With sales booming and a healthy share price reflecting their success, everything on the surface looks rosy for retail giant Sports Direct.
However, a Channel 4 Dispatches programme aired last week made allegations of a far more salacious nature.
Workers on controversial zero-hours contracts were said to be shamed over a tannoy system for a variety of misdemeanours. Staff were also said to be living in a permanent sense of fear regarding a six strikes and you’re out disciplinary process. Underhand pricing tactics supposedly used by the company were also investigated.
But what effect, if any, will this have on consumer attitudes towards Sports Direct, and will it ever impact upon their buying behaviour? YouGov’s BrandIndex data helps to answer these questions.
Our Buzz Metric measures whether a respondent has heard something negative or positive about a brand in the past two weeks.
Following the documentary, Sports Direct’s rating has fallen to its lowest level for more than a month, at minus 13. Mike Ashley, the company founder is also Newcastle United’s owner, which enables him to promote Sports Direct to football fans more effectively. However, the buzz score for football participants and followers is even worse, at minus 19.
But while bad publicity is an issue in itself, perhaps more serious is whether there has been cut through on matters such as value perception and purchase consideration.
The Dispatches programme investigated whether products were labelled as reduced from a price that the goods were never sold at. YouGov’s Value metric shows a decline in whether people believe the brand offers good value. The score has dropped from 15.6 to 6.4
Looking to our Purchase Consideration Metric, we see a drop from 27 in mid-April to 17 at the end of the month, following the allegations and negative headlines
It remains to be seen whether stains on Sports Direct’s reputation will end up having a long-term effect. Will consumers always be tempted by a cheap deal, or will they instead search out a brand that is more ethically conscionable?
The brand has built its success on cheap goods offering perceived value, but with doubts emerging over the legitimacy of these claims, will people look elsewhere?
Stephan Shakespeare is chief executive of YouGov