The Politicization of Shopping
By George Anderson
A large number of consumers of various political, religious and philosophical persuasions are choosing merchants and products based on their perceptions about the companies’ stand on various issues.
According to an article on the BusinessWeek web site, the growing activism of consumers has made it critically important for businesses to have people and systems in place to deal with the next crisis issue.
Corporate communications strategist Arthur C. “Bud” Liebler says dealing with consumer activism is unavoidable. “There used to be a tendency by companies to ignore all [the attacks] and hope they’ll go away. Now you can’t ignore them because of all the Web sites, talk radio, and alternative newspapers.”
He cautions companies against believing they can come up with a response that will satisfy everyone. The goal when companies get into controversies, he said, should be “to do the least damage.”
Because of the impact that state and federal legislation can have on business operations, a growing number of companies are getting involved by financially contributing to political campaigns and political action committees (PAC).
Wendy’s, for example, has donated 93 percent of the chain’s political action committee’s contributions to Republicans over the last five years.
Company spokesperson Denny Lynch said that despite this it would be wrong to read an overt political agenda into Wendy’s actions. “We serve customers on both sides of the aisle,” he said. “We’re not a red company. If Democrats start winning, we’ll move our money to Democrats. It’s just business.”
Other companies, such as Costco, believe business should stay as far away from politics as possible.
Unlike others, Costco has not created its own PAC. Costco CEO Jim Sinegal said, “We don’t believe a public company should take shareholders’ money and support political candidates or causes.”
That doesn’t mean Mr. Sinegal is not politically active. He and Chairman Jeffrey Brotman are known as heavy contributors to the Democratic party. “We do it with our own money,” he said. “I’m a merchant, not a politician.”
Moderator’s Comment: Do you agree that the shopping environment has become more politicized in recent years? What
are the steps retailers and others need to take in dealing with crisis issues such as negative press, boycott activity, etc.? –
George Anderson – Moderator
No, I don’t believe that the shopping environment has become more politicized in recent years. I do believe the media blasts a message that this is so.
Since the 60’s, there have been consumers that shop with their political conscience and more than likely before then! I do not believe it is more so or less so today. I do believe that we tend to forget that the majority of Americans are just trying to get through their day. They have jobs, families, lots of demands and, even in Washington, DC where we are obsessed with politics, most of us do not spend a meaningful amount of time ferreting out which company supports whom.
I believe companies should concentrate on their product, prices and on service. I think Costco has it right.
Taking a public stand for or against any particular issue or cause should have no connection to putting corporate or investors’ money into a political party. Taking and defending stands is what public relations and corporate social responsibility are for. Saying that making donations to a particular party is necessary as a means of influencing local, state or federal legislation is just an excuse. I don’t think executives or boards of directors have any right to spend shareholders’ money on politics. That is not what they are there for. Frankly, I think Jim Sinegal should run for president with Scanner as Veep (even though their political opinions are miles apart). Their principles need to be put into practice.
We are in a politically polarized time and, therefore, consumers are more likely to embrace a retailer or brand that shares their outlook or to not patronize those that don’t.
I’m sure that Kenneth Cole management was aware of this when they decided to promote gun control and other controversial issues, and that their stance has probably built some loyal customers and turned off others. They are probably in political alignment with the majority of their target customers and these campaigns have likely had a positive net effect. Kenneth Cole’s commitment to their list of causes reads as a real expression of passion, and passion is an important factor in building a brand.
However, I think Kenneth Cole is more the exception than the rule, and unless a controversial political ideology is a true part of the brand message, I would advise against it. In this climate, these causes are lumped into “left” and “right” and embracing one issue will often associate the brand with all of the others on the list.
On the other hand, companies lobbying politicians to sway policy in a direction that will benefit shareholders is somewhat expected, and usually not a part of the message that reaches the general population.
Businesses have never been able to gauge the precise impact of advertising on their sales. Even the most modern technology does not yield ROI figures for advertising.
