In April of last year, Target decided to weigh in on the transgender bathroom “debate,” which had been a national issue due to a bill in North Carolina that would require individuals to use the bathroom corresponding with the gender on their birth certificate. Portions of the controversial bill were actually repealed earlier this week, but it was hardly as controversial as people portrayed it to be. Someone transgender and going through gender reassignment surgery can legally get the gender on their birth certificate changed, so it wouldn’t affect them.
Nevertheless, in what was probably nothing more than an attempt to virtue signal to the American public, Target released a statement titled “Continuing to Stand for Inclusivity,” in which they took a public stance on the issue, that “we [Target] welcome transgender team members and guests to use the restroom or fitting room facility that corresponds with their gender identity.”
Regardless of the stance on the issue, nothing could be dumber from a corporate perspective than taking a public stance on a controversial issue (essentially guaranteeing that you’ll alienate part of your customer base). The American Family Association urged Target to instead implement gender neutral bathrooms (which they did in August, costing them $20 million), but they initially refused, leading to nearly 1.5 million people pledging to boycott Target.
Had they complied with the AFA initially, they would’ve been set back $20 million. Instead, they’ve been set back many millions more as the result of a boycott not even Target was prepared for. Even their CEO is acknowledging it was a huge screw-up.
According to Yahoo! Finance, Target CEO Brian Cornell never approved the post (stating their transgender bathroom policy) and found out about it only after it was published, according to The Wall Street Journal. He later told colleagues that he wouldn’t have approved the decision to “flaunt” the policy and that the backlash was “self-inflicted,” The Journal reported.The boycott cost the company millions in lost sales and added expenses. Shopper traffic and same-store sales started sliding for the first time in years after the blog post, and the company was forced to spend $20 million installing single-occupancy bathrooms in all its stores to give critics of the policy more privacy.
Critics of the policy said it opened the door for sexual predators to victimize women and children inside the retailer’s bathrooms, and more than 1.4 million people signed a pledge to stop shopping at Target unless it reversed the policy.Sales fell nearly 6 percent in the three quarters after the post compared with the same period last year, and same-store sales have dropped every quarter since the post.
And here’s their stock price since the announcement on April 19th of last year relative to the entire retail sector of the S&P500 index.
The retail sector has suffered over the past year – but Target’s decline was four times larger.
The story of Target’s blunder is a lesson in how to lose friends and alienate people. If you’re a business, stick to the product, and leave the politics out of it.
[Note: This post was authored by Matt Palumbo. Follow him on Twitter @MattPalumbo12]