City & Corporate: Strong Primark sales despite expose

Retailers remain committed to promoting ethical issues, despite new financial results suggesting such considerations may have little impact on profits.

A Time/Populus survey last week found that Primark was seen as Britain's least ethical clothing retailer following a Panorama expose four months ago. Marks & Spencer was 'most ethical' ahead of George at Asda and Debenhams.

But the tables were turned in the financial markets on Tuesday, with Primark announcing a 17 per cent increase in yearly profits and M&S reporting a 44 per cent half-year profits slump on declining clothes sales.

Geoff Lancaster, Primark's head of external affairs, agreed reputation damage had not affected its trading performance, but insisted that it continues to take ethical matters 'very seriously'. He said: 'We are doing a lot of work and feel we were unfairly represented by Panorama.'

M&S insisted its CSR programme feeds into the company's profitability and that its Plan A drive is now cost-neutral. 'Climate change hasn't slowed down just because the economy has. We know from feedback that ethical issues remain very important to our customers and this survey shows we are responding in a meaningful way,' said Flic Howard-Allen, director of comms and CSR.

But senior agency PROs have been quick to use the fact that the clothing retailer with the worst reputation on the high street is posting the best results to show that CSR is not central to businesses success.

'I do not think CSR will have an impact in the current economic environment,' said Fergus Wylie, Gavin Anderson executive chairman, Europe. 'Ethical issues have a higher profile in good times.'

This flies in the face of another poll by fashion magazine Drapers claiming that 44 per cent of Primark shoppers were likely to switch to another chain after Panorama.

'There is a huge gap between what people say and what people buy,' said Andrew Griffin, MD of Regester Larkin. 'The most important thing is serving your customer well and ethical issues are only on the edge of that equation.'

Wylie did concede that over the longer term consumers will become more aware of CSR and its impact on buying power will become stronger.

Research this week from Business in the Community backed up this positive impact, finding FTSE companies that actively managed and measured CSR outperformed the FTSE 350 on total shareholder return by between 3.3 per cent and 7.7 per cent in 2002-07.

HOW I SEE IT - Ash Coleman, EMEA MD, Ogilvy UK

Consumers have become more sensitised to the CSR of businesses over the past decade. During a recession corporate reputation may affect customers' purchasing behaviour less, but I do not think that once you have sensitised a consumer they suddenly forget about it just because of tough times.

During a boom time consumers have the luxury of worrying more about broader issues, but in a downturn their primary concerns will be much more close to them. It is no use having an environmental policy if you can't demonstrate responsible employment and respect for local communities when the recession bites.

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