Facing bad PR and a potential consumer backlash, Starbucks in the UK has voluntarily agreed to pay £20m in taxes over the next two years.
Facing bad PR and a potential consumer backlash, Starbucks in the UK has voluntarily agreed to pay £20m in taxes over the next two years. The coffee shop chain, as well as Amazon and Google, was accused of “immorally” minimising UK tax bills in a report by the Public Accounts Committee. “These decisions are the right things for us to do. We’ve heard that loud and clear from our customers,” Starbucks stated when explaining the decision.
The threat to Starbucks could have been very real. Protests were already forming online, threatening the chain with a boycott. A Starbucks strategy is to become a key partner in communities, positioning itself as the ‘third space’ between home and work. In recent years, Starbucks has attempted to shed (or at least scale back) its corporate image by selling local artisan coffees and even opening ‘de-branded’ shops, which do not feature the Starbucks name. Being seen as not contributing to the community could have shattered this image.
It remains to be seen what pressure Amazon will face – and what its response (if any) will be. But what is certain is shoppers’ expectations of retailers are growing. In an age of austerity, the image of a large company minimising its tax (albeit legally) can cause anger.
But what is different now compared with 10, or even five years ago, is that social media is enabling consumers to band together quickly to form powerful action groups. In 2010, Gap learnt this lesson when attempting to introduce a new logo. Within days of the announcement, a social media backlash forced it to announce a humiliating U-turn and an abandonment of the new logo.
The question now facing retailers is what decisions or actions will require approval from the online community in the future. With shoppers demanding more transparency on retailers’ actions, values and strategies, businesses face the threat of PR disasters and boycotts driven by social media.
Closing shops, discontinuing brands, changing suppliers – all these and more may have to be passed through online communities for ‘approval’ before being actioned, or retailers run the risk of some very real threats.
- Rob Gregory, Global research director, Planet Retail