Why exemplary ethics will pay off beyond the coronavirus outbreak
In the midst of the coronavirus (Covid-19) 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 favour with shoppers when normality returns.
In the UK, grocers were some of the first retailers to make changes to their operations due to the Covid-19 pandemic, for instance working to address the lack of product availability of key items due to stockpiling by introducing limits on the number of items shoppers could purchase, and shopping hours dedicated to the vulnerable, elderly and National Health Service workers.
Those that have gone beyond this will be remembered more by shoppers, with Morrisons emerging as a retailer willing to take additional steps to protect its staff and suppliers – for instance by setting up a hardship fund for staff in financial difficulty, launching a call centre for those who are unable to shop online, and paying small suppliers immediately to help them survive this crisis.
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 sanitiser 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. 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.
Conversely, there are retailers that will be remembered for profiteering and treating their staff poorly, impacting consumers’ purchasing habits beyond the outbreak, especially if friends or family have been affected. The prime suspects of such behaviour in the UK are, unsurprisingly, Arcadia and Sports Direct.
Arcadia announced it was closing all of its stores hours before the government announced its job-retention plan, ending its fixed-term employment contracts early. Sports Direct initially said its stores would remain open following the announcement of lockdown in the UK, but quickly made a U-turn and closed all stores, leaving it unclear as to whether staff will be paid during the closure, and significantly inflating the prices of sports equipment that can be used to stay fit at home.
Additionally, online behemoth Amazon has reportedly had cases of Covid-19 in 10 of its warehouses globally. As a retailer that has struggled with poor consumer perceptions of its ethics, this crisis provides Amazon the chance to improve this, as it could leverage its global logistics network to distribute medical supplies or get essential goods to vulnerable people.”
- Emily Salter is a retail analyst at GlobalData.