DEI backlash is becoming a reality that many organizations are now forced to navigate and recent headlines show just how big the stakes are. The contrast between the Costco DEI strategy, which stayed strong, and Target’s retreat highlights what’s at risk.
In January 2025, Target made waves by scaling back its diversity, equity, and inclusion (DEI) efforts. The retail giant ended its Racial Equity Action and Change program and withdrew from external diversity surveys – a move largely seen as a response to political pressure. The fallout was swift.
Target Loses $12.4 Billion in Market Value
Shoppers took notice. Foot traffic to Target stores dropped for ten straight weeks, with a 7.9% year-over-year decline recorded by early April. The pullback was particularly sharp among Black and Hispanic consumers, who reduced visits at significantly higher rates. Adding to the trouble, nearly one in five U.S. adults said they stopped buying from brands that walked back DEI commitments. Among Gen Z adults, that figure was twice as high.
The market reacted, too. Target’s stock plummeted to a four-year low, wiping out close to $12.4 billion in market value – all amid increasing public frustration with perceived DEI backlash.
Costco Doubles Down on DEI and Sees 7.7 Million More Store Visits
Meanwhile, Costco took a very different approach. Despite facing similar pressure, the wholesale retailer stood firm on its DEI values. A shareholder proposal to assess the “risks” of its diversity practices was overwhelmingly rejected with more than 98% voting against it. Costco’s leadership reaffirmed that DEI isn’t just a box to check, it’s central to their employee strategy and rooted in the company’s core ethics.
That consistency paid off. In the four weeks ending February 9, 2025, Costco welcomed nearly 7.7 million more store visits, while Target saw almost 5 million fewer during the same period. The surge was especially pronounced among Black and Hispanic/Latino households.
Public opinion also tilted in Costco’s favor. A SurveyMonkey poll found that 68% of Americans backed the company’s decision to maintain its DEI commitments – even in the face of DEI pushback.
The Real Impact of DEI Backlash
The contrast between Target and Costco highlights a powerful message: when brands pull back on DEI, consumers notice and respond. Companies that walk back commitments risk losing trust, loyalty, and even market value.
But there’s more at stake than reputation. DEI remains a smart, strategic business move. Studies from McKinsey & Company consistently show that diverse companies outperform their peers. In fact, two-thirds of Americans believe diversity efforts lead to better products and services, while more than a third say they’re more likely to apply to inclusive companies.
In short, resisting the DEI backlash isn’t just about ethics – it’s about effectiveness.
The Bottom Line: Consistency Builds Credibility
The contrasting decisions made by Target and Costco offer a clear lesson for business leaders: in today’s values-driven economy, authenticity matters. DEI backlash may be trending in headlines, but staying committed to diversity, equity, and inclusion can pay off for customers, employees, and the bottom line.
Want to make inclusion part of your everyday operations? Discover how our Diversity Calendar can help you embed DEI into your culture with actionable tools, insights, and resources for real impact.