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Op-Ed: Online Moral Outrage Doesn't Actually Hurt Sales

There is little evidence that spasms of internet indignation — such as the recent backlash against Peloton and SoulCycle's well reported ties to Donald Trump — cause a retailer long-term damage.
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  • Bloomberg

NEW YORK, United States — For consumer brands and companies in 2019, the internet has laid bare two bewildering realities: It's nearly impossible to stay out of politics. And when there is even a hint of political controversy, the outrage machine will spin itself into high gear.

In the last year, hardly a week went by without some company — big or small, famous or obscure — finding itself at the centre of a storm of online outrage: Most recently it was Peloton Interactive Inc. for a TV ad some saw as sexist. Last month, it was the restaurant chain Chick-fil-A Inc. for announcing that its charity would no longer make donations to organisations that had been criticised as anti-gay. Months earlier, it was Walmart Inc. for changing its ammunition sales policy after a mass shooting in El Paso, Texas. Before that, it was the boutique exercise chain SoulCycle answering for a major shareholder holding a fundraiser for President Donald Trump. In June, it was Wayfair Inc., for selling furniture that ended up in a migrant detention centre. In January, it was Gillette for running ads about toxic masculinity.

Such episodes prompt a flood of snarky denunciations and boycott threats on Twitter and Facebook. Eventually, after a raft of performative posts (dropping sneakers in the trash, smashing coffeemakers), the hashtag — and the media attention — fade away.

And therein lies a lesson for corporate America: There is little evidence that these spasms of internet indignation cause a retailer long-term damage. Online chatter, it turns out, is a poor barometer of real-world consumer behaviour. The penalty for taking a political stand, in terms of lost sales or damaged reputation, is far lower than commonly believed — if a company can manage it in a smart way.

In April 2018, two black men were sitting in a Starbucks in Philadelphia waiting for an acquaintance. When they failed to order anything, a store manager eventually called police, who led them from the café in handcuffs. The incident, which was captured on video and posted on Twitter, was particularly galling for Starbucks Corp., which claims to value diversity so much it once encouraged its baristas to initiate conversations about race with customers.

The fury flowed fast and furious on social media. A sample tweet: “I’d rather drink instant then give u one more dime of my interracial family’s money. Seems it doesn't matter to u anyway #BoycottStarbucks.”

Back in the real world, however, customers largely stuck to their caffeine routines. In the days immediately following the incident, research firm GlobalData asked US adults what actions they intended to take toward Starbucks. Even then, with the story still fresh, most US respondents — 61 percent — didn’t plan to do anything. Two weeks later, in a subsequent survey, even fewer people had actually taken any action.

The coffee chain’s shares, meanwhile, hit an all-time high in July after it recorded its strongest quarterly comparable sales since 2016. Traffic has now increased to restaurants in its Americas division for two consecutive quarters, ending a run of mostly weak performance on this measure that had dogged it since long before the Philadelphia incident.

GlobalData conducted similar surveys around Nike’s September 2018 advertising campaign with former NFL quarterback Colin Kaepernick, who had become a cultural lightning rod after kneeling during the national anthem before games in protest of police treatment of black people. The pattern was the same — 71 percent of US adults never planned to take any action, and when the story faded from the headlines later that month, even fewer had actually done so.

Beyond these high-profile incidents, consumers generally don’t show much propensity to vote with their wallets. A Morning Consult survey from earlier this year found that less than half of shoppers have ever taken action based on a brand’s political stance.

Only 16 percent of consumers, the survey says, report posting to their social media accounts because of a political stance by a company. So a gusher of angry tweets about a company is likely to be coming from a subset of that 16 percent. This group isn’t necessarily reflective of America’s shoppers — much less any specific brand’s target audience.

Researchers at YouGov regularly survey shoppers about brands. Their data show an interesting dichotomy: When a company gets ensnared in an outrage cycle, it often sees a decline in its “buzz score,” a measure of whether consumers are hearing something positive or negative about a brand. But purchase intent, a measure of how likely a shopper is to buy from a given brand, often barely budges at all, or at least doesn’t move as drastically as the buzz score.

It’s not entirely surprising, of course, that outrage surfaces frequently in online discussions of retailers and consumer brands. Outrage is the default mode of so much social media conversation, whether in politics or pop culture.

But these expressions are often no more than exercises in virtual virtue-signalling. This may be considered a drawback in politics — former President Barack Obama recently criticised young people for mistaking tweeting for activism — but that’s not necessarily the case for brands and retailers. Disgruntled consumers retweet their support of a Chick-fil-A boycott, or post a meme on Facebook encouraging others to shun Target, and leave it at that.

After all, why go to the trouble and expense of replacing your iPhone after the president calls for an Apple Inc. boycott when you can just hold forth about it on the internet? Once you get validation online, says Brayden King, a professor at Northwestern University who has studied consumer boycotts, “it’s very easy to stop.”

