Many Businesses Unprepared as Product Recalls Jump 35%

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-Increasingly strict regulations and outsourcing of production responsible for increase.
-Consumer goods hit hardest by recalls.
-Contingency facilities often insufficient to meet sudden spike of calls.

New research from Navigator CM has found that the amount of product recalls issued in the UK has been soaring over the last few years, rising from 112 in 2004 to 253 in 2007, an increase of 125% in just four years. Non-food consumer goods have seen recalls climb eightfold from just 18 in 2004 to 161 in 2007.

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.

Recent high-profile product recalls such as the Cadbury salmonella scare in 2006, (estimated to have cost as much as £20million), Mattel’s recall of excess lead paint in toys (cost: $30million) and Sony’s withdrawal of laptop batteries (cost: $429 million according to research firm Kendall) have served to underline the dangers that companies face.

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, Managing Director 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.

Notes:
1. The report (‘Recall – The Rising Risk: A study of recall trends in the UK’) was compiled by Navigator Customer Management, a relationship marketing agency.
2. Product recalls across all sectors in the UK have been rising since the millennium and rose from 112 in 2004 to 253 in 2007, an increase of 125%.
3. The report also found noticeable, though less dramatic, increases in the amount of food and pharmaceutical product recalls.

About Navigator Customer Management:

Navigator Customer Management is a relationship marketing agency providing a full range of interactive customer management services across key channels – voice, mail, Internet, live, email and text. Founded in 1991, Navigator completed a management buyout in 2007 from MoonRiver Group moving the company into a new phase as a successful independent and one of the fastest growing contact centre organisations within the UK. Navigator’s objective is to help organisations understand the reality of customer relationships and to build strategies that keep valuable customers and increase their value to the company.

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