A botched marketing campaign by Starbucks’s South Korean operation has resulted in boycotts, an investigation, a fired executive, and a public apology. To address the fallout, all 2,000-plus locations nationwide will close early on June 22 for mandatory history and social sensitivity training.
Present in South Korea since 1999, the coffee chain will mark its first nationwide early closure in the country’s history. After the U.S. and China, South Korea is the third-largest market for Seattle-based Starbucks.
Shinsegae Group, which owns the majority stake in the coffee chain’s South Korean operations, is still doing damage control four weeks after launching a promotion for stainless-steel tumblers on May 18 in honor of what it referred to as “Tank Day.” That promotion was quickly met with widespread criticism and backlash, as it came on the 46th anniversary of the Gwangju Uprising, a pro-democracy movement that turned violent and deadly after the military deployed troops, tanks, and helicopters to suppress the rebellion.
Only hours after that promotion launched, Shinsegae fired the chain’s chief executive, Sohn Jeong-hyun, and vowed to investigate the circumstances that led to it happening in the first place. All visitors to the Starbucks Korea website are now greeted with an apology message from Shinsegae chairman Chung Yong-jin that was written that same day.
“We deeply feel a heavy sense of responsibility regarding this incident and the gravity of the matter, and we will take all possible measures to prevent such an incident from recurring,” the apology message on the website reads, in part, according to a Google translation.
TRAINING, OTHER CHANGES COMING
Next week’s training session at its Seoul headquarters, which will be led by history and sociology professors, is the chain’s latest effort to reassure customers who are still outraged over the promotion. Locations are closing early so that employees can also view a recording of the session.
“It demonstrates how seriously we take this marketing incident, and it reflects our commitment to ensuring it never happens again,” Shinsegae said in a statement, according to Bloomberg News.
What’s more, Starbucks Korea will overhaul its internal decision-making process going forward to include a “social sensitivity checklist” and a tighter approval chain to ensure there’s cross-departmental sign-offs from legal and quality control teams.
HOW AI FACTORED IN
Among the many-layered problems with the botched marketing stunt was a slogan for the stainless-steel tumblers that echoed wording used by police after the 1987 torture and death of student activist Park Jong-cheol.
Starbucks Korea marketers chose this problematic slogan after using an AI tool to look for suggestions, according to Shinsegae. And some managers who approved the promotional campaign never opened the email attachments that showed the marketing material, according to reporting by The Guardian.
After customers began demanding refunds from Starbucks prepaid gift cards, Starbucks Korea announced last month that it was temporarily relaxing its balance refund criteria. The fallout from the “Tank Day” promotion saw payments at Starbucks Korea plunge by more than 10% from April, or roughly $6.5 billion, according to figures from MobileIndex.
Though Starbucks licenses the brand, it holds no equity in the Korean operation. But it too was pulled into the controversy and issued an apology last month, as the BBC reported.
“While unintentional, this should never have happened,” the statement read. “We recognize the deep pain and offense this has caused, particularly to those who honor the victims, their families, and all who contributed to Korea’s democratization.”