Diversity in retail: how the high street crisis is harming it and what leaders must do

The UK retail sector is one of the worst hit by the pandemic. Considering the 2021 budget statement, Rachael Wilson, Managing Director of EW Group, examines how the crisis is harming the sector’s diverse workforces, and what leaders must do to help them.

COVID-19 has decimated the UK retail industry with the sector undergoing its worst period since the 1970s. This is all while the industry continues to jostle with the impact of ecommerce and stagnant consumer spending throughout the latter half of the decade.

Figures from the Centre for Retail Research show that there have been almost 200,000 retail job losses and nearly 17,000 store closures since the start of the pandemic, and there could be 200,000 more jobs lost throughout 2021. According to Sky News figures, out of all sectors of the economy, retail has been hit the hardest.

Following the 2021 budget announcement, the Chancellor of the Exchequer has confirmed that Restart Grants worth £5 billion will be rolled out to support the reopening of the retail industry on the 12th of April. This investment, along with the extension of the furlough scheme, will alleviate the pressure on damaged cash reserves and deliver temporary relief. However, this is just a drop in the ocean for retail employers who continue to face a multitude of other issues that contribute to the high street crisis in the UK.

Arcadia, Debenhams, Boots, John Lewis are all casualties of the pandemic, but there is another factor that links them: the above-average diversity of their shop-floor workforces. With the industry’s future hanging in the balance, this is something that business leaders and the government must wrestle with to avoid entrenching inequality.

The UK retail sector has a diversity problem

So, how diverse is UK retail? Well, it depends on who you’re looking at.

Firstly, stereotypes dictate that retail is a women’s industry, but the opposite is true. The sector performs poorly when it comes to gender diversity in leadership, with statistics from the Women Count 2020 showing just 24% of FTSE 350 executives in the retail sector were women, dropping to 12% of boards.

That’s despite women making up 58% of retail staff, according to the Work Foundation’s 2020 No Returns study; far above the national average.

In terms of ethnicity, retail leadership is even more unrepresentative. Only 3.3% of FTSE 100 retail business leaders had a Black, Asian or minority ethnic background in Green Park’s 2019 Leadership 10,000 report – a figure that’s remained static for six years.

Yet the most recent official labour market statistics show that the retail industry had the second greatest number of non-white workers after health and social work. That means most are concentrated at the bottom of the hierarchy and seemingly unable to advance up the ranks.

The same bleak picture can also be seen at retailers that pride themselves on forging more equitable relationships with their workers. In 2020, just six of John Lewis’ 158 senior UK managers were non-white (3.8%), dropping to just 3% of staff in the top four levels of management.

This is even though 13.7% of all John Lewis’ staff have Black, Asian and minority ethnic backgrounds – a figure that rises to 17% in the company’s lowest-paid roles.

These frontline positions are insecure. TUC insights from 2019 found that, compared to white workers, Black and minority ethnic staff were around twice as likely to be on agency contracts, zero-hours contracts, or in temporary work.

Going further down the supply chain the imbalance only increases: according to the Clean Clothes Campaign, around 80% of the world’s garment workers are women. Job losses in the UK will impact them too, especially as businesses try to reduce their overheads and refocus their efforts away from demanding suppliers pay fair wages.

The pandemic has unfairly impacted diverse groups

Even before March 2020, diverse retail staff were suffering from pay and opportunity inequality, but as COVID-19 has ravaged the industry with redundancies, their plight has only worsened.

According to 2021 research from the TUC, in retail, 7% of white retail workers lost their jobs while 16% of Black and minority ethnic workers experienced the same. This is compared to overall Black and minority ethnic employment, which dropped by 5.3% – 26 times higher than the 0.2% rate for white workers.

As well as being much more likely to lose their jobs, the Runnymede Trust’s 2020 research found that minority ethnic groups have up to ten times less wealth than white British people, putting these staff at even greater risk of hardship while they look for new employment.

And since women occupy such a high proportion of the shop floor roles cut as big high street brands fold, they too are feeling the effects much more than their male managers and leaders.

Nearly 80% of Arcadia and Debenhams staff were women, according to the Union on Shop, Distributive and Allied Workers, and the University of Warwick’s Institute for Employment Research found that working class women were most badly affected by the spring 2020 lockdown.

The quality of jobs replacing retail roles is also worse, disadvantaging women; the Work Foundation notes that even though warehouses are hiring as delivery retail explodes in popularity, the location of warehouses and nature of the work means women are less likely to apply.

How retail leaders can address the industry’s imbalanced diversity

While the pandemic and structural shifts in consumer habits are difficult for leaders to fight, there is still much they can do to improve the diversity of their workforces, and both the workplace experiences and opportunities open to diverse staff.

Our bespoke diversity audits, unconscious bias training workshops, and diversity and inclusion training have supported many retail organisations to build an equal and inclusive culture. Our recent work with retail companies such as Planet Organic and URBN aimed to ignite change and successfully achieve inclusivity at all levels of the businesses.

Doing so is not just morally important, but there is also a financial imperative. In 2019, McKinsey discovered that diverse executive teams increased the likelihood of financial outperformance by 25%. And the Women Count 2020 found that across the FTSE 350, companies with women in more than a third of their executive committee positions had net profit margins up to ten times larger than companies with no women executives, equating to around £47 billion in lost profits each year.

So, what steps can they take? Now that the government is offering greater support for retail businesses in the form of staff retention subsidies, long-term sustained funding is needed to ensure a smooth road to recovery and to stem future job losses. Consistent and continuous support will retain jobs and help the plight of diverse groups after long periods of little to no retail trading.

Next, leaders must better understand what is hampering gender inequality within their business, namely within senior positions. If the leadership of a company is not representative of its employees or customers, it will perform much worse at understanding their challenges, what drives them, and barriers to opportunity.

This isn’t a quick process; it requires data collection, audits, strategy, training, and sustained action across all company processes, including recruitment, appraisal and selection. Our longstanding relationships with retail businesses such as Planet Organic and URBN are a great example of how businesses can develop their understanding of organisational equality, diversity, and inclusion.

Not all staff want to rise through the ranks though, so it’s crucial that retailers start committing to paying the real living wage. Currently set at £9.50 for the UK or £10.85 for London, this will go a long way to improving the lives of retail workers – as well as better insulating them against future economic shocks.

If retail leaders rise to the challenge and promote positive, diverse cultures within their businesses, they will reap the rewards: happier, more productive staff; a better understanding of diverse groups of customers; and greater profitability as a result.

The pandemic truly is an inflection point – it’s crucial that leaders make the right choices to guarantee a strong and rapid recovery.