How retail's lack of gender diversity and representation in leadership roles is hurting profitability - in an industry where just 12% of CEOs are women

• Women, and especially women of color, are vastly underrepresented in retail executive roles.
• Females comprise just 12% of CEO positions, despite driving 70-80% of purchasing decisions.
• Experts say this is part of a "pipeline problem," which has been exacerbated by the pandemic.

When Rosalind Brewer was appointed as CEO of Walgreens in March, she became not just the only Black CEO of a Fortune 500 company, but also one of the few women in C-suite positions in the entire retail industry.

According to the Institute for Women's Policy Research, women hold 29% of executive- and senior-level positions in retail, slightly below the 31% of female leaders across all industries. When looking explicitly at chief executive roles, women comprise just 12% of top positions, a disparity that exists even though women drive an estimated 70% to 80% of purchasing decisions.

The lack of women in these roles isn't just a representation problem. By leaving women out of top leadership jobs, companies are in turn leaving money on the table: A May 2020 McKinsey report found that profits and share performance can be close to 50 percent higher when women are well represented in leadership roles.

The 'pipeline problem'

"Women are overrepresented in the retail industry as workers in general, especially front-line workers and salespeople, but that diversity is not reflected in senior executive leadership," Nicole Mason, CEO of the IWPR, told Insider. "What that tells me is that it's really hard for leaders of color and women to make it to those upper echelons of leadership in retail."

Further, once women have obtained top positions, existing power systems can make it difficult to retain them without the proper resources, Mason said. In recent years, the industry has experienced a wave of high-profile executive departures of women across both traditional retailers and newer direct-to-consumer brands alike, including JCPenney's Jill Soltau, Ulta's Mary Dillon, and Away's Steph Korey. In each of these cases, they were replaced by men.

"If you have an organization that has not had a female or person of color in a leadership position, and the organization institutionally has a culture that has not traditionally supported those leaders, it's going to be really hard for them to succeed," Mason said.

According to Melissa Campanelli - the cofounder of the Women in Retail Leadership Circle, a networking group for female executives - lack of gender diversity is "a pipeline problem." The dearth of female representation starts with higher barriers to entry in corporate roles and is perpetuated by roadblocks to advancement, she said.

"It's hard for women to move up the corporate ladder in any industry, and in retail in particular, when there's no opportunities for them at lower levels," she said. "We really work hard to encourage our members to make that change, whether it's putting into place a mentorship program or hiring more women in managing director roles. Once they're on that track, it's a lot easier to move up."

Despite the challenges to bolstering female leadership, there have still been some notable successes.

In February, Lauren Hobart became the first woman to lead a major sporting-goods company when she took over as CEO of Dick's Sporting Goods. Hobart quickly got to work on massive efforts in support of women's sports, including pledging millions of dollars to the US Soccer Federation and USA Softball. She also announced the retailer would revamp stores in order to feature more products for women and girls.

And Brewer's appointment as top executive at Walgreens means she joins CVS Health CEO Karen Lynch and Rite Aid CEO Heyward Donigan as one of three women running the biggest drugstore chains in the US.

"The generation of Spelman women who came before me were all first of a kinds - the first black woman to, the first black leader to, the first black judge to, the first black surgeon to - a real generation of waymakers,"Brewer said while delivering a 2018 commencement speech at her alma mater, Spelman College. "My generation is what one might call 'Generation P,' and that P is for perseverance."

The pandemic effect

The pandemic has exacerbated existing disparities, particularly within a retail industry that was especially hard hit. In addition to high unemployment rates and an economic recession that disrupted career trajectories, working mothers have struggled to navigate child care and remote schooling while working from home.

According to the May 2020 McKinsey report, one in three mothers has considered leaving the workforce or downshifting careers because of the pandemic.

Still, Mason said she believes there's room for hope, adding that she views the coming months as a "moment of rebuilding the sector," an opportunity to put it on track to be more diverse at the top.

"A lot of jobs have been lost. A lot of retail businesses have shuttered or declared bankruptcy," she said. "We're in a moment of rebuilding the sector and making sure that as it rebuilds, it identifies a diverse slate of leaders to make sure that the sector is reflective of the workers."

Mason said she has been inspired by efforts toward overall diversity and inclusion, particularly in the discussions that arose in the wake of the 2020 protests after George Floyd's killing. Now retailers will be tasked with delivering on their promises.

"In this moment where there is more attention being paid to diversity at all levels and commitments made by retailers to racial equality and gender equality, it's really important that retail companies work to implement those policies internally so that the values they say they're leading with are reflected in their workforce, especially at the highest levels," she said.