27 April 2022
Green Park Business Leaders Index 2021 | FTSE 100
Digital transformation, changes in consumer behaviour, the pandemic and now the cost of living crisis putting the brakes on consumer spending. For today’s Retail industry leaders, there may be no easy answers, but one sure bet they can make is that Ethics, Diversity & Inclusion (EDI) will have an ever-greater influence on their future success. Green Park’s Diversity, Inclusion, Culture (DICE) Consultancy looks back at the last 18 months and how the team helped retailers overcome their EDI challenges.
2021 was another extremely difficult year for retailers, with the pandemic still centre stage. Although physical shops re-opened as restrictions eased, trade on eCommerce remained far above its pre-pandemic level. Online penetration was at 37.9% (non-food) and 15.3% (food) in 2021, compared to 26.8% and 7.7% in 20191. As the shift from bricks ‘n’ mortar shops to online stores continues, retailers need to be agile and adapt to omnichannel solutions if necessary.
However, changing consumer preferences were only part of the story, with supply chain issues, fuel and labour shortages and inflation conspiring to give businesses an even greater headache. Data from the Office of National Statistics shows that year-on-year inflation rose sharply in 2021 (from 1.5% in 2020 to 3.8% in 20212) due to disruption to Far East manufacturing and international shipping. Brexit also brought disruption to factories, shipping and deliveries, with higher costs, longer lead times and low stock levels undermining post-pandemic economic recovery. This year, as margins are squeezed and shortages hit, there’s likely to be a serious re-think of supply chains. The retailers that are prepared to adapt and find new ways of cutting costs are those that have the greatest chance of weathering the storm.
While the pandemic is still very much the focus of consumers’ attention, Environmental, Social and Governance (ESG) issues are becoming more and more important to them. Buyers want to know that retailers aren’t contributing to the destruction of the planet and are putting increasing pressure on them to operate more ethically and sustainably. According to PwC, 83% of consumers think companies should be actively shaping ESG best practices3, although the strength of ESG concerns varies from product area to product area. With the focus likely to grow, a coherent ESG strategy is a must for retailers.
Success through EDI
ESG. Digital transformation. Supply chain bottlenecks. Today’s retailers have a lot on their plates. For businesses to survive and thrive, they need the best people at the helm. As countless surveys and reports have shown4, it’s diverse senior leadership teams that bring the creativity and innovation to solve problems in challenging times. And that’s not all – by encouraging diverse workforces, diverse leaders create businesses that represent their consumers. The result is higher profits, higher levels of new business success and more modern companies that are in touch with their consumers.
Diversity in Retail
Despite a sizeable body of evidence that shows that organisations who’ve embraced EDI are those that succeed, retail is one of the least diverse sectors, at least at leadership level. And alarmingly, statistics suggest it’s heading in the wrong direction. According to Green Park’s Business Leaders Index, published in August 2021, board-level and executive committee roles held by women in the FTSE 100 have, on average, positively increased from 2019 to 2020 – up from 29% to 32%. However, in Retail, female representation at this level has reduced. Of the 14 sectors analysed, Retail was the only sector to have gone backwards, dropping from 32% in 2019 to 30% in 2020. Meanwhile, analysis of 200 UK leading retailers shows only 5% of boards, 6% of executive committees and 6% of direct reports are from an underrepresented background – compared with 13% of the British population – according to the British Retail Consortium (BRC) in March 2021. And Green Park’s Retail Leadership 700 report predicts that by the middle of the century, retail leadership could find itself totally at odds with its consumer base. Without radical change, by 2050, UK boards will be just 15% as diverse their customers; the US’s leaders will do better - 35% as diverse as their customers.
Jo Heath, Partner and Head of Green Park’s DICE Consultancy confirms that retail leaders are increasingly unrepresentative of consumers and employees: “There is a clear evidence base and data that find disproportionate outcomes exist in our workplaces and in our society. These outcomes go on to affect the promotion and progression of some groups, which is evident in the Retail sector where ethnocultural diversity is present in the more junior grades and then drastically diluted at store manager and senior leadership level.” The upshot is a disconnect between leaders and the workforce that can leave employees feeling under-valued and overlooked. Bad news for business performance and team morale.
