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Retailers restrict guns sales after Parkland

On February 28, in light of the Parkland, Florida school shooting two weeks earlier, Dick’s Sporting Goods raised its age limit to purchase guns to 21, stopped selling assault rifles and high-capacity magazines and called on legislators to enact stricter gun laws to promote the safety of school-age children. Competitor retailer Walmart also raised its gun purchase age limit to 21 on the same day and, on March 1, Kroger followed suit.

Wall Street gave a collective yawn. Dick’s stock price actually increased after the announcement. The indifference of the financial markets gives the green light for other U.S. companies to follow through on corporate social responsibility themes. The lack of a penalty by equity markets means that there will be similar socially progressive actions taken by corporations.

In its annual report, issued prior to the shooting, Dick’s noted that its sale of rifles exposed it to the threat of a class-action lawsuit, perhaps initiated by a municipal government. It also noted reputational risks, which is important as it brands itself as a family-focused retailer. The annual report notes business risks; the threat of a boycott surely affected the calculus in Dick’s board room.

The downside to raising its age limit, however, was small relative to the mitigation of these risks. Dick’s Sporting Goods has 676 stores, but it sold assault rifles only at its Field & Stream stores, of which it had just 27. Dick’s was also behind the curve. Walmart had stopped selling such rifles and high-capacity magazines in 2015. Air guns and air rifles are still sold across the US, with the help of sites such as teddy tactical reviews giving advice on the best ones to buy.

Doing well by doing good.

Gun rights are a touchy subject for major retailers that must straddle the rural-urban divide of their national customer base. The experience of the last few weeks, however, suggests that retailers can mitigate significant risks by taking incremental steps towards greater corporate social responsibility.

Any given action’s ethicality is subjective. Corporate boards tend to be dominated by the same elite members of society that hold the same view prevailing among their peers (i.e. white and rich). To the extent these views do not correspond to the masses that their customer base belongs to, there could be opportunity for smaller retailers to exploit the exit of the assault rifle market by Dick’s, Walmart and Kroger. In the end, however, the loss of those sales will be well worth the risks that national retailers would be otherwise exposed to.

Many larger corporations are also rolling out internal initiatives to align themselves with an increasingly progressive and younger workforce. The millennial generation, which contains the elements of human capital needed for today’s companies to compete in an increasingly digitized marketplace, is choosing where to work based on ethics as well as salary.

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