The Impact of Major Retailers Scaling Back DEI on Black-Owned Brands

In a significant shift, major retailers like Target and Walmart are pulling back from their Diversity, Equity, and Inclusion (DEI) initiatives. This change raises concerns about the future of Black-owned brands in mainstream retail, as many entrepreneurs have relied on these programs to gain visibility and secure shelf space. Without ongoing corporate support, Black business owners fear a harder fight to compete in an industry dominated by well-funded corporations.

While some companies are retreating from DEI efforts, others remain committed. Sephora, Costco, and E.l.f. Beauty continue to champion policies that support Black-owned businesses and diverse founders. This growing divide among leading retailers has sparked a debate about the long-term impact on inclusivity in the marketplace.

What’s Changing?

Both Target and Walmart, once vocal advocates of diverse business representation, have scaled back their commitments. Target had pledged $2 billion to support Black-owned brands by 2025, but recent actions suggest that funding may be in question. Walmart has also shut down its Center for Racial Equity, which was backed by a $100 million investment for Black entrepreneurs.

This shift appears to be influenced by political and legal pressures. In early 2025, former President Donald Trump issued an executive order banning DEI programs in government, which fueled a broader backlash against corporate diversity initiatives. Additionally, lawsuits from conservative activists, such as Edward Blum’s case against The Fearless Fund, have made many companies hesitant to continue funding Black-focused programs.

Why This Matters for Black Entrepreneurs

For Black-owned brands, corporate DEI initiatives have been instrumental in providing access to retail markets. Visibility in major stores translates to higher sales and broader consumer awareness, which can be the difference between success and failure.

Malaika Jones, co-founder of fragrance brand Brown Girl Jane, credits Sephora’s DEI programs for significantly boosting her company’s growth. Receiving a $100,000 grant and prominent placement in customer emails helped Brown Girl Jane double its sales. Without similar corporate backing, emerging Black-owned businesses may struggle to scale and compete.

Brandon Blackwood, a handbag designer, also voiced concerns. His brand gained recognition in 2020 with the release of his “End Systemic Racism” tote bag. With support from Nordstrom and Bloomingdale’s, his business expanded rapidly. However, Blackwood worries that without DEI-driven retail partnerships, future Black entrepreneurs may not have the opportunities that allowed him to grow.

Retailers That Continue Supporting DEI

While some companies turn away from DEI, others remain steadfast. Sephora, for example, participated in the 15 Percent Pledge, an initiative calling on retailers to dedicate 15 percent of shelf space to Black-owned brands. Since its commitment in 2020, Sephora has increased Black-owned product offerings from 3 to 10 percent.

Costco also remains committed to diversity. In a recent shareholder meeting, 98 percent of Costco investors voted to maintain DEI programs, emphasizing the role inclusivity plays in fostering innovation and business expansion.

E.l.f. Beauty has continued to position diversity as a core strength. CEO Tarang Amin has publicly stated that representation in corporate leadership and product offerings contributes to the company’s overall success. Currently, 44 percent of E.l.f. Beauty’s workforce identifies as part of a minority group, showcasing a commitment beyond just marketing initiatives.

The Potential Backlash of Moving Away from DEI

Retailers cutting diversity programs may face consumer backlash, particularly from younger shoppers who prioritize inclusivity. Millennials and Gen Z consumers expect to see diverse product selections, including haircare, cosmetics, and cultural goods that reflect a wide range of communities.

Actress and entrepreneur Tabitha Brown, who had a successful partnership with Target, expressed disappointment in the retailer’s shift. However, she cautioned against boycotts, urging consumers to continue purchasing Black-owned products. She warned, “If Black brands don’t sell, stores will remove them from shelves.”

What Lies Ahead?

With major retail chains now taking differing approaches to DEI, the future remains uncertain for Black entrepreneurs seeking to scale within the mainstream marketplace. The continued efforts of initiatives like the 15 Percent Pledge and the commitment of companies still prioritizing diversity will be crucial in keeping Black-owned businesses visible.

For consumers who care about diversity in business, intentional spending is more important than ever. Supporting Black-owned brands, either in-store or online, affects which products remain available in the long run. Entrepreneurs and allies alike are encouraging shoppers to use their purchasing power to advocate for the representation that still matters—at the checkout counter.