep an eye on the bottom line. Measure the talent from underrepresented groups. Participate in impact of diversity and inclusion efforts by quantifying trade fairs, professional organizations, and industry- their impact on such factors as return on investment, wide diversity networks. sales, market share, and employee turnover.… Spot the stars. Identify high-potential diverse talent early to engage and groom them for advancement. Create customized career tracks relevant to their needs and interests, and provide training and development opportunities to ensure their success. Executive perspectives on diversity in the retail and consumer products industries 17
  • 18. Supplier diversity programs DiversityIncs “Top 10 Companies for Supplier Diversity,” aAs diverse employees bring new ideas to an organization, list of firms across industries, spend an average of 22.7%diverse suppliers contribute insights at yet another point in of their procurement budgets with Tier I minority- andthe supply chain. As certification for minority- and women- women-owned suppliers (main contractors). The “Top 50owned vendors has become standardized and measured, Companies for Supplier Diversity” spend 9.7%. Nationally,the validity and usage of these vendors has been on the firms spend just 2%.51rise, even in tough economic times. Those most dedicated to seeking supplier diversity linkIn 2008, Wal-mart’s direct spending with minority- and procurement management compensation directly towomen-owned businesses was more than $6 billion, cost savings and efficiencies. Some hold Tier I supplierswith second-tier spending totaling more than $2 billion. accountable by making Tier II supplier diversity mandatory.This represented a growth of more than 25% over the Other best practices include looking abroad for suppliers;previous year.49 including LGBT suppliers and small business owners in supplier diversity strategies; and making a commitmentMcDonald’s currently spends more than half of its to develop diverse suppliers through community events,procurement for Tier I contractors with minority-owned training, educational programs, and financial support.52businesses (MBE) and about one-third on women-ownedbusinesses (WBE). In addition, McDonalds providesfinancial assistance for its suppliers and carefully tracksmetrics on supplier diversity.50 “A particular business wasn’t doing as well as we wanted. Typically, we would only ask for compliance from our suppliers, with limited collaboration. But in this situation, we brought them in to ideate relative to this issue. Diversity is as much about everyone having a voice as it is around women and people of color. We have to find a way to extend the dialogue beyond the norm.” 53 — Regenia Stein, vice president, business performance, industry development and communications, Kraft Foods18
  • 19. The magic of metrics Creating a culturally competent organization means Implementing supplier diversity programs 54 holding leaders accountable for results. Diversity must 1. Define the business case. be aligned with overall corporate strategy and business 2. Set clear goals. process. Relevant metrics must be integrated throughout 3. Track spending. the organization so that employees are working toward 4. Require second-tier supplier diversity. achieving specific diversity goals. Many of the executives 5. Develop a corporate commitment statement. we interviewed suggested that leadership bonuses 6. Grow strategic partnerships. should ultimately contain a diversity goal, whether it’s 7. Make supplier diversity part of procurement. recruiting, retention or development of employees. Clearly, 8. Support ongoing development of diverse suppliers. these executives believe making diversity a part of the 9. Offer mentoring. performance management process ensures there 10. Provide financial assistance. can be no misunderstanding about the seriousness 11. Recognize and reward participating minority- of the initiative. and women-owned business enterprise (MWBE) suppliers. 12. Host trade fairs for MWBEs. 13. Provide technical and managerial assistance to MWBEs. 14. Emphasize importance of second-tier MWBEs.“Executive compensation attached to results seems to be mosteffective. [Reaching diversity goals] may not be a cool thing untilthe compensation is attached…then it works.” 55 — Teresa Chipps, vice president of marketing, Northern Region, Supervalu Executive perspectives on diversity in the retail and consumer products industries 19
