Wednesday 1 May 2013

Come clean or go “no comment”? Primark and the collapsed factory in Dhaka:

ITV News
On 22 April 2013 the news broke that an eight-story building in the Bangladeshi capital Dhaka had collapsed.

At the time of the collapse, thousands of Bangladeshi textiles workers, who were making cheap garments for Western retailers, found themselves trapped inside the building with hundreds losing their lives.

Suddenly, the appalling working conditions of sweatshop workers in Bangladesh had become public knowledge with fingers being pointed at several large UK retailers that were being accused of unethical trading practices and of exploitation of the world’s poorest.

One of these retailers was Primark but reports suggest that at least 3 other UK retailers had used factories in the building.

This disaster signalled the beginning of a reputation management crisis for some of the most recognisable UK retailers all of whom had been caught by surprise by the number of deaths and by the deep scrutiny working conditions in the factory.

It was unravelled that a typical factory worker in Bangladesh earns as little as £0.12 per day, has no holiday and is often required to work 7 days a week, 14 hour shifts only to be able to avoid starvation.

On 25 April 2013, three days after the news of the factory disaster broke out, Primark was the first UK retailer to announce that it was taking responsibility and that it will pay compensation to the victims and their families.

It posted the following message on its Facebook page

"Primark confirms that one of its suppliers occupied the second floor of the eight storey building, which housed several suppliers to the garment industry making clothing for a number of brands.

"Primark has been engaged for several years with NGOs and other retailers to review the Bangladeshi industry's approach to factory standards. Primark will push for this review to also include building integrity.

"Meanwhile Primark's ethical trade team is at this moment working to collect information, assess which communities the workers come from, and to provide support where possible."

Was Primark’s reputation crisis management strategy right? After all, by making such a unilateral announcement the company placed itself at the forefront of the media attention.

Would it not have been better for Primark to do what the other UK retailers did, which is to sit back and see what happens?

The initial announcement by Primark won 500 Facebook ‘likes’ but attracted almost 500 comments in the first 9 hours following its publication. Most of the comments accused Primark of hypocrisy. Although some shoppers did point out that Primark was not the only UK retailer that used a factory in the collapsed building, these relatively supportive comments died out within hours and eventually the Facebook page became dominated by negative and derogatory comments pointing the finger at Primark as responsible for the disaster.

As the scale of the disaster unravelled and with the media focusing more and more on the working conditions in Bangladeshi sweatshops, Primark’s Facebook was providing a convenient forum for shoppers to vent their anger.

On 29 April 2013 Primark made its second Facebook announcement. The announcement described the concrete action taken by the company to assist victims of the disaster, and it included promises to pay compensation to the victims and their families.

In its second announcement the company re-affirmed its commitment to ethical trading by describing the action it has already taken and by making pledges for long term personal support and for improving working conditions.

At the same time the company urged other UK retailers to take similar steps.

So how did the second announcement by Primark on its Facebook page go down with shoppers?

Interestingly, it appeared that public opinion started to shift and that the gamble the company took by coming clean was starting to pay off.

In the first 9 hours, the second Facebook announcement won again nearly 500 Facebook ‘likes’ but only 78 comments. Unlike the initial announcement, now the majority of the comments were positive, appreciative and respectful.

The public seems to have been reassured.

Corporate social responsibility has become a self-imposed standard for many UK retailers. Whilst many of us would like to believe that this self-imposed standard stems from the inner desire to promote trust, the reality is that transparency offers companies such as Primark the only opportunity to survive.

Considering that “no comment” has a clear meaning to the audience - it means “we have got something to hide”, Primark strategy of demonstrating greater openness and transparency seems to be the right approach to re-gaining the trust of its shoppers. An acknowledgment of responsibility together with concrete, immediate action has in the past proven as a reliable strategy for dealing with reputation management crisis.

Unsurprisingly, this sort of strategy often defies legal advice which means that from a legal point of view at least it is very risky. Lawyers, after all must cover their own back too. However, in the tough daily battle for the minds and hearts of shoppers, in many cases, the risk is worth taking.

This blog will continue to follow events so please come back to visit or follow me on Twitter. By: Yair Cohen

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