Consumers Losing Patience with Recalls: Survey

Consumers’ buying habits of undergo dramatic changes, and could end up costing companies millions, when product safety and quality issues are at stake, according to a study released this week by Deloitte, LLP.

Over half of respondents (58 percent) who heard about product safety and/or quality problems altered their buying habits, according to the report, “Food and Product Safety and Its Effect on Consumer Buying Habits.” These consumers refrained from buying such products for an average of over nine months, increasing the likelihood that they would stop buying the product or brand altogether.

“Our research shows that consumers are becoming less tolerant of recalls, with more than 50 percent changing their product choices,” noted Pat Conroy Deloitte, LLP’s vice chairman and consumer products practice leader. “As these consumers continue to buy different products, product manufacturers can expect lower sales and run the risk of damage to their brands.”

The survey focused on key issues in the toy, consumer electronics, fresh food, and packaged food/beverage categories.

Of these categories, changes in buying habits were highest for fresh food and packaged food/beverages. About half (49 percent) of those surveyed said they were extremely concerned about product safety, with the greatest concerns coming from women (53 percent) and consumers age 55 and older (56 percent). Fifty-four percent of respondents said they were more concerned about the safety of fresh food products than they were a year ago.

Approximately two-thirds of respondents (65 percent) were extremely concerned about the safety of products made outside the United States, with the greatest worry coming from older consumers.

About three-quarters of the overall respondents (73 percent) said they extremely concerned about the safety of products made in China, with half having the same doubts about products hailing from Southeast Asia and Mexico.

Further, consumers polled said they wanted more information about food products’ safety to be listed on packaging (86 percent) and on company Web sites (81 percent), and as well as provided by the government (81 percent). Sixty-seven percent said that food product labels with country-of-origin labeling, certification of product testing and certification of quality testing would figure significantly in their buying decisions.

According to the research, some key factors driving the extent of a product recall’s impact on a company’s business include the extent of the company’s product diversification, if the recall is specifically for a branded product, the strength of the company’s brand when the incident occurred, and the company’s response.

“Companies are meeting consumers’ concerns by upgrading or expanding safety procedures, including stricter safety standards, testing, and third-party audits, and government intervention is driving change,” noted Conroy. “The recent granting of the Consumer Product Safety Commission to initiate product recalls and monitor ingredient levels such as lead allowed in toys and other children’s products is a very timely and relevant example of changes being made all with consumer safety and peace of mind at the top of the agenda.”

The survey, which was commissioned by Deloitte and conducted online by an independent research company on Sept. 3, 2008, polled a nationally representative sample of 1,004 adult consumers, with a margin of error of +/- 3.1 percentage points at the 95 percent confidence level.
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