Friday, 27 March 2020

Good PR during crisis is key to post-coronavirus consumer approval says analyst

The very public apology made by Fraser's group CEO Mike Ashleigh on Friday underlines the importance of good PR during the coronavirus pandemic and an analyst has said that "exemplary ethics will pay off" once the outbreak is over.

“In the midst of the outbreak, retailers that have made bold commitments to their staff, customers and the wider community will be remembered, while those that have proven themselves to be less ethical risk falling out of favor with shoppers when normality returns,” said data and analytics firm GlobalData on Friday.

That claim comes as brands and retailers are rushing to be seen as doing the right thing with some offering free access to previously-paid-for services, while others are extending returns windows and seeking to reassure people that their staff is being cared for.

Retail analyst Emily Salter said, "those that have 'gone beyond' will be remembered more by shoppers”. She cited companies that have set up hardship funds for staff in financial difficulty, launched initiatives for those who can't shop online and paid small suppliers much more quickly.

Singling out the fashion sector, she said that as demand for fashion drops, international brands are harnessing their production capacity to produce equipment to help fight Covid-19. Inditex announced that it will produce surgical masks and hospital gowns for Spanish healthcare facilities, and LVMH has switched from manufacturing perfume to hand sanitizer for French hospitals.

“This highlights the retailers that are more willing to incur costs to benefit society as few major fashion brands are manufacturing such items so far, though many have the capacity to do so,” she explained. But she added that retailers “need to make sure that press-friendly responses in the midst of plummeting sales do not backfire by ensuring the health of workers involved in the manufacturing of these items as the outbreak grows globally.”

And she highlighted why it was important for Mike Ashley to issue his apology on Friday, saying that retailers that will be remembered negatively for “profiteering and treating their staff poorly” could see consumers’ purchasing desires dented beyond the outbreak, “especially if friends or family have been affected”. She specifically called out the Frasers-owned Sports Direct chain here and also Arcadia. The latter “announced it was closing all of its stores hours before the government announced its job retention plan, ending its fixed-term employment contracts early”.

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