Why Exclusion Hurts Your Brand and the Strong Business Case for DEI
- Brainz Magazine
- May 7, 2025
- 6 min read
Written by Sharon McKimm, Life and Diversity Coach
Sharon is an empathetic and results-driven Life and Executive Coach with 27+ years of global experience. She transforms lives and organizations through her insightful coaching approach, combining her Advanced Diploma in Personal Leadership and Postgraduate Diploma in Equality, Diversity, and Inclusion with life and multicultural expertise.
As a child growing up in the Bronx, I remember studying the Civil Rights movement and being fascinated by the courage and commitment of individuals who stood up and united to effect change. I remember wondering why some businesses failed to recognize the value and patronage of their ethnic customers. I realise that there were many cultural factors at play, but I wondered why the business owners did not consider or appreciate the impact on their bottom lines. Why didn’t the money of ethnic customers hold equal sway?
The mind of a child has a way of cutting to the heart of things: Why would you disrespect your customers when you rely on them to survive? It was puzzling. It didn’t make sense then, and it doesn’t make sense now. Yet the same upside-down thinking continues in today’s marketplace.
Let's abandon the smoke and mirrors surrounding DEI debates and get back to a fundamental business principle: never insult your customers because they hold the power to make or break your business. Rather than placing pressure on American and international corporations to dismantle DEI policies, perhaps the US government should examine the success stories of organizations thriving through sound diversity, equity, and inclusion practices.
In hindsight, the economic threat of exclusion becomes obvious. History has taught us that unconscious bias and racism frequently come at a high cost. DEI practices and inclusive behaviours are not merely ethical choices, they’re business imperatives.
Lessons from history: The Montgomery bus boycott
The Montgomery Bus Boycott offers a powerful example of the economic consequences of discrimination. It began on December 5, 1955, after Rosa Parks, a 42-year-old Black seamstress, was arrested for refusing to give up her seat to a white passenger on a segregated city bus. It's worth noting that she wasn't the first fifteen-year-old, Claudette Colvin had refused to give up her seat nine months earlier, but didn't receive the same attention or support.
Instead, Parks' quiet defiance lit a match, and what followed was more than a moral protest; it was a strategic economic withdrawal. The boycott became a defining moment in the U.S. civil rights movement.
At the time, Black riders made up roughly 70% of Montgomery’s bus customers. Yet they were demeaned and marginalized by the very system their fares supported. From a commercial standpoint, the logic was baffling: Why would any business insult 70% of its customer base?
Local leaders, including Dr. Martin Luther King Jr., organized a boycott that lasted 381 days. During this time, African Americans walked, carpooled, or arranged other forms of transportation to avoid using the buses. Despite harassment and intimidation, the boycott held firm and it worked."
It could be argued that this practice was the local cultural norm in the 50s and that racial segregation was at the root of the dysfunction of this bus enterprise. However, this is the point: to be in business necessitates removing all such biases and non-commercial practices that impede servicing your customer base. In addition, retention or expansion into additional markets requires pragmatic recognition that exclusive and/or biased approaches result in negative consequences to the business’s revenues.
The boycott ended successfully in December 1956 when the U.S. Supreme Court ruled that bus segregation was unconstitutional. But beyond the moral victory, let's examine the financial impact:
The numbers behind the Montgomery protest
Montgomery City Lines, the bus company, reported losing approximately 65% of its revenue during the boycott:
Category | Estimated Loss (1955–56) | Modern Equivalent (approx.) |
Bus company losses | $250,000–$300,000 | $3M–$3.6M+ |
Weekly bus revenue loss | ~$3,000 | ~$33,000 |
Indirect retail impact | Not fully quantified | Substantial |
Source: NPS.gov (The Montgomery Bus Boycott)
When you review the numbers, it is not surprising that Caucasian citizens and officials demanded an end to the boycott purely from a financial standpoint, and not on moral grounds. It can be argued that this is where the DEI argument needs to reside.
