Corporations need to make moral and economic decisions in ideological positioning, says Americus Reed

Speaking of Starbucks, the company recently celebrating Pride Month successfully. It's a change from last year when some of its US stores came under fire for not allowing Pride decorations. Meanwhile, Tractor Supply is backing off its DEI goals and initiatives following conservative backlash. Among other things, Tractor Supplying now says they'll stop sponsoring Pride festivals. With the culture wars in America showing no signs of dying down, what does this tell other companies about taking a stand on social issues? Americus Reed is a marketing professor at Upenn Wharton School of Business and a CNBC contributor. And Americus, it seems, as we indicated before, that it's really important for these companies to know thy customer. You're 100% correct, Kelly. I think that's the that's the mantra. And if you're going to bill yourself as the country's largest rural lifestyle retailer, then you better know a little bit about what that rural lifestyle actually means. So in some senses here, you know, you have to be able to craft a position around ideological viewpoints that are consistent with your customers. And if you're not able to do that, it looks quite bad if you have to backtrack and kind of pull away from those positions because it's called taking a stand for reason. So this is not a good look. I wonder if a company that has made, let us say broadly DEI or or inclusivity A, a part of its persona, its DNA from the early days of the founding of the company gets maybe with some customers a pass compared with a company that comes to that particular party later. Am I, am I on to something there? You're definitely on to something there, Tyler. It's 100% correct. What it points to is the importance of the track record. So if you're this kind of company who decides I want to dabble in this sort of ideological positioning viewpoint, DEI is important. You have to demonstrate consumer that this is something that is authentic and that you've been doing for some period of time. I think if you do that, then you're essentially concretely signaling to the marketplace that you are that company. And so when your values, your mission and all of these positions that you take actually hit the marketplace and people react to them, they're reacting to, just like you said, Tyler, in the context of understanding that you are that kind of company that you say you are. Do you think Americans that companies are backing away from, you know, fighting in the culture wars? I've heard a lot of people say when it comes to the election, for instance, they're they're telling their employees they're not going to take a stand. Yeah, it's an interesting question, Kelly. I think that the decision calculus has to be one that is both moral and economic. And as I said earlier, and as you and Tyler were pointing to, if you know your customer that you understand what you're able to do to be able to connect with their identity. This is all about identity. And so if you want to make an argument that you're synchronous with the values of your customer, then that's something that you understand and you're taking that risk. Some companies will say, I don't want to do this, I want to stay out of this because this is not at all related to my business making revenue generating model. That's fine too. But the idea is if you're going to dabble your toe in this sort of pool of ideological positioning, DI abortion rights, voting rights, all of these different things, then you better make sure that when you do it basically you're all in and that this is a position that you're going to be willing to lose customers with and live and or die by the sword. I may not have all of my facts correct here, but as I understand it, in the Tractor Supply case, the uproar, to the extent that there wasn't uproar, had to do with a celebrating Pride month. It was sparked, let me say, shall I say, by a former Hollywood director who has turned a pulled into a political activist. It This also seems to me to be that therefore an example of the vulnerability, for lack of a better word, of companies to a single activist or agitator, or maybe a group of activists or agitators on social media. It shows how social media can create a movement or an anti movement. That's 100% correct, Tyler. If you touch on something that's very critical here and that's the power of the two way communication that happens between consumers in real time and with brands when brand brands make decisions. And so the social media has amplified and accelerated this communication and you're going to get moral outrage and you're going to know about it very quickly in social media whenever you're making one of these particular positional stands or taking a stand in an issue like this. And so you have to make a decision if your brand, product, service, organization is that moral outrage rising to the level of a movement where I might actually lose more customers than I could gain on the basis of these ideological points of view. And that's the the decision calculus that you basically have to do if you're going to be effective at this kind of thing.