As the holiday shopping season approaches, retailers are weighing their options around diversity, equity, and inclusion initiatives in a bid to avoid customer backlash. Many companies are taking a cautious approach, with some hiring outside advisers for guidance on minimizing criticism, while others are skipping DEI events altogether. With the 2024 presidential election adding political pressure, companies worry about being seen as "too woke" or not woke enough.

The concerns come after sales for Bud Light and Target tanked over marketing campaigns and product collections geared toward the LGBTQ community. Companies like Lowe's, Tractor Supply, and Ford, have since dialed back their DEI efforts, including stopping Pride festivals and ending partnerships with LGBTQ+ advocacy groups.

One retail industry insider told CNBC, "Retailers left to their own devices would like to be very proactive on DEI. But now they don't want any of their views to be public because they want to be able to sell stuff to everybody, and it's become such a stupid political issue."

According to retail consultant Sonia Lapinsky, the stakes are high as retailers approach the busiest sales period of the year. She noted a recent AlixPartners survey that showed that less than half of Millennials care about retailers' values as much as assumed. Lapinsky said, "Then we go down from there. So 45% for millennials, less than 40% for Gen Z and Gen X, even though we think we hear Gen Z cares about this, and then Boomers was 16%."

However, Lapinsky argues that DEI matters for developing products and services that resonate across diverse customer bases, even if companies avoid promoting these efforts publicly. Retailers are seeking to carefully navigate what they see as a "no-win situation," as they prepare for holiday shopping season without alienating either side of their customer base.

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