The real cost of scaling back DEI: How consumers are adjusting their purchasing behaviors

The state of diversity, equity and inclusion

Editor’s note: Dave Albert is the chief insights officer at Collage.

In recent years, brands have faced increasing scrutiny over their corporate commitments to diversity, equity and inclusion (DEI). As some companies scale back their DEI programs in response to external pressures, consumer reactions are shaping up to be more than just social commentary – they're effecting brand loyalty and purchasing behaviors, impacting brands' bottom line. 

A consumer survey from Collage Group, completed on February 2, 2025, sheds light on how Americans feel about corporate support for diversity and inclusion and the consequences for brands that pull back. The data is clear: Consumers – predominantly Black, Hispanic and LGBTQ+ – are not only noticing these shifts but also making purchasing decisions accordingly. 

Consumers expect brands to take a stand

Today, consumers expect brands to align with their values. Nearly half (49%) of all consumers agree with the statement, "I am more likely to consider purchasing a brand that supports causes I care about." This sentiment is even stronger among Black (56%), Hispanic (57%) and LGBTQ+ (71%) consumers.

When it comes to DEI specifically, the numbers are even more striking. A majority of Black (55%), Hispanic (54%) and LGBTQ+ (73%) consumers are more likely to consider purchasing a brand that supports diversity and inclusion, compared to just 36% of white consumers. Trust is a significant factor with 46% of Black and 55% of LGBTQ+ consumers saying they don't trust brands that engage in social issues if they lack internal diversity. Four out of 10 Black consumers and over one-third (54%) of LGBTQ+ consumers report actively looking up a brand's DEI practices before purchasing.

How consumers react to scaling back on DEI initiatives 

With increased awareness of corporate DEI efforts, consumers pay attention and take action when brands scale back. Over half of American consumers know that some brands and retailers have recently reduced their DEI initiatives. For many, this awareness translates into action. 

One-third of all consumers have stopped or reduced purchases from brands that have pulled back on DEI. Looking deeper, 45% of Black, 45% of Hispanic and 58% of LGBTQ+ consumers say they have already reduced their spending or plan to in the next three months with brands that have cut back on DEI. The result for brands is profound, with the potential to miss out on over $1 trillion in buying power among these key growth segments in the next few years. Beyond reduced spending, emotions are running high – three out of 10 Black consumers and 42% of LGBTQ+ consumers report feeling angry when they hear about brands halting DEI efforts.

Implications for brands: The business case for DEI efforts

The business case for inclusive marketing continues to strengthen. More than 65% of all expenditure growth comes from multicultural consumers. Hispanic buying power alone has surged +320% in just five years and is estimated to reach $2.8 trillion by 2026. Black buying power doubled in just five years and is estimated to hit $2.1 trillion in 2026. 

The data is clear – scaling back DEI efforts carries real business risks, particularly among multicultural and younger consumer segments. Brands that pull back risk losing trust, eroding short-term revenue and long-term brand equity. Here's why:

Consumer backlash

With 45% of Black and Hispanic consumers reducing or stopping purchases from brands that scale back DEI, these brands risk alienating significant and growing consumer segments. The broader population also shows a strong response, with 30% reporting similar shopping behavior shifts resulting in about 86 million consumers who are changing the way they shop due to corporate policy changes.

Positive sentiment drives growth

Consumers are more likely to support brands that maintain their DEI commitments. Half (55%) of Black Americans report a more positive feeling toward brands that continue investing in DEI, compared to 36% of white Americans.

Loss of trust

Brands that do not align their corporate values and actions with their marketing messages risk stoking distrust among consumers, driving them away. Black and LGBTQ+ consumers are more likely than other groups to agree with the statement, "I don't trust brands that get involved in social issues if they lack internal diversity." It's about maintaining brand loyalty and ensuring consumers do not shift allegiance to competitors who remain consistent between their DEI commitments, brand values and marketing. 

Brand momentum is shifting: Consumers take immediate action 

Consumers' shifting sentiment is already affecting brand equity. One notable example is Target, which has historically been seen as a leader in inclusive marketing. However, Target’s net brand momentum (measured January 31-February 2, 2025) has now turned negative, meaning more consumers believe the brand is falling behind rather than progressing. Target’s close competitors, Walmart and Costco, continue to have positive momentum, with Costco having the highest brand momentum of the three retailers – three times more consumers feel that Costco is on the rise than consider the brand on the decline. At the time of this study, Costco was the only one of these three that was standing by its original DEI policies. 

This trend underscores a crucial brand lesson: Diversity and inclusion aren't just about corporate responsibility – it's a business imperative. Companies that roll back their DEI policies must urgently consider how they will deliver authentic commitments to diversity and inclusion. The cost of not addressing this incongruence is severe – eroding trust, alienating key demographics and ultimately losing market share. 

The path forward: How brands can navigate this landscape

Brands that embrace inclusive marketing protect their brand equity and position themselves for long-term growth. Diversity and inclusion are business necessities that drive brand trust, loyalty and revenue growth. Companies that choose to scale back DEI will need to find ways for their brands to authentically connect and build trust with critical multicultural segments that drive growth. Simple representation is no longer enough. 

Brands must go beyond surface-level inclusion and focus on cultural specificity and individual depth. Engaging diverse communities authentically and ensuring representation resonates with real-life experiences is essential. Brands that excel in cultural fluency – understanding and engaging with diverse audiences – outperform competitors in trust and brand favorability. An effective way to ensure that consumer marketing is authentic is to involve their voices in the development of products, services and campaigns. Companies that collaborate with multicultural consumers strengthen trust and advocacy. 

The message from consumers is clear: Brands that scale back on DEI initiatives do so at their own risk. In an era where consumers demand authenticity and accountability, companies that remain committed to diversity and inclusion will be the ones that thrive. Investing in cultural fluency today will ensure long-term brand success in an increasingly multicultural marketplace.  

Methodology

Collage Group surveyed a sample of 1,012 adults from January 31-February 2, 2025.