Consumer Activism Sweeps Nation, Raises Stakes for Companies

A growing wave of consumer activism is transforming the retail landscape, with protests and boycotts targeting companies perceived as opposing diversity, equity, and inclusion initiatives. The movement has already led to significant losses for several major brands, including Target, which saw a nearly 5% decline in visits year over year during the week of February 24.

At the center of this activism is the Latino Freeze Movement, led by Michael Galvez, who has been calling on consumers to boycott companies that align with President Donald Trump's initiatives. "We can't keep 'spending our money on companies that may not value our community,'" Galvez told Yahoo Finance. Demonstrators are gathering outside Tesla stores nationwide to protest CEO Elon Musk's involvement with the Trump administration and his push to cut government spending.

Some Wall Street analysts argue that Musk's political involvement has already had a significant impact, with RBC's Joe Feldman noting that "the potential ramifications of this backlash should not be downplayed." Companies like Target, Walmart, Amazon, and Coca-Cola have recently reversed their stances on diversity, equity, and inclusion, while Google, Meta, and Tractor Supply have also faced pressure from consumer groups.

Target has become a focal point for the movement, with a series of boycotts starting in late January. The economic blackout on February 28 led to a significant decline in foot traffic, although its specific impact is difficult to isolate. Researchers at Placer.ai attribute the decline to the economic blackout, while also noting that Target's visits dropped nearly 5% year over year during the week of February 24.

The retail giant blamed other reasons for a slow February after reporting its fiscal fourth-quarter earnings, but not a single analyst raised the issue of the recent boycotts during the earnings call. Despite this, 16 analysts cut price targets by an average of 7.2% since the company reported earnings March 4.

Impact on Companies and Economy

The Latino backlash could "inflict a similar or greater degree of damage" than previous conservative boycotts led against companies like AB InBev (BUD) and Target, RBC's Modi emphasized. The community is not monolithic, however, with a record turnout of Latino voters supporting Trump in the election.

Organizers behind the Latino Freeze Movement are bipartisan, allowing those who disagree with the current federal government to still take action by voting with their wallets. "It's always a concern when you have any kind of consumer activism," Kris Merz, a retail expert and partner at Columbus Consulting, told Yahoo Finance.

"The fact that some brands are flip-flopping out of their positions is an issue because people who trust them may not continue to buy from them." The series of boycotts against Target started in late January, followed by the economic blackout on February 28. Data from Placer.ai found Target's visits dropped nearly 5% year over year during the week of February 24.

Researchers at Placer.ai attribute that the economic blackout may have been an influence, but its specific impact is difficult to isolate. This differs from Walmart seeing a 0.6% decline in foot traffic during the same week. Other consumer groups and activists, including the Black faith community, called for a 40-day shopping fast at Target during Lent, which began on March 5.

Companies Most Exposed

According to Modi's analysis, companies with the greatest exposure to this demographic include Constellation Brands (STZ), Coty (COTY), and Primo Brands (PRMB). "It's so early to quantify," Modi told Yahoo Finance in an interview. "This is going to be a problem. So just be aware of it."

The movement raises significant stakes for companies like Target, which have reversed their stances on diversity, equity, and inclusion. The Latino community accounts for about 20% of the population and contributes about 71% of the country's overall population growth between 2022 and 2023.

Conclusion

The growing wave of consumer activism has already led to significant losses for several major brands, including Target. The stakes are high for companies like Target, which have reversed their stances on diversity, equity, and inclusion. The Latino community is a significant demographic that cannot be ignored, and the movement raises concerns about the potential impact on sales and profit.

As consumer activism continues to transform the retail landscape, companies must be aware of the growing backlash against companies perceived as opposing diversity, equity, and inclusion initiatives.