Now we’re discussing the impact of consumer activism (boycotts) on sales. But the question remains the same as with advertising: How does a retailer know if “absent sale A” is attributable to activism, but not “absent sale B?” A non-existent sale has no RFID tag or barcode to identify its source. How can a politically active group send an understandable message to retailers that they disapprove of them for a specific reason? (Naturally, this doesn’t apply to so-called “duh!” sales downturns like that recently reported by a small-town independent grocer whose son was arrested locally for an unspeakable act.) This is a big-bidness issue.
And, what’s the opposite of “boycott?” If a business can do something politically harmful to their sales, can they do something politically helpful? If so, how do they measure it? The weakness of political boycotts or consumer activism is that the targeted retailers never get the message. They just think that a competitor beat them on prices this week, or the weather was bad, or they need more advertising (none of which, of course, is measurable).
Business has played both sides of every interest since time in memoriam – it’s good business. As Wendy’s says, they would move their money to winners … you bet they would. Neutrality in politics is tough but if you’re a public company, that had better be the only option because, as was stated, the internet has created a stronger influence and you can’t take sides with the number of investors we now have. I don’t think Costco’s leaders understand. In this day and age of information, what you do privately does indeed matter. On the other hand, private business concerns may take the risk if they see a niche audience base that would loyally follow due to the political bent.
Obviously, no company is going to please everyone. I read where, in Madison, Wisconsin, politically correct Whole Foods is getting a hard time for wanting to build too big and there are worries about how they will hurt the other competitors. Recently, I read where those who dislike Wal-Mart actually spend more money in their stores than those who support Wal-Mart. The dollars do all the real talking.
Jim Sinegal has it totally right. I don’t think there are proportionately more [activists] today than before, but it is easier for them to organize and have a platform. They make easy and colorful copy for the increasingly budget-conscious, entertainment-driven and shallow media of today.
The defensive responses seem to miss the opportunity presented by consumers willing to be influenced by the good deeds associated with companies or products. Instead of supporting partisan or divisive issues, identify and embrace one or more of the thousands of causes that are accepted by almost every rational consumer. Retailers and consumer goods suppliers have sufficient research tools to identify an additional demographic, “important causes or issues.” It should not be difficult to stay on a positive path and avoid consumer backlash or boycotts.
Jim from Costco has about the right approach, if not the opposite political persuasion to my liking. He is a merchant and understands his focus. He understands what is ‘his’ money and what isn’t. And, there is a huge difference. The respect gained from that realization is incalculable.
Those who have been caught up in controversy with consumer groups have in many cases brought it upon themselves. Some care and some don’t. In the case of Starbucks and their cups covered in quotes, my perspective is that they really didn’t care one way or the other about the reaction. It’s likely there were two factors that played a roll in the reaction. One, they were and are strong enough to be able to not care. And secondly, those that did weren’t in the majority – boycotts never do make a difference. In the end, they did respond with some sensitivity and that made good sense.
In the case of the giant, Wal-Mart, they too have brought controversy upon themselves. In some cases, from my perspective, they have a deaf ear. They make moves to placate interest groups and their own point of view and, in other cases, they have taken a hard line on the same view in contradiction to themselves.
Like most issues of this sort, common sense seems absent. Doing what you do and doing it well works. Leaving the political whims of the day out of the business focus seems to make perfect sense to me. Otherwise, it’s simply personal and that’s not a good thing in business for anyone.
Before we get all caught up with how much things have become politicized, we need to remember we’ve been doing this for years based on our socio-economic standing. Why do some people prefer shopping at Aldi and others prefer shopping at Publix or still others at Winn-Dixie? Why do some people only buy American made cars and others would never think of buying anything other than a foreign made car? This trend is nothing new; we’re just seeing it move in a more accented manner.
The amount of political activism is not necessarily increasing; however, the amount of people involved has changed with the use of the internet. Connecting small groups of people who live in different locations is much easier because of the internet. They can act as a group even while geographically distant. Messages can reach people who have a similar view and encourage action or reaction to specific events more quickly today. These are no longer small, isolated groups of people, but a large group of people living in different places. The nature of political activism has changed.