  • 20. The path forwardDiversity and inclusion was once about doing right in the “The best strategies establish cultural competency as aworkplace; it is now about doing well in the marketplace. requirement for all leaders,” said Trudy Bourgeois, CEOExamples of commercial successes of companies that have and founder of The Center for Workforce Excellence. “Andembraced multiculturalism are becoming commonplace. then we have to say either you get on board or leaveClorox, for instance, breathed new life into its Kingsford the organization. We have to get that serious, because ifbrand by insightfully courting the Hispanic market, while we say it’s a business imperative we have to treat it likePepsiCo listened to its Hispanic affinity group and scored any other competency.” 57 What distinguishes the trulybig with its Hispanic Heritage line. inclusive organization from the merely diverse one is the way it listens to the different voices within its ranks. AtSuperficial attempts at creating diversity and inclusion successful companies, diversity of thought is not merelywill not succeed. “I’m all for celebrations and for you accommodated, but sought out, respected, and integratedrecognizing the heritage of our groups, but don’t confuse into every aspect of the business. Until an organizationthat for the real thing,” said author Andres Tapia, who changes its culture and incorporates D&I into its corporateis chief diversity officer/emerging workforce solutions DNA, diversity may be relegated to mere window dressing.leader for Aon Hewitt. “You have to create processes andpolicies and procedures that are truly inclusive in taking To succeed tomorrow, industry leaders must be outspokeninto account the fact that I have a different world view and determined champions of diversity and inclusionand that doesn’t mean I eat arroz con pollo – it means today. Too often diversity and inclusion is viewed inthat I’m very communal, very relational, able to do work isolation. Survival depends on organizations seeingthat gives me meaning. Because I’m more holistic, I don’t diversity and inclusion in its proper context as the criticalcompartmentalize as much between home and faith component of reaching today’s consumers.and work. If you really want to be inclusive, create aculture that allows for various cultures to work within Diversity in your workforce and inclusion in your decisionthe system.” 56 making is the most powerful lever to move the mosaic of markets that comprise today’s retail landscape. It takesTrue inclusion will stem from an understanding of the commitment, skill and, most of all, leadership, to build thebottom-line business opportunity it represents and will culturally competent organizations that will dominant theinvolve a comprehensive organizational shift. Ultimately, retail and consumer products industries of the future.success will rest on senior leaders’ commitment to creatinga diverse and inclusive culture, their ability to communicatethat vision throughout the organization and theirwillingness to hold employees accountable for reachingits goals. “This issue is a life-and-death situation. Retail companies that don’t realize that the world and workforce have changed are not going to survive and companies that do will survive and thrive.” 58 — Andrés Tapia, chief diversity officer/emerging workforce solutions leader, Aon Hewitt20
  • 21. How inclusive is your organization?Check your organization’s level of inclusiveness by 5. Infuse meaningful baseline accountability into theasking yourself these questions: organization. Move beyond rewarding employees for• Does our culture enable behavioral diversity? results via bonuses. Instead, set the expectation that• Do we effectively access talent throughout our leaders are responsible for creating a diverse team as a organization? condition of employment.• What market/business metrics are we looking to impact 6. Measure results by the bottom-line metrics you would and how will diversity help? use for any business imperative, such as leveraging• Is diversity a business process or simply a departmental diverse perspectives that result in profitable products, function? increase market share, drive new sales, etc. 7. Charge C-suite executives with leading by example.Then take these steps toward achieving an inclusive Involve them in sponsoring top diverse talentcorporate culture: identified in the succession planning process.1. Weave diversity into the organization’s strategic 8. Leverage the board of directors to broaden plan. Build it into departmental and functional plans benchmarking efforts. and into the development plans of leadership and 9. Focus on multicultural marketing as a mainstream line managers. Link diversity strategy with corporate opportunity and support it with appropriate budget strategy, inclusive culture with corporate culture. and manpower.2. Fully