Starbucks’ attempts at selling ‘culture’ comes back to haunt them

Starbucks doesn’t just sell coffee. It sells the idea that it is a community meeting space where people are invited to gather whether they’re consuming Starbucks products the whole time or not.

That community culture may have set the stage for the company’s latest public relations crisis — the arrest of two black men in a Philadelphia café.

“Part of what has created this conundrum for them and the opportunity to make these stupid mistakes is they want to be a community center so that people aren’t always holding something that they’ve bought,” said Mark Lipton, graduate professor of management at The New School, author, and c-level business consultant. “There are consequences they have to be mindful of.���

To be sure, no one MarketWatch spoke with, including Lipton, discounts the racism involved in this case.

“This is not new. Blacks have been getting thrown out of restaurants far more than whites have for decades,” Lipton points out. Even Starbucks Chief Executive Kevin Johnson reiterated the company’s firm stance “against discrimination or racial profiling” in one of his statements over the weekend.

Moreover, the experts said that social media and the tireless work of groups like Black Lives Matter have not only spread information about these incidents but keep the attention focused on them.

“Black Lives Matter is doing a great job of keeping the heat on these events when they happen,” Lipton said.

Data provided by Sprout Social, a social media marketing management and intelligence tool, shows that 46 percent of consumers have used social media to “call out” brands, and four in five think social media has increased business accountability.

But according to Lipton, the issue here is “contextual.” Starbucks has fostered an open environment in its stores, and front-line managers are responsible for making decisions in those locations.

“If you want to be a community, you better figure out in the confines of that store what community means and what it takes to maintain a safe, comfortable community,” Lipton said.

He highlighted Johnson’s call for more training to avoid “unconscious bias” during an interview on ABC News’ “Good Morning America.” Lipton said he thinks the bigger issue is that a manager is responsible for making decisions in the moment, and companies have to be sure they have the right people for the job.

“Maybe it’s not only to Johnson’s point of throwing more implicit-bias training, but in the selection of who they have in a managerial role in their store at any given moment,” Lipton said. He suggested that companies ask, “[H]ave we looked at all the dimensions of their human interaction skills and if we have to pay more money to get those [qualified] people, we will.”

With so many consumer-facing workers — Johnson said there are “28,000 stores around the world” during his interview — it’s difficult, if not impossible, to control everything.

“To expect a company to have absolute control over its employees is not only unrealistic, it’s also antithetical to what Starbucks is striving for,” said Greg Portell, lead retail practice partner at A.T. Kearney, a global strategy-management consulting firm.

Both Portell and Lipton, as well as the “GMA” anchors, said they think the company responded well. In addition to the interview Monday morning, Starbucks issued three statements, including one from Johnson apologizing and calling the incident “reprehensible,” on Saturday and Sunday.

Further coverage from “GMA” said the manager who called the police on the two men “no longer works for the company.” MarketWatch was in touch with Starbucks for further comment or an update but did not receive a response.

Matt Rizzetta, chief executive of North 6th Agency, a PR and social-media organization, said he thinks Starbucks reacted too slowly.

“With Starbucks, the incident happened on Thursday and the first statement wasn’t until Saturday,” he said. “This is a serious incident and there’s a disgraceful act that took place at one of your locations that reeks of racial insensitivity. That’s unacceptable.”

However, companies might want to slow down to make sure that systems are in place to avoid such incidents. He said that communication clearly broke down somewhere between the corporate level and the franchise level.

“There’s an exaggerated premium on speed and sometimes they don’t think about common sense checks and balances,” he said. Rizzetta stressed the need for “common sense” more than once in his comments with MarketWatch.

“Obviously, any company of any size who’s worth anything needs to embrace diversity and an inclusive workforce,” he added.

In recent months, there have been other racial incidents that drew both anger and outrage from consumers, such as an ad from H&M that featured a black child wearing a sweatshirt that said “coolest monkey in the jungle” and a Heineken ad with the tagline, “Sometimes, lighter is better.”

Experts pulled no punches calling those incidents “tone deaf” and downright “stupid.” But they also differentiated between those incidents and this most recent one at Starbucks.

“[It] is an abject failure of management that those products/ads somehow got through the design process,” said The New School’s Lipton, talking about the H&M and Heineken examples. “It speaks volumes about the ad agencies and the designers who are hired.”

On the other hand, experts gave Starbucks credit for trying to be a good actor on different fronts, even attempting to tackle race in the past.

Ultimately, incidents such as these can have an impact on the balance sheet, with customers calling for boycotts, protesting, and in some cases deciding not to patronize the offending companies any longer.

“The behavior of the brand is the brand,” Lipton said. “In my head, I have rebranded what those organizations stand for. I have to assume that there are tens of thousands who feel that way.”

Starbucks shares closed Monday up 0.3 percent, and are up 3.5 percent for the year so far. The S&P 500 index is up 0.2 percent in 2018.