Many Black residents, who were the backbone of the city's bus ridership and a substantial portion of downtown retail consumers, also withdrew their economic participation from city centers. White-owned businesses felt the sting as foot traffic dwindled, and sales dropped. At the same time, the city absorbed additional costs related to increased policing, legal proceedings, and maintenance due to ongoing tensions.
While the moral urgency of the boycott captured national attention, it was the economic pressure that ultimately facilitated change.
Modern examples of the cost of exclusion
More recently, there have been several notable instances where inadequate or discriminatory practices led to significant financial consequences:
North Carolina's HB2 "bathroom bill" (2016)
North Carolina's enactment of House Bill 2, which restricted transgender individuals from using public restrooms, resulted in:
Major corporations like PayPal and CoStar are cancelling planned expansions in the state.
High-profile events, including concerts and sporting events, are being relocated.
An estimated $3.76 billion loss over 12 years in business opportunities, according to the Associated Press.
Target Corporation DEI rollback (2025)
Target Corporation's rollback of its Diversity, Equity, and Inclusion (DEI) initiatives has led to significant financial, reputational, and operational impacts.
In January 2025, the corporation rebranded its Supplier Diversity program to "Supplier Engagement" and discontinued its $2 billion Racial Equity Action and Change (REACH) program. This decision, influenced by political pressures, led to:
Calls for a consumer boycott, notably starting on February 1st, 2025, the beginning of Black History Month. In addition, civil rights activists, led by Rev. Jamal Bryant, initiated a 40-day national boycott starting in March 2025.
Criticism from civil rights groups and activists who viewed the rollback as a retreat from prior commitments to diversity and inclusion.
The financial impact on the corporation is still ongoing, but according to the Buckeye Revenue (in March 2025), the market value of the corporation declined with a loss of approximately $12.4 billion in market value. After the DEI rollback, Target's stock price dropped by $27.27 per share by the end of February 2025.
Consumer behavior and boycott effects
Decline in Store Traffic: Data from Placer.ai indicated a 4% decrease in customer visits during the week of January 27, 2025, followed by an 8.6% drop the week of February 3, and nearly 4% the week of February 10.
Competitor Gains: In contrast, Costco, which maintained its DEI commitments, experienced a 5.7% increase in visits during the week of February 3rd and a 4.6% rise during the week of February 10th.
Broader economic impact of discrimination
Beyond individual companies, systemic discrimination has wider economic repercussions:
A Citigroup study estimated that racial discrimination against African Americans cost the U.S. economy $16 trillion over two decades due to factors like wage gaps, unequal access to housing and education, and limited business investment. (Source: Citigroup’s 2020 report, “Closing the Racial Inequality Gaps”)
Research consistently shows that companies with discriminatory practices face higher employee turnover, reduced productivity, and diminished innovation.
Back to business basics
The public have become desensitized to DEI moral arguments. The approach and DEI rational needs to be fundamental and practical: non-inclusive business practices equal a negative impact on business.
We are no longer in an era where the disabled, poor, elderly, or people of non-Christian religions and cultures are going to tolerate non-representation or disrespect. They are not captive consumers without options.
Business leaders who rise above politics and prioritize inclusion will future-proof their brands, strengthen customer loyalty, and unlock consistent revenue streams. The market has spoken in the past and is consistent in its present-day verdict. Is your company ready to listen?
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Still not convinced? Here’s your call to action:
Read McKinsey’s “Diversity Wins: How Inclusion Matters” (2020).
Focus on what matters: customer-centricity, objective decision-making, and sustainable business growth. Ignore the noise of DEI controversies and identify your market as you and your team serve it well.
Remember that today’s consumers expect businesses to operate with integrity, best practices, and inclusion, not bias or outdated assumptions.
Read more from Sharon McKimm
Sharon McKimm, Life and Diversity Coach
Sharon is a life and diversity coach dedicated to empowering individuals and organizations to achieve meaningful change and growth. Through her work at Guiding Light, she helps clients find clarity, overcome obstacles, and align their daily actions with their deepest values. Drawing from her multicultural upbringing in the Bronx and corporate leadership experience, Sharon brings a unique blend of cultural intelligence, business acumen, and empathy to her coaching. Her mission: Guidance to empower change and growth.
