Toxic sofa' lawsuit hits Homebase and Argos

Article from: 
UK
Thu, 29/04/2010 - 15:23

The negative publicity surrounding the recent 'toxic sofa' lawsuit involving Homebase and Argos (both part of the affected Home Retail Group) has coincided with the two high street retailers' 'Reputation' and 'Buzz' BrandIndex scores taking a hit.

On April 26th, a High Court judge ordered both Homebase and Argos, along with other retailers including Walmsley's, to pay out £20million to victims of the injury-inflicting sofas. Thousands of customers who bought the sofas and subsequently suffered injuries such as rashes, burns, sores and even blood poisoning, are now in line for a payout.

'Reputation' is one of six key measures used to create a brand's index, and is measured by asking people which companies they would be proud or embarrassed to work for. 'Buzz' is gauged by asking people if they have heard anything positive or negative in the last fortnight about any of the brands. A net score is reported (positive minus negative mentions).

It seems the 'toxic sofa' case has had an effect on the two big home furnishing brands. In particular, Homebase has seen its BrandIndex 'Reputation' fall from 11.7 on April 13th to 7.2 on the 27th. As the graph below displays, Homebase's 'Reputation' has fallen over the past two weeks by 4.5 points.

And Argos has not escaped the public's condemnation. As the graph below illustrates, Argos's 'Buzz' score has fallen from 16.9 on April 13th to 14.2 on the 27th. It did see a rise to 18.5 on April 14th, perhaps because of rumours of a takeover of the Home Retail Group by Asda (which saw share prices in the Group rise by five percent on the 12th) but has since fallen by 4.3 points.

Time will tell whether the settling of the court case and the compensation payouts will succeed in raising the brands' measures on BrandIndex any time soon.

Homebase 'Reputation' scores
Chart Image
Argos 'Buzz' scores
Chart Image
Ranking Home
People Illustration