Shinsegae Group Chairman Chung Yong-jin issued a public apology on the 26th, but the fallout from Starbucks' "Tank Day" is not easing. As boycotts and public criticism stemming from the incident spread beyond Starbucks and E-MART to department stores and other separately run units across the group, concerns are being raised that it could also weigh on large-scale development projects underway in Gwangju.
The parent company of Starbucks Korea is E-MART, whose largest shareholder is Shinsegae Group Chairman Chung Yong-jin, but the department store business is a separate unit run by his younger sister, Chung Yoo-kyung, chair of Shinsegae Co. Although the department store unit is managed separately from E-MART and even prepared for a spin-off, analysts say an image hit is inevitable because the public still perceives them as one group. In particular, Gwangju Shinsegae, a local entity in Gwangju, is affiliated with Chair Chung Yoo-kyung's side and has no direct connection to Starbucks, which is part of E-MART overseen by Chairman Chung.
That morning at Josun Palace in Gangnam-gu, Seoul, Chairman Chung held a press conference and said, "I deeply apologize for causing great hurt and concern to the spirits and bereaved families of the May 18 pro-democracy movement, Gwangju citizens, and the people," issuing a public apology. Shinsegae Group said it conducted an internal investigation of Starbucks Korea employees immediately after the incident and reviewed whether it was marketing with a specific intent and the risk management framework.
However, even immediately after the apology, Gwangju civic groups, including May 18 organizations, issued successive statements criticizing it. They reacted that only a formal apology and a message of harmony were offered, arguing it lacked sincerity. Some groups said civic resistance and the boycott would continue.
The controversy erupted after Starbucks used phrases such as "Tank Day" and "Knock on the desk" reminiscent of the May 18 pro-democracy movement in a recent tumbler promotion. President Lee Jae-myung directly mentioned the situation, and a boycott of Starbucks spread across government offices and civic groups. Among some consumers, criticism and boycotts are extending across the group, including Starbucks, E-MART, and even Shinsegae Department Store.
Signs of customer defection have already appeared. Jeon Sang-jin, executive vice president overseeing management at Shinsegae Group, acknowledged requests to refund Starbucks prepaid cards and withdraw from membership, saying, "Because this involves an agreement with the Korea Fair Trade Commission, we are consulting with the relevant ministry to improve it in the direction customers want." He added, "There is a considerable decline in sales."
In particular, this situation is increasing pressure on the group's regional business. On the 22nd, the May 18 Memorial Foundation and civic groups held a press conference and a picket protest in front of Gwangju Shinsegae under the theme, "Shinsegae, we strongly condemn dividing the community." On the 20th, members of the Gwangju-Jeonnam Citizens' Alliance for the Defense of Popular Sovereignty visited Gwangju Shinsegae and criticized, "Shinsegae made money in Gwangju and mocked May 18."
There are growing concerns that the fallout could spread to large development projects E-MART is pursuing in Gwangju. Shinsegae Property, an E-MART affiliate, is pushing a development project for "Grand Starfield Gwangju" at Eodeungsan Tourism Complex with an investment of about 1.3 trillion won. It is the first large-scale mixed-use mall project in the Gwangju area, with plans to build it by 2030 on a scale larger than Starfield Goyang.
Gwangju Shinsegae, a department store affiliate, is pursuing "The Great Gwangju," a project to integrate the Gwangcheon Terminal area. The plan will reorganize the existing U-Square terminal district into a mixed complex combining a department store, terminal, hotel, and cultural facilities, with about 3 trillion won to be invested by 2033. The existing site has been demolished, and the company is preparing subsequent permitting procedures.
Meanwhile, politicians are ramping up comments targeting the Starbucks controversy, further heightening concerns over the group's regional business. Min Hyung-bae, the Democratic Party of Korea's candidate for special integrated mayor of Jeonnam-Gwangju, recently wrote on his Facebook page to Starbucks, "We will make you pay the price for mocking May 18 and insulting Gwangju."
There is a view that Chairman Chung's renewed apology reflects a sense of crisis that the incident could adversely affect the group as a whole over the mid to long term. On the 18th, when the Tank Day controversy broke, Chairman Chung dismissed former Starbucks Korea CEO Son Jeong-hyeon, and on the 19th he apologized in a written statement. This is the first time Chairman Chung has personally apologized in public since taking office in Mar. 2024.
Meanwhile, Shinsegae Group said its internal investigation found no indication that the employees involved planned the marketing with a specific purpose. A Shinsegae Group official said, "We plan to fully cooperate with the police investigation going forward, and if it is found that there was an intent to disparage May 18, we will immediately dismiss the employees involved and hold them civilly and criminally liable."