From The Editor | July 2, 2013

The Risk With Retail And Celebrities

Source: Retail Solutions Online
bobjohns

By Bob Johns

Bob Johns, Robert Johns, associate editor

Retailers and manufacturers spend millions of dollars each year on product tie-ins with all types of celebrities. Today, however, public opinion of these celebrities can swing from love to hate with the send of a tweet.

Most recently we have seen Paula Deen, the southern food queen, get blasted by the media and the public for her admission to using the “n-word” and a racial and sexual discrimination lawsuit. In order to quickly distance themselves from Deen, nearly every one of her sponsors and retail partners have left. Food Network was the first to announce it would not renew Deen’s expiring contract, despite her show’s continued popularity — up until now. This has been quickly followed by Smithfield, Caesars Entertainment, Ballantine Books, and drug-maker Novo Nordisk. Additionally, retailers Walmart (which carries her products at over 4,000 locations), Target, Home Depot, QVC, J.C. Penney, Sears, Kmart, and Walgreens have all severed ties with Deen. The endorsements alone have cost Deen millions, not to mention the damage to her brand.

What about the retailers, though. Most have not removed Deen’s products from the shelves, just said they will not order any more. Is this a stall tactic in case if public opinion swings back they can just jump back onboard? Can retailers afford to just eat the product cost, and wholesale it out? Should they wait and see how the court proceedings play out and then make a move? What about monitoring social networks? Do you wait until a snapshot of the huge Paula Deen display is all over Facebook with your logo and an “X” through it? Most retailers cannot afford to play the “wait-and-see” game.

However, we have seen how quickly public opinion changes before. Anyone remember Tiger Woods’ fall from grace? He lost more than $20 million in endorsements from companies such as Tag Heuer, AT&T, Accenture, GM, and Gatorade in 2009/2010, but he has rebounded nicely. Both Nike and EA Sports stood by him throughout his scandal, and both have profited from his turnaround. Is this a risk retailers can afford to take in today’s retail and consumer climate?

Retailers need to be extremely careful to fully vet any of these types of potential partnerships.  One, the product itself could be horrible and fail. Two, in today’s world where everyone has a cellphone camera and a Twitter account, the odds of a celebrity getting into trouble has dramatically increased. Reacting swiftly for damage control, and even to pull stock from shelves, is the only option until the storm blows over. The celebrity might be more hesitant to work with you in the future, but once they see the dollar signs, everything will be back to normal. Customers have very short attention spans, so retailers must be able to react instantly and be at the forefront during times of crisis with a spokesperson or partner. After all, would you want Aaron Hernandez jerseys in your front window display today?