employ diversity as a tool in the company’s 10. Establish consumer insights as a cross-functional decision-making process to bring multiple perspectives manager requirement. to making choices and solving problems related to 11. Closely examine the state of collaborative vendor both internal and external business matters. relationships to support customization, consumer3. Make leaders knowledgeable about the changing insights, and representation of diversity on the consumer. Call out cultural competency as an essential respective teams. leadership pillar. Require leaders of the organization 12. Create partnerships/consortiums to share leading to demonstrate this as they would any other critical practices and develop solutions to diversity issues success competency. within the industry.4. Build a scorecard to assess performance in recruiting, 13. Continuously benchmark against the “best in class” in retaining, developing, and advancing a diverse team. the industry to identify gaps and see where you stand versus your competitors. Executive perspectives on diversity in the retail and consumer products industries 21
  • 22. Endnotes1. Knauss, Don. Chairman and CEO, The Clorox Company. Interviewed by Deloitte employee via telephone, 19 March 2010.2. U.S. Census Bureau, ‘‘Annual Estimates of the Population by Race, Hispanic Origin, Sex and Age for the United States: April 1, 2000 to July 1, 2008 (NC-EST2008-04)’’ (released May 14, 2009). Web. <http://www.census.gov/popest/national/asrh/NC-EST2008-asrh.html>.3. White, James. President and CEO of Jamba Juice. Interview by Deloitte employee, 16-18 March 2010.4. Humphreys, Jeffrey Matthew. The Multicultural Economy 2008. [Athens, Ga.]: Selig Center for Economic Growth, Terry College of Business, University of Georgia, 2008. Print.5. Knauss, Don. Chairman and CEO, The Clorox Company. Interviewed by Deloitte employee via telephone, 19 March 2010.6. Dillon, Dave. "Closing Keynote Address,” Executive Leaders Forum 2010. Dallas, Texas, 14 July 2010. Web. <newonline.org>.7. Vail, Mike. President and COO of Sweetbay Supermarket. Interviewed by Deloitte employee via telephone, 13 April 2010.8. “The Woman-Led Economy,” U.S. Womens Chamber of Commerce, June 2010. Web. <http://www.uswcc.org/>.9. “Marketing to Women Conference Fast Facts.” 25 Aug. 2010. Web. <http://www.m2w.biz/fast_facts.php>.10. "Women in Their Digital Domain, Ogilvy & Mather, 25 Aug. 2010. Web. <http://www.ogilvy.com/On-Our-Minds/Articles/digital_divas.aspx>.11. "Men Buy, Women Shop: The Sexes Have Different Priorities When Walking Down the Aisles." Knowledge@Wharton. 28 Nov. 2007. Web. <http://knowledge.wharton.upenn.edu/article.cfm?articleid=1848>.12. Humphreys, Jeffrey Matthew. The Multicultural Economy 2008. [Athens, Ga.]: Selig Center for Economic Growth, Terry College of Business, University of Georgia, 2008. Print.13. Ibid.14. "Consumer Expenditure Survey 2008." U.S. Bureau of Labor Statistics, March 2010. Web. <http://www.bls.gov/cex/csxann08.pdf>.15. Humphreys, Jeffrey Matthew. The Multicultural Economy 2008. [Athens, Ga.]: Selig Center for Economic Growth, Terry College of Business, University of Georgia, 2008. Print.16. Ibid.17. Ibid.18. American FactFinder. American Community Survey. 25 Aug. 2010. Web. <http://factfinder.census.gov>19. Casey, David. Vice president and diversity officer for CVS Caremark, Inc. interviewed by Deloitte employee, 18 May 2010.20. Humphreys, Jeffrey Matthew. The Multicultural Economy 2008. [Athens, Ga.]: Selig Center for Economic Growth, Terry College of Business, University of Georgia, 2008. Print.21. Smikle, Ken. The Buying Power of Black America. Chicago, IL: Target Market News, 2008. Print.22. Witeck, Bob. "Americas Gay 2010 Buying Power Projected at $743 Billion." Echelon Magazine. 20 July 2010. Web. <echelon magazine.com>.23. Lucin, Stephen J. "Gay Community, Mainstream Advertising.” Echelon Magazine. 3 March 2010. Web. <echelonmagazine.com>24. Giordano, Donna. President of QFC (Quality Food Centers, Kroger), 8 Sept. 2010. E-mail.25. Witeck-Combs and Packaged Facts. Americas Gay 2010 Buying Power Projected at $743 Billion. Witeck Combs Communications. 20 July 2010. Web. <witeckcombs.com>.26. LGBT Demographics and Media Coverage for PlanetOut (LGBT). Wikinvest – Investing Simplified. 25 Aug. 2010. Web. <http://www.wikinvest. com/stock/PlanetOut_%28LGBT%29/Lgbt_Demographics_Media_Coverage>.27. "The Gay and Lesbian Market in the U.S.: Trends and Opportunities in the LGBT Community," Packaged Facts, 4th Edition.28. Ibid.29. Burton, Tracey. Former director of diversity at Target Corporation. Interview by Deloitte employee via telephone, 5 May 2010.30. "Best Practices in Achieving Workforce Diversity Benchmarking Study." U.S. Department of Commerce and Vice President Al Gores National Partnership for Reinventing Government. 2 Sept.2010. Web. <http://govinfo.library.unt.edu/npr/library/workforce-diversity.pdf>.22
