Retail Executives Overestimating Consumer Interest in Diversity and Inclusion, Underestimating Impact of Offensive Products
Quality and Low Prices Still Key Drivers in Purchase Decisions
NEW YORK–(BUSINESS WIRE)–In an era of rising sensitivities around diversity and inclusion themes, retail executives may be misjudging their impact on shopping decisions. According to a new report by First Insight, Inc., the world’s leading technology company transforming how leading retailers make product investment and pricing decisions, 92 percent of senior retail executives surveyed felt that consumers would continue to buy from their company even if they created and offered a controversial and offensive product, if they pulled it from the shelves quickly and issued a public apology. In comparison, only 27 percent of consumers responded that they wouldn’t mind and would continue shopping at that retailer. Further, 19 percent of consumers said they would stop shopping at that retailer or brand forever, versus the 5 percent predicted by senior retail leaders.
The study points to a significant perception gap between senior retail executives and consumers on the impact of diversity and inclusion themes on shopping behavior. When asked about the importance of diversity factors when choosing which retailers or brands to shop, only 61 percent of consumers felt extended sizing was important, versus 82 percent of senior retail leaders. Similarly, only 44 percent of consumers felt brand influencers representing diverse viewpoints were important, versus 77 percent of senior retail leaders.
“According to the results of this survey, consumers may be more understanding and forgiving of retailers as they ramp to meet rising inclusivity and diversity expectations than previously anticipated by most senior retail leaders,” said Greg Petro, CEO of First Insight. “Rome wasn’t built in a day, and as retailers and brands continue to work to align with new expectations of today’s consumer, whether it’s through extended sizing, cultural inclusion, hiring a Chief Diversity Officer, or responding to and learning from mis-steps, retailers need to continue to be sensitive to the needs of the consumer. The data also shows that senior leaders need to stay invested in their day-to-day operations, and stay connected with the voice of customers on quality and pricing of items.”
Results of the surveys were announced today during WWD’s Apparel & Retail CEO Summit in New York City.
Download the report and accompanying infographic to see all of the key findings from the study here.
Other significant findings of the surveys include:
Misalignment on Value of Hiring a Chief Diversity Officer:
While both consumers and senior retail leaders were aligned on the importance of women and minorities in senior leadership positions (50 percent versus 54 percent, respectively), 75 percent of senior retail leaders said they do not plan to hire a Chief Diversity Officer compared to 54 percent of consumers who felt it would benefit them.
Cultural Inclusivity More Important to Consumers than Senior Retail Leaders Know:
While cultural inclusivity which includes modest styles, hijabs and head coverings was ranked the least important diversity factor impacting shopping behavior by both groups, it was more important to consumers (46 percent) than to senior retail leaders (38 percent).
Senior Retail Leaders Significantly Out of Step on Mobile Purchase Behavior
While senior retail leaders believe 33 percent of purchases are made in-store and 67 percent are made online, in close alignment with consumers (37 percent and 63 percent respectively), results show a significant disconnect on the number of purchases being made via mobile devices monthly. According to the report, 75 percent of senior retail leaders believe consumers are making purchases on mobile devices more than six times a month. However, only 42 percent of consumers say the same.
Consumers Believe Prices are Increasing, Particularly In-Store
Fifty percent of consumers surveyed believe prices of products online are increasing. However, only 38 percent of senior retail leaders answered the same. Further, 60 percent of consumers felt that in-store prices were increasing, compared to only 35 percent of senior retail leaders. Of note, while significantly more senior retail leaders believe in-store pricing is increasing this year versus 2018 (20 percent), they are still significantly disconnected with consumer beliefs (60 percent of consumers felt in-store pricing was increasing 2018).
Senior Retail Leaders Out of Touch on Pricing and Convenience in Purchase Decisions
Similar to our 2018 report, there remains a large disconnect between senior retail leaders and consumers on the impact of pricing on purchase decisions. While quality remained the most important factor for both senior retail leaders (48 percent) and consumers (51 percent), a greater percentage of consumer respondents (40 percent) ranked low price of a product as important, versus 23 percent of senior retail leaders. Of note, 23 percent of senior retail leaders ranked convenience as important, with only seven percent of consumers ranking it as important.
Notes on Survey Methodology and Analysis
First Insight’s findings are based on two separate surveys. The consumer survey was based on targeted samples of more than 1,000 respondents and was fielded in September of 2019. It was completed through proprietary sample sources amongst panels who participate in online surveys. The executive survey was based on a sample of 48 retail senior-level business executives (C-suite, EVP/SVP, Vice President and Director roles), and was conducted in September and October 2019.
About First Insight, Inc.
First Insight is the world’s leading digital pre-season product testing and decision-making platform that empowers retailers and brands to incorporate the Voice of the Customer into the design, pricing, planning and marketing of new products. Through the use of online consumer engagement, the First Insight solution gathers real-time consumer data and applies predictive analytic models powered by machine learning and AI to create actionable insights, which drive measurable value. Retailers, manufacturers and brands use the First Insight solution to design, select, price, plan and market the most profitable new products for reduced markdown rates and improved sales, margins and inventory turnover. Customers include some of world’s leading vertically integrated brands, sporting goods companies, department stores, mass merchant retailers and wholesalers. For further information, please visit www.firstinsight.com.
SVP of Marketing