Background to the problem

Woolworths is the largest retail industry in Australia and second largest organization in terms of annual revenue (Woolworths.com.au, 2017). In recent times, the concerned organization operates in over 1000 stores, 968 supermarkets and 19 convenience stores across Australia (Woolworths.com.au, 2017). Total of 111,000 employees are currently working under Woolworths and the organization is liable for earning annual revenue of AUS$ 39,588.8 million (Wow2016ar.qreports.com.au, 2017). The problem statement of this research will highlight the issue of the product safety at Woolworths that seem to be breached by Woolworths. The company has formulated some product safety requirements based on Australian Consumer Law (Woolworths.com.au, 2017). They also have a checking security process of clear and defined products approval that comprises of factory auditing, product testing and inspection of the products. The issue is that in spite of all these policies, the concerned organization made false or misleading representations on the safety aspects on their three products- Abode 3L Stainless Steel Deep-Fryer, Homebrand Safety Matches and Woolworths Select Drain Cleaner (ABC News, 2017). The issue was reported in the year 2016, when one of the customer suffered a nose bleed and burns from the product ‘Select Drain Cleaner’ and three other customers burned by the drain cleaner (Australian Competition and Consumer Commission, 2017). Apart from the mentioned 3 products, injuries are also reported from other two products that are padded flop chair and a folding stool (Australian Competition and Consumer Commission, 2017). It was found that the padded chair could not reliably support more than 92kg and they claim that the product can bear the weight of 115kg (Australian Competition and Consumer Commission, 2017). The first case of making false or misleading representations was found in the year 2014 against some home-brand products like- child-proof lid and self-igniting safety matches. However, the company continued to sell the faulty products even after injury reports. The Australian Consumer Law have found that Woolworths engaged in misleading and deceptive conduct and thus the organization have to pay total penalties of $3.057 million for the issue occurred in 2016 (Australian Competition and Consumer Commission, 2017). This results in poor brand image and loss of customer’s loyalty and annual profitability.

Thus, the issues that will be the major research aspects are:

• The gap between the existing product safety requirement policies developed by the organization and their actions
• Misleading products information that impacts the customers health and their loyalty towards the organization

Management decision

• How can Woolworths re-build brand loyalty for their home products?
• How can the organization improve their products safety regulation to avoid such circumstances in future?

Research question

• What are the factors that influence brand loyalty?
• What are the essential factors that can enhance the effectiveness of the existing products safety requirements?

Research Objectives

• To find out the aspects the Woolworths has included in the products safety requirements
• To evaluate the effectiveness of these products safety requirements
• To explore the impact of false safety guidelines on organization’s image and customer loyalty
• To identify the factors that can help Woolworths to improve their brand loyalty

Reference List

ABC News. (2017). Woolworths ordered to pay m over product safety concerns. [online] Available at: https://www.abc.net.au/news/2016-02-05/woolworths-ordered-to-pay-3m-over-product-safety-case/7144442 [Accessed 13 Aug. 2017].

Australian Competition and Consumer Commission. (2017). Woolworths misled consumers over product safety hazards – Ordered to pay over $3 million in penalties. [online] Available at: https://www.accc.gov.au/media-release/woolworths-misled-consumers-over-product-safety-hazards-%E2%80%93-ordered-to-pay-over-3-million-in-penalties [Accessed 13 Aug. 2017].

Woolworths.com.au. (2017). Shop-Discover-About-us-Product-safety. [online] Available at: https://www.woolworths.com.au/Shop/Discover/about-us/product-safety [Accessed 13 Aug. 2017].

Wow2016ar.qreports.com.au. (2017). Woolworths Resource Report. [online] Available at: https://wow2016ar.qreports.com.au/xresources/wow16ar-financial-report [Accessed 13 Aug. 2017]