There’s an additional consideration: The sheer volume of digital infernos makes it hard to stay focused on any one of them. It’s not just that the outrage is fleeting; it’s that it’s spread so thin.

Consider just how many targets U.S. consumers have raged against online in recent years: Home Depot, over its co-founder's support of President Donald Trump's campaign. Walmart, for the aforementioned gun policy and for allowing "Impeach 45" t-shirts to show up on its website. Inc., for its worker policies. H&M, for a photo of a kids' sweatshirt that was perceived as racist. Gucci, for a sweater that was reminiscent of blackface. Prada, for Sambo-like monkey dolls. Target, for allowing transgender customers to use the store bathrooms that correspond with their identities. Pepsico Inc., for a commercial that was tone deaf about the Black Lives Matter movement. Nordstrom Inc., for dumping Ivanka Trump's clothing line. Victoria's Secret, for its sex-bomb imagery in the #MeToo era. Jimmy John's, for an old photo of its founder hunting elephants.

You get the idea (and that’s just a sampling of the ire against retailers that sell stuff; there is a whole other backlash against Big Tech). Again: It may be disappointing to their supporters that so many of these campaigns flame out, at least in part because it’s simply too hard for most people to stay mad about so many things at once. But for the targets of the campaigns, there is safety in numbers.

Michael Jordan’s famous (and possibly apocryphal) quote — “Republicans buy sneakers, too” — neatly sums up why retailers have so long avoided wading into politics. But it is entirely possible for consumer companies to take a stand and not end up the worse for  it. For one, some issues are simply not that controversial.

This issue-by-issue variance helps explain why studies seem to present conflicting data about shoppers’ attitudes. For example, the Global Strategy Group study found that 79 percent of respondents agreed with the idea that “corporations should take action to address important issues facing society.” Yet a Morning Consult study from earlier this year found that a majority of respondents thought corporations should “stick to what they do, and generally not get involved in political or cultural matters.”

This is likely about the phrasing. Respondents might hear “important issues facing society” and think of equal pay or the environment. When they hear “political matters,” they might think of divisive issues such as abortion or immigration.

So retailers should choose wisely which causes to champion. Sometimes this is easy, especially when brands have a clear identity and customer base. So Patagonia supports the environment, while Nike’s Kaepernick ad appeals to its young urban customers. But even if a retailer does wade (or get dragged) into a more divisive issue, there are effective playbooks.

After the El Paso shooting, for example, Walmart took a full month to revise its ammunition sales policies. And its overtures were incremental, not drastic: It said the lapsed assault weapons ban “should be debated” by Congress, for example, but didn’t go so far as to say it should be reinstated.

What were the consequences? Walmart just reported that U.S. comparable sales rose 3.2 percent from a year earlier in the latest quarter, a healthy increase that is on par with the growth it had been posting for two years before the incident. Executives said last month they had not seen signs of a backlash. It’s almost as if the whole thing never happened.

Dick’s Sporting Goods Inc., meanwhile, didn’t just stop selling assault-style rifles after the February 2018 mass shooting in Parkland, Florida; CEO Ed Stack wrote a book and gave interviews explaining his decision. He has said they heard from many angry customers and the company estimates it has cost it $250 million in sales.

Nearly two years later, Dick’s has returned to comparable sales growth and is even experimenting with getting out of the hunting business altogether in more than 125 stores. Sales grew in those stores in the latest quarter as it reallocated that space to other departments. And the company said its gross margin improved recently in part thanks to its pullback from the hunting category — a benefit the company would never have realised had it not taken a stand.

In the wake of the Philadelphia arrests, Starbucks closed thousands of its cafes for an afternoon of racial-bias training. The closures cost the chain about $17 million in sales, but it was a small price to pay for the message it sent that the company was taking the incident seriously.

Even political firestorms that aren’t handled particularly deftly can disappear. When Macy’s Inc. dropped Trump’s clothing line in 2015, it initially said it did so because of his “disparaging characterisations” of Mexican immigrants. Later, after Trump called on his supporters to boycott Macy’s, then-CEO Terry Lundgren cast the decision different light, saying: “If Hillary Clinton had a handbag collection, we wouldn’t be carrying that, either.” Despite the incoherence, the issue quickly faded. Macy’s has had plenty of problems in the years since, but it’s hard to argue that any of them have been the result of Trump’s call for a boycott.

The lesson may not be obvious, but it is clear: With strong strategy — or a little serendipity — outrage cycles can be a footnote, not a chapter, in a company’s history. A bunch of enraged tweets are not a gauge of consumer sentiment or evidence of an actual boycott. However hot and bright these controversies flare online, in the real world they simply don’t leave much of a burn.

By Sarah Halzack; editor: Michael Newman

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