Starbucks Korea is experiencing a "very significant" decline in revenue after a controversial marketing campaign revived memories of the brutal military crackdown on pro-democracy protesters, according to the coffee chain's local operator.
Shinsegae Group, the parent company of E-Mart – which operates Starbucks in South Korea – faced mounting criticism over the campaign called "Tank Day." The campaign was launched on the anniversary of the May 18 Gwangju Uprising, when the military government deployed soldiers and tanks to suppress pro-democracy protests.
In a press conference Tuesday, Shinsegae Group Chairman Chung Yong-jin publicly apologized and urged the public not to direct their anger at Starbucks Korea frontline staff. "I take this matter seriously, as many people feel deeply pained and angry over Starbucks Korea's inappropriate marketing campaign," Mr. Chung said.
He emphasized taking full responsibility for the incident and appealed to people not to cause trouble for store employees, as responsibility lies with management. So far, no reports of serious incidents at stores have emerged.
Earlier, Mr. Chung issued an initial apology on May 19, acknowledging that the campaign had caused "deep pain to the victims and their families of the May 18 Democratization Movement as well as to the public."
Last week, Shinsegae fired the CEO of Starbucks Korea after apologizing for the campaign. Global Starbucks also issued an apology and said it had launched an investigation. A Shinsegae official said sales had dropped sharply since the marketing controversy erupted. "While revenue is not our primary concern right now, we have seen a very significant decline," the official said.
At Tuesday's press conference, Shinsegae Group senior executive Jeon Sangjin said the company had not found conclusive evidence that Starbucks Korea's marketing staff intended to mock the democracy movement, an accusation the staff have denied. However, some employees refused management's request to hand over their smartphones during a week-long internal review. Mr. Jeon said the company would review results from a police investigation, and any employee found to have intended to mock protesters would be fired.
Outrage over the campaign has sparked calls for a public boycott, amplified by government officials including Interior and Safety Minister Yoon Ho-jung. She announced that Starbucks products would no longer be used at government events and condemned the chain's "unhistorical act." South Korean President Lee Jae-myung also weighed in on social media last week, calling the campaign "an inhumane and shameful act by cheap profiteers who deny the values of the Korean community, basic human rights, and democracy."
An estimated hundreds of people were killed or went missing during the Chun Doo-hwan military government's crackdown on the Gwangju protests. Many details remain unconfirmed, including who ordered the shooting.
