When it comes to public perception it pays not to short-change staff
Towards the end of December, there was a row involving luxury department store Harrods.
Waiting and kitchen staff took industrial action because they alleged that the business’s owners retained up to 75 per cent of service charge, which reduced pay by up to £5,000 a year.
Harrods has subsequently vowed to let staff keep 100 per cent of the money raised from restaurant tips.
Read more: Working Lunch: Gold leaf wagyu at Harrods' Chai Wu
However, YouGov brand tracking data shows what damage was done to consumers’ perception of Harrods while the dispute was ongoing.
Given the location of Harrods, the biggest decreases have occurred in London. Among respondents across Britain, Harrods’ impression score (whether a respondent has a positive or negative impression of the brand) dropped by 10 points.
However, in London and the south east, its score has decreased by 13 points (from 23 to 10). In both cases it has now started to make a very slight recovery.
Because of the type of business Harrods is, in this instance the impact on the bottom line may well be minimal as many of those that now think worse of the business would not ordinarily shop there anyway.
Read more: Harrods posts a profit despite tough trading conditions
Our previous research shows that 70 per cent of the population at large think that the current minimum wage is too low, with around a fifth (21 per cent) thinking that it is at about the right level.
Therefore, brands that fail to pay the minimum wage could encounter some degree of public antipathy.
In recent times brands such as Sports Direct, and more recently JD Sports have suffered following stories about alleged improper wage practices.
Businesses being criticised for seemingly short-changing staff is in stark contrast with German supermarket brands Aldi and Lidl.
Read more: A Lidl competition: Aldi becomes the highest-paying supermarket in the UK
Those brands – recently confirmed as the top two brands in YouGov’s annual Buzz Score Rankings – have been proactive in increasing wages and this has been reflected in improved consumer perception.
We have noted a direct link between their progressive wage policies and improvement in public sentiment.
Brands that try to make cut costs when it comes to wages should be appreciate the damage it can do when negative stories reach the public domain.