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Exemplary ethics will pay off after the COVID-19 outbreak

Lauretta Roberts
27 March 2020

Retailers and brand who have behaved responsibly to staff, customers and the wider community will reap the rewards once the COVID-19 crisis has passed, while those who have not will be remembered.

According to data and analytics experts GlobalData the grocers who have been at the front-line during the crisis have responded most quickly and while there were shortages of stock initially, many have gone above and beyond in the crisis.

“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 NHS 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," said Emily Salter, retail analyst at GlobalData.

As demand for fashion has slumped and now with some retailers unable to continue sales online, some fashion brands have focused their efforts on support initiatives for the community and health services.

In France, luxury conglomerate LVMH was among the first to take action, by repurposing its perfume manufacturing lines to create hand sanitiser. In Spain, global giant, Inditex, is dedicating manufacturing to produce surgical masks and gowns, while Mango has donated millions of masks. H&M, meanwhile, has offered to open up its global supply chains to help support the production of PPE (personal protective equipment) for health care workers globally and Ralph Lauren in the US is dedicating some of its manufacturing to do the same.

Here in the UK, John Lewis drew praise for immediately announcing its community support plans before the retail shut-down began and for closing its stores before being obliged to do so (as indeed many fashion retailers did).

John Lewis COVID-19

Despite the grave financial hit that the company will take as a result of the crisis, it immediately made £75,000 donations to charities Age UK, FareShare and the Trussell Trust and launched a £1 million community support fund to create additional delivery services, as well as delivering essential items to care homes and community groups and donating products to vulnerable people.

Kurt Geiger CEO Neil Clifford was applauded for agreeing sacrifice a full year's salary so ensure staff could continue to be paid during the lock-down and the company has pledged to offer a 50% discount to NHS staff for a year once its stores are able to re-open. It has also been carrying out "acts of kindness" by sending free shoes to NHS workers and shut down its stores early to enable staff to volunteer for community work.

Salter sounds a note of caution, though, that brands should ensure that they don't make mistakes while carrying out good work, such as failing to ensure the safety of staff who are manufacturing PPE equipment for health workers, for instance.

“[Offers to manufacture masks and gowns] highlight 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," she says.

The price of behaving poorly, or being seen to do so by the public is already clear. This morning the usually unapologetic founder of Sports Direct and CEO of Frasers Group, Mike Ashley felt obliged to apologise to staff, customers and even the Government for his company's behaviour over the past week.

Frasers Group Sports Direct

Sports Direct initially tried to claim its stores were "essential" and therefore exempt from the Government-ordered lockdown, emailing staff within 30 minutes of the lockdown happening to tell them to show up for work the next day, and then proceeded to press the Government for "clarification" on its position in a letter to Cabinet Office Minister Michael Gove.

In an uncharacteristic move, Ashley wrote an open letter today to say: "Given what has taken place over the last few days, I thought it was necessary to address and apologise for much of what has been reported across various media outlets regarding my personal actions and those of the Frasers Group business."

The company has offered up its fleet of delivery vehicles for free to deliver vital supplies for the NHS or any key workforces who may need them, which, if accepted, may go some way towards rehabilitating its reputation.

Another company that could have behaved better, according to GlobalData, is Sir Philip Green's Arcadia, which announced that it was closing all of its stores hours before the government announced its job retention plan, ending its fixed-term employment contracts early, leaving some people in doubt over whether they would be paid long-term as the company only pledged to pay them until the end of the month before the situation would be reviewed. As it stands those employees should be covered by Government relief via its furlough initiative, which covers 80% of salaries up to £2,500 a month.

But for Arcadia and Sports Direct, there is hope. Companies that previously did not have the greatest of reputations have the opportunity to turn that around during these extraordinarily tough times.

While Amazon has reportedly had cases of COVID-19 in its warehouses, its delivery capabilities have the potential to be a vital support network for Governments worldwide and here in the UK it is reportedly being lined up to deliver COVID-19 home testing kits that will enable people to discover if they have had the virus or not, and if so, be allowed to get back to work or carry out vital community support.

"As a retailer that has struggled with poor consumer perceptions of its ethics, this crisis provides Amazon the chance to improve this," Salter says. It seems Mike Ashley, at least, has perhaps begun to realise this.

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