Retailers Doing Well by Doing Good

This is a time to be very proud as a retailer.

Recently there have been several high profile news reports of companies taking actions that will have a short-term negative impact on financial performance but serve a higher ethical purpose. These actions will result in stronger long-term success for these brands.

ABC, an entertainment retailer, canceled the very popular TV series Roseanne. Dick’s Sporting Goods discontinued carrying machine guns in all of its stores, and Starbuck’s closed 8,000 coffee shops to allow employees to work through an important training program.

Each of these actions will definitely result in an immediate shortfall of top-line revenue. ABC will lose tens of millions in advertising revenue they would have otherwise sold for the Roseanne show. Dick’s Sporting Goods will lose sales of the assault rifles no longer carried. One would assume that those customers won’t transition to purchasing Frisbees or wakeboards instead. Perhaps, but probably not.

And Starbucks will not be open to sell its lattes and cappuccinos during the hours it is closed for this intensive training, plus they will continue incur the expense of paying those employees engaged in the training—a double hit to the profit line.

Why Take a Financial Hit?

These retailers are conscious of an important reality. They and their customers form a broad, connected community. That community has standards and values. The people watching their shows, buying their coffees, and buying their sports equipment and clothing are aware—and that awareness came immediately through all the media channels of the events that prompted these actions.

People vote with their pocketbooks. These companies will be rewarded with long-term benefits for taking appropriate actions in these cases. They put People First, before a short-term financial consideration. It’s difficult to measure exactly what the long-term benefits will be, but it is noteworthy that Dick’s stock price has jumped 20 percent in recent weeks. Guess they are selling more Frisbees than assault rifles. That’s good for them and good for all of us.