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Controversial 'Tank Day' Marketing Hits Starbucks Korea Sales And Reputation

Controversial 'Tank Day' Marketing Hits Starbucks Korea Sales And Reputation

Starbucks Korea has experienced a sharp decline in sales after a promotional campaign that appeared to reference the military's violent crackdown on pro-democracy protesters in 1980 sparked widespread backlash, a Shinsegae Group official said on Tuesday.

The coffee chain, operated in South Korea by Shinsegae subsidiary E-Mart, has come under growing criticism over its 'Tank Day' campaign, which used tumblers to mark the anniversary of the May 18 Gwangju Uprising, a pivotal pro-democracy movement that was brutally suppressed by the military government using troops and tanks.

Shinsegae Group Chairman Apologised

In a press conference on Tuesday, Shinsegae Group chairman Chung Yong-jin made a public apology and asked people not to take out any anger on Starbucks Korea employees and frontline staff.

'I take it very seriously that Starbucks Korea's inappropriate marketing hurt and angered many people,' Chung said. 'I will take all responsibility for the incident.'

Hundreds of people are estimated to have died ⁠or gone missing when the military dictatorship of Chun Doo-hwan cracked down on the protests in Gwangju. Many details remain ​unconfirmed, including who gave the order to open fire.

Shinsegae shares fell as much as 2.8% in morning trade before reversing to rise 1.7% by 0116 GMT, while E-Mart gained 2.3%, compared with a 3.2% rise in the KOSPI.

A Shinsegae official said sales had dropped sharply after the marketing controversy, and an internal probe is examining whether any employees or managers were involved in deliberate wrongdoing.

'Serious Flaws' Exposed

Starbucks Korea's e-commerce team organised the campaign and received final approval from team leaders and executives, the official said.

The investigation had not been able to conclude whether there was intentional wrongdoing, but the incident exposed serious flaws in Starbucks Korea's risk management framework, the company said.

The e-commerce team had been overly focused on sales amid a large volume of weekly promotional events, leading staff to approve the campaign without proper review or legal scrutiny, it said.

Starbucks global headquarters in the United States was aware of the gravity of the situation and had been receiving updates on the investigation and the company's response, it added.

Shinsegae fired the head of Starbucks Korea last week after apologising over the campaign. Starbucks Global also apologised and said an investigation had begun.

(With inputs from Reuters)

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Disclaimer: This content has not been generated, created or edited by Dailyhunt. Publisher: Strat News Global