The escalation of the EDI agenda due to the pandemic
Morale is always important but particularly so in a pandemic. Retail workers have been hit hard over the last two years, especially women and people of colour. Women were more likely to lose their jobs and more likely to give up work to cope with childcare, according to McKinsey, with a quarter of women considering leaving the workforce or downshifting their careers versus a fifth of men. Meanwhile, employees who remained found themselves on the frontline, dealing with public and therefore facing heightened risks. Although those with underlying conditions were identified and protected accordingly, there was no such risk assessment for Black, Asian and ethnic minority workers, who are disproportionately affected by Covid. That meant the most vulnerable employees were often those who were most exposed to risk. NHS England was one of the few organisations that issued risk assessment tools for NHS employers to mitigate risk to ethnic minority workers during the pandemic. How different would the picture have looked if retailers had done the same?
Introducing the Green Park DICE consultancy
Identifying EDI strengths and weaknesses. Supporting business improvements. Educating leaders. Green Park’s Diversity, Inclusion, Cultural and Ethics (DICE) consultancy has a proven record of helping organisations solve wide-ranging EDI challenges. Key to our approach is viewing cultural development not as a final destination but as a journey, with every business having its own milestones. The result? Tailored solutions and a cultural shift that’s authentic and sustainable.
Our dedicated D&I Consultancy Practice assists clients to increase their diversity maturity and proficiency at any stage of their inclusion journey. A partnership with us is an opportunity to build knowledge and strengthen your internal capability to support the business to develop a diverse and inclusive workplace.
Green Park’s range of DICE services range from Diverse Talent Mapping to Organisational Coaching to Cultural Assessments. All are designed to help you move the dial by understanding your D&I strengths and where you need to improve. Our team bring a wide range of private, public and third sector experience plus all kinds of training and accreditations. Many have a number of years of senior leadership experience, delivering large scale cultural transformation programmes. This combination enables us to be an excellent critical, encouraging and trusted friend to every business we work with. We understand Retail and we have a track record of achieving results.
Helping leaders understand intersectionality and diverse workforces
In our experience, leaders’ lack of education on EDI also extends to important and sensitive subjects such as intersectionality. In other words, leaders are oblivious to the nuances of how race, class, gender and other individual characteristics overlap and intersect with one another. That means there is no acknowledgement or understanding of the implications of belonging to two or more communities. For instance, being disabled may be a very different experience for a Black woman than it is for a white one. What effect does it have on EDI initiatives and strategies when leaders miss these crucial subtleties?
For UK’s Leading Home Improvement Retailer this was a highly relevant question. The business was aware that a greater focus on EDI was needed for future success. With this in mind, the retailer asked Green Park to train some 600 of its leaders on inclusive leadership, cultural intelligence and racial fluency. The training was well received, with 4 out of 5 participants scoring 9 out of 10. Since then, stakeholders have reported examples of major cultural change.
Using data analysis to create effective candidate attraction campaigns
Boosting numbers of ethnically diverse employees is a challenge for many retail organisations. Why aren’t people from diverse communities being recruited into retail teams so they reflect the consumers they serve?
A Leading Global Retailer was determined to get to the root of this problem and improve diverse hiring across the business. The grocer commissioned Green Park to conduct a global Culture & Inclusion Audit (CARE) that would investigate every aspect of its recruitment operation and cover most of its worldwide business, including thousands of workers. The audit pinpointed the areas where the organisation needed to improve, including attraction campaigns. For a more targeted focus on diverse communities, there needed to be more robust analysis of relevant markets to create effective recruitment material. This and other recommendations are now part of their overall strategy, shaping recruitment on a multi-national scale.
Reaching out to the right people
As Green Park’s research shows, retail leadership could find itself totally at odds with its consumer base by 2050. But how do organisations find and attract talented diverse candidates?
This was a problem that a Big 4 UK Grocer needed help to resolve. So, in 2021, the organisations commissioned Green Park to carry out Diverse Talent Mapping for three key roles. The first step was to review levels of diverse talent in the external market for the three roles using Green Park’s proportionality mapping solution. This enabled us to calculate the percentage of diverse talent in the sector generally and compare it with the percentage currently at the organisation. The retailer then asked Green Park to approach the most promising diverse candidates with a view to networking with them. This work has led to multiple placements and boosted representation within one of the most homogenous teams at the BIG 4 Grocer through providing the business with qualified talent pools and upskilling recruiters who can apply a much more targeted focus to future outreach based on the Partnership with Green Park.