Rise in product recalls ‘damaging customer relations
The amount of product recalls issued in the UK has been soaring over the last few years, with a damaging effect on customer loyalty.
That is one of the findings in new research from relationship marketing agency Navigator CM, which found that product recalls rose from 112 in 2004 to 253 in 2007, an increase of 125% in four years. Non-food consumer goods have seen recalls climb eightfold from just 18 in 2004 to 161 in 2007.
Navigator says the risks to businesses are serious. A recent Harris Interactive poll found that following a recall for health and safety reasons 55% of customers would “temporarily purchase another brand and then purchase the recalled brand once it was safe”, 15% would “purchase another brand and never purchase the recalled brand again” and 21% would “avoid using any brand made by the manufacturer of the recalled projects”.
Electrical appliances recalled in 2007 ranged from portable torches to fan heaters, from digital photo frames to handheld blenders, affecting a wide selection of industries.
Cadbury scare Recent high-profile product recalls such as the Cadbury salmonella scare in 2006, (estimated to have cost as much as £20m), Mattel’s recall of excess lead paint in toys (cost: $30million) and Sony’s withdrawal of laptop batteries (cost: US$429m according to research firm Kendall) have served to underline the dangers that companies face.
The report says it is clear that in such a situation it is vital that companies are able to give clear information and advice to consumers and journalists. Given the vastly increased number of calls, companies find that existing care line facilities are not sufficient to cope with demand and yet the rate at which product recalls are rising is outstripping the rate at which appropriate contingency centres are being set up.
Rob Denton, MD of Navigator, said: “This is a critical and growing issue for consumer brands. The upward trend has exposed an area of brand risk where many brands simply do not have contingency facilities in place. And no worse impression is created, nor brand damage done, than in the situation where a company is uncontactable or unhelpful just when consumer concerns have been escalated by a product recall.”
The report claimed that the increase could be ascribed to several factors. Firstly, new product safety legislation introduced in 2005 requires manufacturers to inform both the authorities and consumers of any potential risk from their products.
Secondly, consumers and authorities are increasingly aware of potential hazards. Thirdly, manufacturers are increasingly sourcing ingredients, components and packaging from further afield where they have less control over the supply chain and legislation may not be wholly in line with that of Europe.
Health risk was the most common reason for a recall being issued (21% of all recalls), with risk of choking (19%), risk of fire (14%) and risk of electric shock (14%) also important causes.