Starbucks’ customer appreciation day may backfire

August 9, 2013

For most companies, the prospect of thousands of customers thronging its stores to celebrate its corporate policies would be regarded as ambrosia from the retail gods. But it’s hard to imagine that Starbucks sees this week’s spontaneous “Customer Appreciation Day” by gun-toting Second Amendment absolutists as quite such a blessing.

The Seattle-based caffeine chain has been the target of gun safety advocates for some time over its refusal to adopt a corporate policy that would ban patrons from carrying loaded guns into its stores. That’s why gun rights groups exhorted their supporters to holster up and pop into their local Starbucks on Friday to order frappuccinos.

Thus far, everyone seems to be acting within their obvious constitutional rights. Starbucks is following applicable state gun laws — including “open carry” regulations – which permit customers to bring weapons into stores. Opponents of the idea of sipping lattes next to folks carrying Bushmaster AR-15′s also have the right to voice their dissent.

Still, the economic downside for Starbucks may be much greater than the company has let on. The current furor could explode into a nationwide call for a boycott — something that many gun control organizations are now publicly embracing, particularly following an insensitive, though legal, call by one gun rights group for its members to parade their weapons at the Starbucks in Newtown, Connecticut – where 20 children and six educators were massacred in an elementary school last December by a gunman wielding an assault weapon with high-capacity magazines.

The truth is, Starbucks and its shareholders may have more to lose than gain by resisting the adoption of a policy like the one it has for its own corporate headquarters that asks gun owners to check them at the door.

Corporate embargoes are a common business risk. The classic modern example was a consumer movement against Nike products in the late 1990s over the sweatshop conditions at its suppliers’ factories. Fearing this would damage its reputation and brand — and thereby the bottom line — Nike helped create the Fair Labor Association to help protect workers’ rights. Similar fears guided Apple’s decision two years ago to allow the FLA to conduct special audits of its suppliers’ factories in China.

Northwestern University Professor Brayden G. King studied boycotts like the one that prompted Nike’s change of policy. In a 2011 paper on the subject he concluded that the “increasing importance of reputation and positive media coverage appears to have changed the mechanism of a boycott’s greatest influence, thus making it an attractive tactic.” Social media, he noted, may “further enable movement disruption.”

So how does this apply to Starbucks? It’s not clear what a shift in its policy, towards asking customers to leave their weapons behind, would do to its business. We can, however, take a guess by analyzing its customer base.

Starbucks declined to detail how many of its stores are located in rural communities as compared to urban and suburban ones, where national polls show Americans to be more favorably disposed to increased regulation of firearms.

However, according to the company’s website, Starbucks has a far larger share of its stores in those states that have recently passed more stringent firearm laws than it does in states that have taken the opposite tack. That stands to reason given population differences. But the numbers illustrate the potential harm a nationwide boycott might inflict.

Last year, Starbucks had 504 company-operated and licensed stores in New Jersey — whose Republican Governor Chris Christie signed into law a raft of gun reforms this week — Maryland and Connecticut, both of which also strengthened firearms rules since the Sandy Hook Elementary School massacre.

By contrast, Starbucks listed 100 stores in Montana, Utah and Wyoming, where some legislators have pushed for rules that would encumber the ability of the federal government and police to enforce certain restrictions on gun owners.

The point is, Starbucks appears to make more of its money from states where certain restrictions on guns — which do not infringe upon the Supreme Court’s reading of the Second Amendment of the Constitution — are favored by a majority of its customers.

In the end, whatever Chief Executive Howard Schultz decides to do about guns, it will almost certainly be a matter of business, not politics.

Rob Cox is global editor of Reuters Breakingviews, and a founder of Sandy Hook Promise, a non-profit in Newtown, Connecticut dedicated to reducing gun violence through common sense solutions. Reporting by Grace Dai.

PHOTO: Coffee mugs are pictured on display at a Starbucks coffee store in Pasadena, California July 25, 2013.   REUTERS/Mario Anzuoni

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