Retail’s Big Reveal: Transparency Transformation

Posted by Carol Spieckerman on March 16, 2011


Over the past couple of years, I’ve contended that transparency would be the next game-changer for retailers and brands, and the latest surge of show-and-tell schemes certainly bears that out.

How is the licensing community responding?

A new wave of open-door regulation in retail (both self-directed and imposed), begs licensors and licensees to incorporate regulatory accountability into their program planning, rather than vaulting into crisis management mode when problems arise and now, potentially accelerate.

At the beginning of this month, a diverse group of leading apparel and footwear brands, along with retailers, manufacturers, non-governmental organizations (NGOs), academic experts, and the Environmental Protection Agency (EPA) officially launched the Sustainable Apparel Coalition, whose overarching mission is to develop a “shared vision of sustainability” and “establish consistent expectations for brands, retailers, and manufacturers.” An impressive roster of companies from across a broad range of markets have joined the effort, including green-standard-setters (and strange sustainability bedfellows), Patagonia and Walmart.

The coalition has plans to develop a comprehensive database of the environmental impact of every aspect of the apparel production process and then leverage that data to arrive at a sustainability score. The longer-term goal is to produce a label that will divulge sustainability scores to shoppers via a clear, simple rating indicating the environmental impact of every item, from frock to flip-flop.

In related news, last Friday, amid much controversy, the Consumer Product Safety Commission (CPSC) soft-launched their first publicly-accessible safety complaints database and public website at http://www.saferproducts.org. This major milestone will enable consumers to not only learn about safety complaints that have been made about specific products, but to file their own complaints online. Prior to the launch, the only way to access CPSC complaints was to file a request through the Freedom of Information Act, a process that in some cases took years, and even then the information received was often aggregated rather than individualized by product complaint. The new system promises to deliver detailed information in a matter of weeks, while reports will begin to be available toward the beginning of next month.

The growth in transparency that we are seeing today, brought on by the Internet and the proliferation of social media platforms, has awakened companies to the need for institutionalized reputation management. The smarter ones have assigned level-headed, social-media-savvy team members to the job of monitoring, and in some cases personally managing, all manner of mentions.

For the licensing community, quick responses and clear accountability will be critical to maintaining brand integrity and equity in the newly transparent regulatory environment. Unfortunately, as difficult as it can be to strike the perfect balance in a self-branded environment, the multi-stakeholder nature of licensing threatens to slow down response times to a crawl, chipping away at consumer perceptions, or worse, turning every challenge into an exercise in finger-pointing.

It’s an ongoing issue that should concern everybody in the licensing world. Licensees (and their suppliers) are dealing not only with contractual requirements imposed by licensors regarding such facets of the production process as environmental impact, labor conditions, product safety, but also with those required by retailers. Of course, no two of those regimens exactly match, increasing exponentially the amount of paperwork and the number of factory audits. LIMA has been working with five member companies (Hasbro, Mattel, Disney, Time Warner and NBC Universal), along with consulting group Business for Social Responsibility, on a series of webinars and, potentially, other training designed to facilitate compliance with contractual stipulations in these areas. It behooves everyone to get on the same page.

Bottom line:

  • The growing list of consortiums and coalitions aimed at increasing transparency should be seen as a great opportunity for licensors to become part of a larger conversation and to deploy insights and best practices down to licensees. For direct-to-retail brands, participation should be considered a mandate.
  • It’s time for licensors and licensees to determine who will stay on top of online databases and who will manage and respond to any complaints or actions that arise.
  • Maturity and superior communication skills should be seen as the baseline qualifications for anyone who is assigned to this challenging but essential role.
  • Transparency has become one of the highest values for retailers. The days of “no news is good news” are over.