Good morning! Carl’s Jr. brings back sexualized ad campaign approach, Chan Zuckerberg Initiative will not end DEI efforts, and Target's DEI pivot turned off consumers. Have a restorative weekend.
- Shopping list. Amid corporate America's rollback of DEI, some announcements caused more of a stir than others. One that hit a nerve was Target's: The retailer said, four days into the Trump administration, that it was ending its diversity and inclusion programs.
Target's fear was unsurprising given the Trump administration's level of vitriol and legal threats toward DEI in both the federal government and the private sector. New attorney general Pam Bondi started her tenure this week with a memo that said the Justice Department would look at companies with DEI initiatives for "criminal investigation."
But the abrupt shift from Target's friendly and inclusive brand identity just a year ago left a sour taste with consumers. In May 2023, CEO Brian Cornell told Fortune that DEI had "fueled much of our growth" over nine years. While consumers weren't happy about similar decisions rolling back DEI at Meta, Amazon, and Walmart, Target's felt more personal. The $108 billion-in-revenue retailer's brand had benefitted from its public-facing support of Black-owned businesses, proving out the theory that consumers like shopping a diverse array of products. Especially in a physical retailer where customers can touch and see products ranging from food to makeup to household items, going back on that commitment felt like a betrayal, to some, and simply a worse shopping experience to others.
Reactions have been passionate and complicated. Calls to boycott Target started immediately. Others called on shoppers to continue to support Black-owned brands independently and at Target's stores—if a brand's sales falter, it gives Target a further excuse to question the value of these brands, they argued. Independent e-commerce isn't a solution for all brands, the Honey Pot founder Bea Dixon said; for those that sell inexpensive products, it often isn't economically viable to sell direct-to-consumer. "I know it may seem like I'm defending Target, but I'm not," Dixon wrote on Instagram. "I'm advocating for the small businesses that depend on this opportunity."
Aurora James, who founded the Fifteen Percent Pledge in 2020 and convinced businesses to commit 15% of their shelf space to Black-owned brands, has spent the past few weeks unpacking why the tide has turned so quickly. "If it weren't working, they wouldn't be spending so much time trying to dismantle it," she says. The Pledge's contractual commitments are still up and running, and Sephora (which is owned by LVMH, whose family ownership attended the Trump inauguration) doubled down on its support for Black-owned brands at the Pledge's annual gala this past weekend. James says she's had lots of conversations with signers of the Pledge over the past couple weeks, but none have backed out.
Target never signed the Fifteen Percent Pledge, and instead announced the launch of its own initiative to support Black-owned brands—which could now be part of this rollback. Yesterday, Target was hit with a shareholder lawsuit alleging that the company failed to disclose the risks of its DEI efforts. (Target hasn’t commented on the suit and responded to Fortune’s request for comment with a fact sheet about their recent changes.)
"Consumer data has not changed," James says. "We still know consumers are interested in shopping with their values." What has changed is politics. And when a company's commitment to DEI—or abandonment of DEI—is politically motivated, consumers can sniff it out.
Emma Hinchliffe
emma.hinchliffe@fortune.com
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