The company hailed last year as the UK high street’s most reputable fashion retailer has tumbled in public perceptions while still posting strong sales growth.
ASOS’s announcement this week of a 34% jump in sales in the six months to February has prompted the Reputation Institute (RI) to rain on the fashion retailer’s parade.
The institute points out that following bad publicity about working conditions the $4 billion online vendor of vests and playsuits has fallen nearly a dozen places in the reputational league table RepTrak.
In 2016 the company was the only UK clothes retailer to break into the ‘excellent’ category on RepTrak, with a score of more than 80, but in Q1 2016 it fell to ‘average’ with 69, a clear indication of the effect of a few media reports.
Reputational issues might already have had an impact on the company’s UK sales, and threaten future growth, the institute suggests.
Perceptions of workplace (-10.2) have seen the most significant decline in the table for ASOS, with a number of high profile stories of poor workplace practices having had an impact.
Last Autumn Buzzfeed alleged zero hours contracts, invasive surveillance, agency workers being discouraged from taking comfort breaks and having their pay docked for arriving late at an ASOS warehouse in the north of England.
In response, ASOS said the allegations were ‘inaccurate or based on out of date information’. It denied that any staff at the warehouse were on a zero hours contract and asserted that four fifths of the staff were permanent, and no one was ever much more than four minutes from a lavatory.
As for the allegation of intrusive surveillance it said of course staff were watched but searches were kept to a minimum.
James Bickford, Managing Director, Reputation Institute said: “ASOS posted impressive interim results. However, our research reveals that reputation amongst the UK general public has declined over the past year, supported by the fact that while overall sales growth is at 38%, UK growth was only at 18% and international growth was at 54%.
“Perceptions of products and services are of course the most important dimension when judging reputation; however we have seen a significant growth in the importance of governance and citizenship among the UK general public. ASOS are known for offering great value products and services, but perceptions of these key dimensions are in decline (governance -5.8 and citizenship -6.9), workplace (-10.2) and leadership (-9.8) have also declined.
“While this has not had an immediate impact financially, letting these kind of perceptions spiral can have a devastating impact further down the line, as we have seen with the likes of Sports Direct.”
The Institute says its RepTrak system measures a company’s ability to deliver on stakeholder expectations across the seven key rational dimensions of reputation: products and services, innovation, workplace, governance, citizenship, leadership and performance.
It says that in the UK companies’ reputations must be considered “excellent” by consumers to have more than 50% of those surveyed claim that they would say something positive about a company, recommend its products, trust it to do the right thing, welcome it into the local community, work for or invest in it.