  • 23. 31. Ibid.32. "Labor Force Data." U.S. Bureau of Labor Statistics. 23 Sept. 2010. Web. <http://www.bls.gov/emp/ep_data_labor_force.htm>.33. "White Men: Enrolling the Dominant Culture in Diversity and Inclusion." Network of Executive Women. Web. <newonline.org>34. Chow, Joan. Chief marketing officer for ConAgra Foods. Interviewed by Deloitte employee via telephone, 8 April 2010.35. "2007 The Bottom Line: Corporate Performance and Women’s Representation on Boards." Catalyst, 2008. 17 Sept. 2010. Web. <catalyst.org>.36. Ibid.37. "Best Practices in Achieving Workforce Diversity Benchmarking Study." U.S. Department of Commerce and Vice President Al Gores National Partnership for Reinventing Government. 2 Sept. 2010. Web. <http://govinfo.library.unt.edu/npr/library/workforce-diversity.pdf>38. "2008 Catalyst Census of Women Corporate Officers and Top Earners of the Fortune 500." Catalyst, 2008. 17 Sept. 2010. Web. <catalyst.org>.39. Adler, Roy D. Women in the Executive Suite Correlate to High Profits. Pepperdine University. Web. <http://www.csripraktiken.se/wp-content/ uploads/adler_web.pdf>.40. Brown, Cole. Chief diversity officer, Wal-Mart Stores, Inc. Interviewed by Alison Kenney Paul, Bentonville, Ark. 8 Oct. 2010.41. Burton, Tracey. Former director of diversity at Target Corporation. Interview by Deloitte employee via telephone, 5 May 2010.42. Ibid.43. Sanders, Rebecca. Vice president, consumer insights for Brookshire Grocery Company. Interview by Deloitte employee via telephone, 22 April 2010.44. Tapia, Andrés. The Inclusion Paradox: The Obama Era and The Transformation of Global Diversity, Hewitt Associates, 2009.45. Vail, Mike. President and COO of Sweetbay Supermarket. Interviewed by Deloitte employee via telephone, 13 April 2010.46. Anand, Dr. Rohini. Senior vice president, global chief diversity officer for Sodexo. Interview by Deloitte employee via telephone, 7 May 2010.47. Oppenheimer, Sherri Eri. "A Look at Campbell Soup Companys Inclusive Culture: PRSA." Public Relations Resources & Tools for Communications Professionals: PRSA. 03 Oct. 2010. Web. <http://www.prsa.org/Intelligence/Tactics/Articles/ view/8825/101/A_look_at_Campbell_Soup_Company_s_inclusive_cultur>.48. Chow, Joan. Chief marketing officer for ConAgra Foods. Interviewed by Deloitte employee via telephone, 8 April 2010.49. Frankel, Barbara. "The DiversityInc Top 10 Companies for Supplier Diversity." Diversityinc.com. 24 March 2010. Web. <diversityinc.com>.50. Ibid.51. Ibid.52. Ibid.53. Stein, Regenia. Vice president, business performance, industry development and communications for Kraft Foods. Interview by Deloitte employee, 16-18 March 2010.54. "Deloitte Best Practices Report developed for MasterCard," Deloitte, 2007.55. Chipps, Teresa. Vice president of marketing, Northern Region for Supervalu. Interview by Deloitte employee, 16-18 March 2010.56. Tapia, Andrés. Chief diversity officer/emerging workforce solutions leader, Aon Hewitt. Interview conducted 16-18 March 2010.57. Bourgeois, Trudy. CEO and founder of The Center for Workforce Excellence. Interview by Deloitte employee via telephone, 30 March 2010.58. Tapia, Andrés. Chief diversity officer/emerging workforce solutions leader, Aon Hewitt. Interview conducted 16-18 March 2010. Executive perspectives on diversity in the retail and consumer products industries 23
  • 24. AuthorsAlison K. Paul Tonie LeatherberryVice Chairman & US Retail Leader PrincipalPrincipal Deloitte Consulting LLPDeloitte LLP Tel: +1 215 446 4361Tel: +1 312 486 4457 tleatherberry@deloitte.comalpaul@deloitte.comThom McElroyUS Talent Leader, RetailPrincipalDeloitte Consulting LLPTel: +1 704 227 1441thmcelroy@deloitte.comVisit Deloitte.comTo learn more about our services, visit us online at www.deloitte.com/us/Retail. Here you can access our complimentary Dbriefs webcast series,Deloitte Insights podcast program, innovative and practical industry research, and a lot more about the issues facing retailers from some of theindustry’s most experienced minds.About DeloitteDeloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms,each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure ofDeloitte Touche Tohmatsu Limited and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure ofDeloitte LLP and its subsidiaries.© Copyright 2011 by Deloitte LLP. All rights reserved.Member of Deloitte Touche Tohmatsu Limited

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