Ikea in record 29m furniture recall in US after 3 deaths

Ikea’s very successful cabinet kills 3 kids in the US. Should Ikea recall the product just in the US or across the world? Here’s what I shared with Lindsay Whipp at the Financial Times:

Ikea has issued a recall of 29m chests of drawers in the US after three children died as a result of its furniture toppling on to them over the past two years.

The recall, which excludes 6.6m in Canada, of its Malm drawers and other designs comes amid a push by the US Consumer Protection Safety Commission to reduce the number of children being killed due to furniture and television tip-over accidents in the country, which now reaches one every two weeks.

Last year, Ikea offered free wall anchoring kits with many of its chests and dressers, after reports of two deaths. However, subsequently a 22-month-old child died in February this year after an Ikea chest fell on to him and crushed him. The chest had not been secured to the wall.

“We have no information of any tip-over incidents with a properly anchored chest of drawer,” Ikea said. “This is why we are committed to raise awareness among consumers of the tip-over risks and how to prevent them.”

Ikea added that there will be a financial impact, including the “significant investment” it is making in its campaign to educate consumers about preventing tip-overs, but not a lasting one.

The CPSC said that in addition to the deaths, there have been reports of 41 incidents of Ikea Malm chests tipping over resulting in 17 injuries, all children aged between 19 months and 10 years old. In addition, there have been reports of 41 incidents of other Ikea chests toppling over since 1989, with 19 injuries and three deaths, according to the CPSC.

Experts were divided about whether the recall — the biggest furniture recall in the US — could prove damaging to Ikea in North America, an important market for the company. The Swedish group has 3.8 per cent of the furniture retailing market, trailing Bed, Bath and Beyond, in an extremely fragmented market, according to Euromonitor data.

Neil Saunders, a retail analyst at Conlumino, said he did not expect long-term reputational damage as the issue had been going on for some time. He said that while the products could be made safer the company had indicated it had been trying to solve the problem and had not been negligent.

But Dean Crutchfield, an independent branding expert, said that while the deaths occurred in North America, the company should also recall the chests elsewhere in the world. He added that it was not enough that the manual in the UK, for example, advised customers to secure the chest against a wall.

“[What has happened is] an utter outrage for a brand that is about inclusion, warmth and is so widely recognised,” Mr Crutchfield said. “It can destroy a reputation. It says something about the management of Ikea that reflects on its brand.”

Elliot Kaye, chairman of the CPSC, said that Ikea had co-operated with the organisation and pledged to sell only dressers that comply with the most recent performance standards. He warned that other retailers should take heed.

“[Any company] failing to do so should pay close attention to the details of this recall, as they should expect to be hearing from us,” he said. “CPSC will seek recalls of other brands that pose an unreasonable tip-over risk to innocent children.”

Ikea had repeated a safety warning earlier this year about the accidents involving its Malm chests.

Former Subway Pitchman Jared Fogle to Plead Guilty in Child-Sex Case

Screen Shot 2015-07-09 at 8.41.18 AMWhat should Subway do to mitigate the circumstances? Does it wait or react. Here’s my POV with Julie Jargon the WSJ:

Lawyers representing Mr. Fogle said he had accepted responsibility for his actions. “Jared also understands that he requires significant psychiatric medical treatment and counseling,” they said in an emailed statement. Mr. Fogle has begun that process, they added, by being examined by an expert in sexual conditions and it is his “intent and goal to become healthy again.”

A lawyer for Mr. Fogle’s wife, Katie Fogle, said his client was shocked by the charges and is seeking a divorce.

Subway last month suspended ties with Mr. Fogle after a raid by federal authorities of his home in Zionsville, Ind., an affluent suburb of Indianapolis. A spokeswoman for the company, owned by Doctor’s Associates Inc., said it had no further comment on Wednesday and had “already ended our relationship with Jared.”

The situation is widely expected to cause Subway to shift its marketing practices by relying less on any single spokesman, a step other companies are likely to follow, according to marketing consultants.

“I think this event will create a great deal of soul-searching among other advertisers that use spokespeople,” said Steve Rivkin, founder of marketing consultancy Rivkin & Associates LLC. “The morals clause in these agreements likely will have stronger language going forward to provide for a quick separation in the event of trouble.”

The Subway spokeswoman declined to comment on the company’s marketing strategy.

