Just shut up

Michael Baker
July 3, 2013
The Age

A message to the major retailers: no-one cares what you’ve got to say on the GST, disability insurance or pretty much anything else.

A lot of CEOs would be better off keeping their opinions to themselves.

David Green, CEO of giant retail chain Hobby Lobby, which has 555 stores throughout the US selling craft and other supplies, is an evangelical Christian and wants everyone to know it, particularly the US government. The stores are all closed on Sundays and Hobby Lobby’s home page shrieks the phrase “In God We Trust” in bold text.
The CEO’s religious conscience is not just a personal character trait; it’s a corporate profit centre. The company has just won a major court victory exempting it on religious grounds from an ‘Obamacare’ mandate that “morning-after” pills and certain other forms of contraception be covered under employer health care plans.

Dan Cathy, CEO of 1700-store fast food chain Chick-fil-A, also likes to weigh in on matters of conscience. A devout Baptist, Cathy found himself in the middle of a firestorm recently when he went public in his opposition to gay marriage.

Meanwhile, in Australia, Myer CEO Bernie Brookes is still battling with the consequences of his outburst against the Federal government back in May, when he voiced his objection to an increase in the Medicare levy to fund the national disability insurance scheme.

Brookes is not alone among local retailers in getting into political debates. The leadership of some of Australia’s leading retail chains have been the ones screaming loudest about the need to impose GST on offshore internet purchases made by Australian consumers. Instead of leaving it to the trade associations to do the dirty work, the CEOs use their own pulpits. And predictably it’s gone down with consumers like a ton of bricks.

What can small business leaders learn from the examples set by their counterparts at the head of these large chains?

Retailers are in a uniquely sensitive position when it comes to publicly expressing views about political or social issues. The reason is that with the proliferation of competition consumers can afford to be less tolerant of brands whose image is inconsistent with their own values.

There are three key lessons for small retail owners.

First, keep in mind that as a rule no one is interested in your views until you blurt them out. People will usually shop happily at your place until you happen to say something. Then you risk losing a bundle. Let’s face it, shoppers didn’t really care about Myer’s view on disability insurance until its CEO took to his high horse. Since he did, they haven’t stopped taking potshots at him.

Second, when in doubt it is probably better just to shut up unless there is a good business case for speaking out. Sometimes there really is. In the examples of Hobby Lobby and Chick-fil-A, both are based in the southern US where their customer base is known for its religious conservatism. In all likelihood, coming out against contraception and gay marriage would have resonated well with the two retailers’ target customers.

Myer’s example is quite different. Brookes appeared to be contending that the extra $300 taxpayers had to part with to fund the disability scheme might otherwise have been spent at Myer. The business case for saying something so inflammatory was weak to say the least.

Myer’s sales in 2012 accounted for approximately 0.4% of household spending and 0.3% of household disposable income. So Myer could not expect to see more than a tiny percentage of the $300 forked over to disability insurance by each Australian worker, amounting to a total of roughly $10 million, tops. But even that overstates Myer’s loss because some of the money would still show up in Myer’s till from spending by disabled beneficiaries of the scheme.
·Presumably the amount of that offset will be somewhat less now as a result of Brookes’ comments.

The third lesson to be drawn from the ramblings of retailer CEOs is that if you do have views on political and/or social issues but there is risk of a consumer backlash, it may be wiser to express the opinions through your trade association. The trade association can lobby quietly or noisily on your behalf, but either way it carries significantly less risk to your brand.
Michael Baker is principal of Baker Consulting and can be reached at michael@mbaker-retail.com and www.mbaker-retail.com.