Act Quickly — And Carefully

To ensure a quick, efficient and effective response to store brand product recalls, retailers need to consider five best practices.

Significant sales growth for private label products in supermarkets, mass merchandisers and drugstore chains, combined with an increasingly stringent regulatory landscape, are increasing the recall risk and liability for retail executives responsible for protecting store brands. With store brand dollar share at an all-time high, consumers have more and more store brand products in their pantries, refrigerators and freezers.

Retailers have always been in a unique position during a recall. They are usually the most immediate consumer-facing communicator — a responsibility that demands quick, efficient and effective response. Even when not responsible for the manufacture or distribution of the recalled product, retailers are responsible for all products on their store shelves. And that accountability is exponentially increased when the retailer also operates its own manufacturing facilities for store brand products.

Whether a company is solely a retailer or is both a retailer and private label manufacturer, it must adhere to the recall process as structured by the regulatory agency. With the agency's recall lifecycle in mind, the retailer should consider five best practices: communicate, offer an appropriate recall remedy, document the recall process, ensure removal of affected product, and dispose of the product.

Communicate

Whether responding to a recall by a third-party supplier or managing recalls of private label products, retailers are the "face" of the recall for regulatory and consumer audiences.

Honest and transparent communication must begin with regulators. Then the company must turn its focus to identifying and promptly notifying all affected parties, from consumers to manufacturers, distributors and individual retail locations. When dangerous or defective products pose a risk to public health or safety, companies must communicate immediately and effectively. As one executive of a major food company has said more than once, speed is the most important element in recall communications.

Public recall communication becomes even more critical when a retailer also is a private label manufacturer. In addition to consumer messaging such as appropriate signage on store shelves, at the point-of-purchase and on any community boards, private label manufacturers now must send the initial recall notification, manage consumer inquiries and answer requests for information.

Offer an appropriate remedy

An appropriate recall remedy is essential to earning the recall response rate necessary to meet regulatory requirements.

If you are a retailer selling products under your own label, you must be ready to supply an appropriate recall remedy of your own — one that considers more than just a repair or replacement product. You may need to take an extra step and give consumers some sort of incentive to respond to ensure full recall compliance is achieved. Some companies may provide coupons for additional merchandise on top of a full refund for the recalled product.

Document the recall process

Recall documentation is a tough, labor-intensive process. But it is essential to proving effective recall management and closing out the recall efficiently. In this increasingly strict regulatory environment, private label manufacturers, retailers that manufacture some of their own products, and non-manufacturing retailers all must document more than just the product removal process. Recall documentation should occur at every stage of the recall lifecycle and include the exact date of the initial notification, the date and time specific locations were notified, the amount of recalled product received and processed, the date and method of disposal — and everything in between

Comprehensive documentation should be kept in a central data repository that will satisfy regulatory requirements and help you close out the recall as soon possible, and also help to mitigate future litigation risk and liability. While the non-manufacturing retailer could ultimately hold the manufacturer responsible for certain expenses, the owner of the store brand is still a responsible party.

Ensure removal of product

Retailers selling private brands must manage the full "reverse logistics" process through storage and disposition, which means they must ensure all affected products are collected from consumers and removed from all store locations, distributors and warehouses, as well as the manufacturing facility. Retailers also should conduct effectiveness checks at every location to ensure all recalled product is off the shelves and removed from inventory storage.

One way to prepare for success is to put into place a recall plan that can be implemented successfully by recall coordinators at each step along the supply chain.

Dispose of the product

In some cases, such as in recalls involving food products, a recalled product simply may be discarded. But certain household goods and consumer products might have to be stored until they are eventually destroyed at the end of a recall.

This process requires retailers to have a way to quantify, qualify and quarantine every affected product, adding additional documentation responsibilities for the processing, segregation and storage of recalled products.

Each of these five critical steps should be included in every recall plan. All retailers should have appropriate plans and procedures in place to manage a recall — which means training employees at each store location, as well as those employees who manage retailer-run manufacturing and distribution facilities, PGSB