Highlights

• Consumer boycotts and other forms of protest have little impact on retailers.
• What impact there is doesn't last more than a few weeks.
• The most effective response might be to ride it out.

Why?

Customer shopping habits are entrenched and often difficult to change. 

Consumers like to think they can influence companies to become more socially conscious through boycotts or attention-grabbing protests.

But a new study from the University of Iowa finds these consumer-initiated efforts are rarely successful, and that stockholders, suppliers and regulators may have much more power to change a company. 

The study, from Assistant Professor of Accounting Danye Wang at the Tippie College of Business, also shows how difficult it is to change customers’ entrenched shopping habits. 

Wang used a unique dataset measuring foot traffic in stores and sales data through credit and debit card records from more than 500 firms from 2018-2020. She looked at how consumers responded in the days and weeks following media reports of any of those retailers engaging in behavior that was less than conscious of environmental, social, or government (ESG) issues.  

Among the study’s findings…

—There was only marginal impact on foot traffic and sales following media reports of negative ESG activity. Often, it’s less than one store visit a day. 

—The impact doesn’t last. In almost every case, foot traffic had returned to normal within six weeks of the first news coverage, even in the most socially conscious markets.

—In many markets, the number of boycotting consumers is offset by new consumers shopping at the store for the first time. 

—Even in markets where consumers are more apt to be socially conscious, spending is only about 3% less than other, less socially conscious markets. 

Wang said the study suggests the most effective response to a consumer protest is to ride it out until shoppers return to their normal habits in a few months. 

Though exceptions exist, she said. For instance, Target has not recovered from a drop in sales after it scaled back certain types of merchandise because of pressure from anti-LGBTQ groups. In response, many shoppers who support LGBTQ rights have abandoned the store. 

Similarly, Budweiser backed off a pro-LGBTQ marketing partnership with a trans influencer following a boycott by conservatives.

 Wang said the large-sample evidence from her study suggests that, on average, ESG issues are highly divisive among consumers, with positive and negative consumer responses often offsetting one another. She said the Budweiser boycott also illustrates how ESG activities perceived positively by ESG-conscious consumers may be perceived negatively by others.

Wang’s study, “Do consumers vote with their feet in response to negative ESG news?” was co-authored by Svenja Dube and Hye Seung Lee and published in the Journal of Accounting Research. 

Media Contact:

Tom Snee
Media Relations Specialist

319-384-0010 (o)
319-541-8434 (c)
tom-snee@uiowa.edu