Law enforcement officials raided the home of Subway restaurant spokesman Jared Fogle July 7 without providing any information about the reason for the raid. Subway later announced that it had suspended its relationship with Mr. Fogle. Photo: AP

Prosecutors said Mr. Fogle received child pornography from Russell Taylor, executive director of Mr. Fogle’s nonprofit Jared Foundation. Mr. Taylor was arrested earlier this year and charged with multiple counts of production of child pornography. A lawyer representing Mr. Taylor declined to comment.

Court documents detailed how Mr. Fogle’s alleged crimes extended well beyond his relationship with Mr. Taylor. Prosecutors said Mr. Fogle solicited underage girls for sexual acts, including meetings at the Plaza and Ritz-Carlton hotels in New York City. Mr. Fogle at times scheduled work travel around meetings for sexual encounters and sent text messages to escorts to help him arrange meetings with girls as young as 14 years old, according to federal authorities.

Though many marketers have suffered embarrassment when their famous spokespeople have run into trouble, few companies’ brands are so closely intertwined with one person as Subway’s has been with Mr. Fogle.

The chain of more than 27,000 U.S. sandwich shops began featuring Mr. Fogle in commercials in 2000 after the then-college student claimed he had lost weight by exercising and adopting a diet of Subway sandwiches. Mr. Fogle became known as “the Subway guy” and appeared in more than 300 commercials for the brand.

His weight-loss story helped fuel the company’s sales for years and contributed to its image as a healthy, convenient place to eat.

Mr. Fogle’s role was unusual because most brands use people who already are celebrities to pitch their products, while Mr. Fogle’s celebrity was created by Subway.

Wendy Patrick, a business-ethics lecturer at San Diego State University, said Mr. Fogle also was unusual in that he was held up as a role model for others seeking healthier lifestyles. “Role models are held to a higher standard than typical celebrity spokesmen. That’s really what distinguishes Jared from other people,” she said.

Some branding experts said Subway likely will shift the focus of future marketing messages to its food.

“I would be surprised if they went with another spokesperson or ‘spokes animal’ or anything like that because of the inevitable strong comparison that would be made to Jared,” Mr. Rivkin said. “Since they stood for so long for fresh and healthy food, I think they’ll return to that in their advertising.”

Other experts said they believed Subway should quickly introduce a new face as a spokesman for the brand to help consumers forget about its association with Mr. Fogle. “The last thing they should do is remain quiet…[Mr. Fogle] needs to be replaced with someone new,” said marketing consultant Dean Crutchfield.

There are signs that Subway is tweaking its approach to advertising. The company’s longtime marketing chief, Tony Pace, stepped down late last month, although he said his departure had nothing to do with Mr. Fogle’s problems. The day after Mr. Pace’s announcement, Subway said it was conducting a review of its creative advertising, according to Advertising Age.

The episode involving Mr. Fogle comes as Subway is trying to rebound from one of its biggest slumps. Years of rapid restaurant growth, increased competition from upstart sandwich shops and recent concerns about the quality of Subway’s food have crimped sales at the 50-year-old company. Revenue at its U.S. restaurants fell 3.3% to $11.9 billion last year, the first decline in more than a decade.

Still, Subway’s swift action to suspend ties with Mr. Fogle may have spared the company from lasting damage from the scandal, according to marketing experts.

YouGov BrandIndex, a research service that interviews 4,500 people from a representative U.S. population sample each weekday, said consumer perception of Subway dipped a little bit after news broke of the raid of Mr. Fogle’s home, but remains high.

In early July, 47% of adults who were polled said they would consider buying their next fast-food meal at Subway. Over the next 30 days, that figure dropped to 44%. It is now back up to 45%, still higher than most other fast-food chains, including McDonald’s Corp. Subway is a client of YouGov BrandIndex.

Written by Julie Jargon at julie.jargon@wsj.com and Mark Peters at mark.peters@wsj.com

Screen Shot 2015-07-09 at 8.41.18 AMWas Subway’s decision to jettison its longstanding and successful relationship with Fogel? What’s the likely fall out? What do you think? Was it too fast too soon? Here’s what I shared with Eliott McLaughlin over at CNN:

What’s your view?

Can Nostalgia Pay Off for KFC and McDonald’s?

Noimages-10stalgia is a hard concept to explain especially to a young audience that prefers forward facing purpose driven brands including fast food. Here’s what I shared about McDonald’s return of The Hamburglar and KFCs revitalization of the Colonel with Sydney Ember at The New York Times:

http://www.nytimes.com/2015/05/23/business/media/hamburglar-mcdonalds-colonel-sanders-kfc.html?_r=0