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Crisis Management and its Importance for Retailers in Canada at a Challenging Time

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By Josh Cobden

Few people would say that the world has become simpler in recent decades. In fact, there is strong evidence for the increased complexity facing organizations in all sectors, including retail. The past year has been particularly tumultuous, as businesses have grappled with the communications challenges around a global pandemic, rising concerns of racial injustice, growing cyberthreats, and escalating concerns and expectations around environmental sustainability. Each of these issues, and countless more, present risk in different ways.

As these threats have evolved, they have required new approaches and solutions requiring deep expertise in trust and reputation protection. This often starts with understanding the three main categories of risk and how to deal with them.

Risk 1: Issues

The lowest immediate reputational threat is an issue. An issue is a known concern whose risk level can be affected by current events. For example, poor worker conditions concern some people who may choose to boycott products, sign petitions, or take to social media. For others, the joy of inexpensive goods is more important than the plight of those who make them. However, evolving events can ramp up the threat level of an issue. Recently, leading Canadian clothing brands like Roots, Canada Goose, and Aritizia, among others, have faced pressure to sign and verify a specific commitment to not using cotton that is sourced through forced labour in the Xinjiang region of China, raising the stakes and reputational risks of this issue.

Every retailer ought to know what its issues are, and issue management is the practice of knowing which way the wind is blowing for each of them and how to react. This requires an always-on approach to reputation protection which might include social and traditional media monitoring, influence measurement, and opinion polling, among other research approaches. At a certain point, an issue may progress from a communications challenge to a legal challenge or an operations decision. Helping leaders recognize and assess risk is vital to determining if an issue can be de-escalated through communications, or if more is needed.

Risk 2: Emergencies

A second category of reputational threat is the emergency. An emergency is an undesirable but predictable event, even if it is unusual. Some issues accelerate into emergencies, or vice versa. For example, for any major retailer, an obvious and predictable emergency is a data breach that exposes personal information from customers or employees. Retail giant Target’s major data breach in 2013 was a wake-up call for many retailers, yet almost a decade later, retailers still struggle to stay ahead of cyber criminals. Recently, Home Hardware Stores Ltd., with over 1,050 stores, acknowledged it was targeted by the hacker group The Darkside that threatened to release private data if a ransom wasn’t paid. While data breaches are often isolated incidents (an emergency), if they share a common trait (e.g. a vulnerability in a common point-of-sale platform), even after an emergency, a lingering issue could remain.

Every retailer ought to have emergency plans in place around predictable events, even if they are unlikely. These might include scenario planning and simulations that stress test processes and help refine and update them, and media and spokesperson training. This planning should involve key functions within a retailer’s organization that may play a role in an emergency, such as communications, HR, IT, operations, security and legal, among others. A few savvy groups had plans in place if a pandemic were ever to occur. Since COVID-19, we can be sure this topic will now be covered in most risk audits. Still, many organizations are caught flat-footed when emergencies occur.

Risk 3: The Crisis

A third category, the crisis, is an unexpected and unpredictable event that also has potential to damage reputation. For example, last month, Canadian lifestyle clothier lululemon found itself under the microscope when an employee used his personal Instagram account to promote a xenophobic t-shirt design (not a lululemon product). According to news agency, Reuters, in less than a week of the employee’s post, the hashtag “lululemon insults China” was seen over 200 million times on Chinese social media platform Weibo, including calls for a boycott of the brand. A crisis is often fast, intense, and dynamic, and social media platforms have all but eliminated the time an organization once had to ponder a response. Thus, during a crisis, digital monitoring and presence are essential.

Technology’s New Role

Crisis management in the famous Tylenol case, when seven consumers died after consuming capsules that had been laced with cyanide, occurred in the old analogue world. Now, the Internet and social media have accelerated the speed and multiplied the reach. To battle the faster and farther impact of a crisis, human talent must be matched with technological prowess.

Leading crisis communicators use highly advanced social media monitoring processes and tools to track, assess, and forecast velocity and growth of a threat. These techniques harness artificial intelligence and predictive analytics, and can identify what is being said, by whom and how fast the message is travelling. This in turn, informs the response strategy.

Responding requires the ability to engage on whatever communications platform is most efficient in reaching key audiences. If the crisis is unfolding on social media, it is likely best to respond on social media. My colleague Rob Clark, an expert in crisis monitoring, says, “If one thinks of a crisis like a fire, one’s own side of the story can be a stream of water to control or even extinguish the flames. But if your hose can’t reach the fire, it will keep burning and even spread.”

Prepare in Advance

Good preparation involves setting up communications platforms and communications assets that are most likely to reach a retailer’s audiences (including potential critics) and then establishing a voice and following on each. This can’t start from scratch on the day a crisis erupts. Doing the work in advance is like insurance that pays out in all stages of reputation management but can also provide benefits in good times.

Josh Cobden

While the threat of widespread reputational damage has existed since the advent of the printing press, the stakes have skyrocketed. The combination of social media and evolving social expectations have formed an accelerant that can turn a spark into an inferno – unverified, amplified and magnified. Handling evolving threat categories must be done with precision, and that starts with understanding them in the first place.

Josh Cobden is Executive Vice President of Proof Strategies Inc., a leading public relations and communications firm based in Toronto. Josh frequently collaborates with in-house communications teams to manage reputational threats across a wide variety of sectors.

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