This Month in Reputation: Books, Vaping, Guns, and OxyContin

Barnes & Noble tops U.S. retail industry in reputation through emotional connection with customers

Despite being far from its glory days in the 1990s, when the big-box giant terrified independent bookstores with its deep discounts and comfy armchairs, Barnes & Noble today maintains anexcellent reputation — and the best among 81 measured retailers in Reputation Institute’s U.S. Retail RepTrak®️ 2019 — due to the strong emotional connection it has created with its customers.

“We are so proud of this resignation that we take very seriously... we work hard in every store every day to earn the trust of our customers.”                                                  - Frank Morabito, VP of Stores, Barnes & Noble

B&N operates 627 bookstores across 50 states and is the only retailer to maintain an excellentRepTrak rating for three consecutive years. All other rated companies achieved a strong reputation score, but this year only B&N stands apart as excellent.

 
 

Meanwhile, online rival Amazon.com has seen its reputational stock slide over the past year. In last year’s study, the retail giant ranked supreme. This year, it didn’t crack the Top 10. You know things must be bad when a company is paying its own employees to Tweet about how it’s actually not miserable to work there. 

 

Heinz brings up the rear in the S&P 500; food giant plagued by poor sales and scandal

Earlier this month, the once-robust Kraft Heinz received a dubious honor: On August 8, their stock was down 15% in early trading and they were the worst performer on the S&P 500

How did a once-mighty brand fall so low? Part scandal, and part shifting trends. For the first half of 2019, the company was wrapped up in an accounting scandal. Its CEO resigned. 

Its sales are down, however, not because of customers angry about the state of their bookkeeping. Rather, the company’s signature products — Miracle Whip and Velveeta, among others — are no longer in step with consumer tastes, which now gravitate toward foods that are healthier and less processed. 

The accounting problems and the cost-cutting required by shrinking revenues has also distracted Kraft Heinz from making necessary changes and innovations to keep it competitive with rivals General Mills, Hershey, and ConAgra, who have all acquired more health-conscious brands in the past few years. 

Walmart employee penalized for organizing gun protest

A 23-year-old employee at Walmart, Inc had access to his email address and the company’s Slack account cut off after he urged fellow employees to call in sick and not show up to work to protest the retailer’s sale of guns in its stores. He also organized a petition that has 46,000 signatures that he planned to send to the CEO. 

The protests came following the deadly shootings in El Paso, Texas, where 22 people were killed in a Walmart, and Mississippi, where two Walmart employees were killed by a disgruntled former employee. Walmart is one of the U.S.’s largest gun sellers. 

Walmart finds itself in the center of a larger cultural debate, caught between the beliefs of employees like Thomas Marshall, who worked in the company’s e-commerce division in California, and many of its retail employees and customers, who tend to be stronger supporters of gun rights. 

At the end of August, whether in response to Marshall’s protest or not, Walmart announced it would stop selling handguns and certain types of ammo in its stores and would discourage its customers from carrying firearms openly.

Juul CEO makes unusual pitch to non-smokers: Please don’t use our product

Juul CEO Kevin Burns is at pains to stress that, as far as he or anyone at the company knows, Juul is not toxic. That said, he doesn’t want you to use his company’s product if you haven’t already formed some kind of dependence on nicotine.

"Don't vape. Don't use Juul," he said in an exclusive interview with Tony Dokoupil for "CBS This Morning." "Don't start using nicotine if you don't have a preexisting relationship with nicotine. Don't use the product. You're not our target consumer."

Burns must walk a fine line: Rules from the US Food and Drug Administration mean he can’t say his company’s product is healthy, but he can say that it’s less unhealthy than the “number-one source of preventable death in the world,” cigarettes. 

Given the company recently received a major infusion of cash from Altria, the seller of Marlboro cigarettes, it’s no surprise that the public is skeptical. 

Yet Juul’s stated mission of “improving the lives of the one billion adult smokers in the world by eliminating cigarettes” does seem to be working. Cigarette sales are down 7%.

CEOs break with corporate orthodoxy and declare the shareholder is no longer king

For years, even decades, the principle that public companies must, above all, “maximize shareholder value” has been an article of faith for some and a running joke for others. See this New Yorker cartoon from 2014:

Now, however, CEOs of giants like JP Morgan Chase and Apple say that the shareholder is no longer the only master corporations must serve. Instead, it’s now all about a range of stakeholders: employees, customers, the community, and the environment. 

“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders,” the Business Roundtable, a lobbying organization that represents many of America’s largest companies, reported in a statement. “We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”

This comes following several years in which corporations and their CEOs have been drawn into debates about politics, climate change, and income inequality. It’s clear that, at least publicly, companies can no longer care only about making profits; they must consider the social and political ramifications of their actions. 

Earlier this year, online home goods retailer Wayfair was blindsided by employee backlash to their decision to supply beds to a detention center holding migrants detained at the border. The CEO explained that an order had come in and, as a business, it was their responsibility to fill it. Employees, and many customers, disagreed. 

This announcement may signal a shift in corporate governance but it will be fighting against the tide of the last several decades, when the emphasis was on profit above all. 

Johnson & Johnson are found liable for opioid addiction in Oklahoma

This shift away from “shareholder value” may have come a few decades too late for Johnson & Johnson. In late August, a judge in Oklahoma found the company liable for decades of opioid addiction and ordered the company to pay the state $572 million in damages. 

Johnson & Johnson did not manufacture drugs like OxyContin, one of the most popular — and most addictive — painkillers. They did, however, make the strain of poppy that made OxyContin possible. 

The judge cited the aggressive sales and marketing tactics of the companies — where representatives minimized the chance for dependence and emphasized its pain-killing prowess — as a rationale for the judgment. 

This comes on the heels of a series of lawsuits that claimed the company’s talcum powder not only caused ovarian cancer but that the company had known about it and kept it hidden for years. 

This latest setback has put a major damper on Johnson & Johnson’s reputation. 

“It’s fair to say that the opioid trial is probably the straw that broke the camel’s back for Johnson & Johnson’s reputation,” said Ri chief reputation officer Stephen Hahn-Griffiths.  “We’ve not in recent years seen Johnson & Johnson’s reputation dip as low as it’s currently tracking.”

 

Melanie LoBue 
Senior Director of Global Marketing
Reputation Institute
mlobue@reputationinstitute.com
@melanielobue

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