I agree with Karen’s comments. Companies that openly take a political stand or support a political cause shouldn’t be surprised when some people don’t like the stand they’ve taken. It may increase the loyalty of consumers who agree with them, but it also has the effect of making those who disagree feel excluded. If you want to appeal to the masses, you stay neutral.
A very small group of consumers have voted with their dollars based on their view of selected businesses. Groups like the Rainbow Coalition have tried to elevate the use of consumer dollars to influence business, but achieved only limited results. Not so long ago, the issue was local versus national retailer. Recently, there has been a significant growth is businesses linked to a religion or church. Their target market is very narrow, but advertising is extremely effective and efficient. The retailer position should be as neutral with a stated goal of serving consumers.
In America, people vote at the cash register. And it’s not a new trend. Generations ago, there were Jews who wouldn’t buy Fords because of Henry Ford’s antisemitism. Later, there were people who wouldn’t buy VWs because they could not forgive Germany. Today, GM uses Chevy as the “buy American” brand. Although the article states that “…a growing number” of businesses are using campaign funds, I doubt that is provable. Big business owners have used campaign contributions (and other financial incentives given to politicians) for the entire history of government, American, pre-American, and worldwide.
I have heard but not seen demonstrative proof of the politicization of shopping. If it exists, it must be an aspect of affluence, of economic good times. Once the economy shows signs of a downturn, people will shop with a sharp focus on price. Ideology will become a luxury. It’s a variation of Maslow’s Pyramid.
There are a number of good points in both the article and the posts. I believe these break down into 3 major issues:
1 – Is there a benefit to shareholders to the company taking a political or issue stand? I’d answer this with a qualified yes. Companies should research their [loyal + profitable] customer base to find additional ways to retain their loyalty and attract like-minded prospective customers. If one of the key findings is a propensity for one side of an issue, then there’s a big up-side to weighing in on the issue. Stated in this fashion, the argument sounds somewhat cynical – but when executed correctly it really isn’t. Think of Avon’s support for breast cancer research.
The corollary here is that if you are not attempting to segment your market and then address the needs of a both loyal and profitable segment, then there’s really no benefit to taking a stand on an issue.
Think about the American auto makers, with their dealership on every corner and abysmal loyalty rates. GM or Ford wouldn’t benefit because even if they do know who they’re selling to, they’re not keeping them loyal after the sale.
Lexus took a diametrically opposite approach to segmenting and selling in to this market. Lexus could benefit from overt political support for an issue if a) they found their rock-solid customer base was strongly behind it; and b) their prospective customers were also strongly supportive.
2 – Should companies invest shareholder dollars in political contributions? To my mind Jim Senegal has it exactly right. If management compensation is properly structured, then they’ll put their personal money behind political issues that are meaningful for the health of the company.
Company funds used for political lobbying typically seem to break out into a couple of buckets: a) the large bucket of political / regulatory relief issues mentioned above; and b) topical issues that are, I feel, somewhat cynical in their appeal, such as gun-control or abortion/anti-abortion lobbying.
In either case, I’d suggest that senior management benefits more strongly than investors. These individuals get access to politicians, and career and networking benefits through that access – while the trickle-down to the average investor is very limited. Wendy’s Denny Lynch says it all with his comment that Wendy’s PAC is party-neutral, they just fund whoever is in power. Also, whenever I’ve noticed a company PAC strongly supporting a topical issue, my general impression is that this is an extension of a management team’s personal beliefs rather than a well-thought out extension of the company brand.
3 – Is shopping becoming more politicized? Given that vocal minorities are finding more and better ways to get their message out I’d say yes. However, the take-away for the manufacturer/retailer/service provider seems to be that good ethical business practices will keep you out of the majority of controversy.
Wal-Mart’s shifting some product like Breakback Mountain DVDs from front-of-store POPs to the general shelves, and dropping product from some stores based on community response shows a good model for how a general merchandiser handles these issues. Wal-Mart doesn’t have a stand on the morality issues of the film, and they’re not caving in to the “Moral Majority” – they’re just addressing the interest or lack thereof in local communities for the product.
If you do select a side on a controversial issue, be sure you know why you’re doing it, and how it fits in with your overall brand strategy. To do it right research your loyal and profitable customers!