After H&M Debacle, Business Booms for Reputation Firms

It was a rough start to 2018 for H&M, and other retailers are paying attention, knowing that their brand could easily come under fire next. Reputation management consulting firms are seeing increased interest from retailers eager to avoid, and prepare for, any controversy similar to the H&M debacle.

After the Swedish apparel seller posted an ad of a black child wearing a hoodie reading "Coolest monkey in the jungle" earlier this month, global protests, both in person and on social media, have erupted, calling the 4,133-unit chain racist. Recent developments in the two-week-old backlash include store closures following violent demonstrations in South Africa, and the relocation of the child model and his mother from their home in Stockholm due to security concerns.

In an age of hyper-awareness of potential racism and sexism, business is booming for firms like Reputation Institute, a Boston-based outfit that has roughly 350 global clients such as Kroger and Procter and Gamble. The 20-year-old company, which has eight offices outside North America, added a Chicago office last month, and plans to open two additional U.S. locations later this year. It's also offering more products and services, such as the ability to measure corporate responsibility and certain public opinion.

Stephen Hahn Griffiths, chief research officer of the Reputation Institute, says that debacles like H&M's are easier to overcome if the brand already has established itself as a "good corporate citizen."

"It really is all about the premise of how reputation has become so much more important above and beyond the brand and what it delivers," he says. "You can' just sell your wares, you have to sell your company—the brand that stands behind those products." He expects consumers will see more branding stories around values and social responsibility from retailers in coming months as brands try to foster goodwill with consumers ahead of any potential controversy on social media.

Similarly, Chicago-based Blink OnDemand Crisis PR, a PR and consulting firm, debuted new software for crisis management for brands last week. The cloud-based product offers real-time and interactive worksheets for companies to weather social media storms and costs one-tenth of what an agency would charge for a crisis plan, according to Laurel Kennedy, president of Blink.

For its part, H&M is still making corporate changes following the Jan. 8 outcry that included criticism from former celebrity collaborator The Weeknd. While the fast-fashion chain removed the hoodie in question and issued multiple apologies, it said last week that it was taking the additional step of hiring a diversity leader. Annie Wu, who previously worked as global manager for employee relations for the H&M group, is now tasked with helping to "build respect, understanding, caring and equality into every aspect of our decision making," said a spokeswoman. "Something that we have been doing for a long time but we need to expand and speed this up," she added.