- More than 70 per cent of consumers are willing to pay an average premium of 16 per cent over standard prices for products that achieve exemplary safety standards.
- Consumers now place product safety above brand in purchasing criteria and demand increased transparency in safety labelling
- Over half of consumers have experienced unsafe products in the last five years
- Companies conduct an average of 10 product recalls in the last five years alone, at a cost of nearly 10 per cent of revenue
- Despite improvements to product safety practises over the last five years, over half of manufacturers, distributors and retailers are still unable to trace components through their supply chain and half cannot gaurantee their supply chain meets product safety requirements.
Perceived cost barriers to improving product safety are unfounded, indicates new independent global research released today by TÜV SÜD, one of the world’s leading providers of testing, inspection and certification services. The study, named the TÜV SÜD Safety Gauge , to the contrary suggests that escalating consumer demand coupled with substantial annual recall costs, mean investing in enhanced product safety should not only improve consumer wellbeing but drive commercial success. The research is the first to investigate product safety practices alongside consumer attitudes and experiences in the consumer electronics, children’s products and food sectors.
Economic Benefits of Improving Safety
On average, companies surveyed as part of the research estimated they would need to increase production costs by 19 per cent to achieve the highest safety standards available. At the same time, however, they admitted with current standards in place they have had to conduct an average of 10 product recalls in the last five years alone at a cost of nearly 10 per cent of revenue. Responses from consumers also supported the notion that improving safety standards makes commercial sense by stating safety is one of the most important criteria when purchasing a product, above brand. Nearly all (77 per cent) also said they are willing to pay an average premium over standard prices of 16 per cent for products that achieve exemplary safety standards.
Ishan Palit, Chief Executive Officer, TÜV SÜD Product Service Division, said: “The results indicate companies are overestimating the cost required to achieve exemplary safety standards. From our experience, attaining the highest safety requires significantly less than an increase of 19 per cent in production costs. Furthermore, in some instances, increases in production costs are not required at all. For example, many companies we work with have improved the safety of their products by tightening the quality and safety requirements imposed on suppliers, and thereby improving the safety standards throughout the entire value chain. It is beneficial for all companies to investigate the potential for implementing such initiatives, bearing in mind the cost of product recalls extends beyond the physical act into reputational damage and reduced future sales.”
Consumers Are Driving Legislation
The TÜV SÜD Safety Gauge also indicates concern from consumers around product safety is mounting, with two thirds (63 per cent) of those surveyed stating that product safety is very important to them now, up from half (47 per cent) in 2007. This appears to be having a spill-over effect with Government’s looking to tighten their legislation in response, as 58 per cent of the consumers surveyed do not think that penalties imposed on companies failing product standards are strict enough. Consumer concerns are shown to be particularly high when purchasing products online (57 per cent more concerned about product safety when buying online than in-store).
In addition, consumers called for increased transparency in product safety labelling. Nearly one third (29 per cent), for example, said they don’t understand product safety labels at all at present, suggesting companies that adhere to high standards could achieve a competitive advantage by more clearly communicating their products enhanced safety on packaging. Furthermore, 51 per cent of consumers stated they have experienced unsafe products in the last five years. Cuts from sharp edges (24 per cent), allergic reactions (21 per cent) and injuries from product design (18 per cent) were the most common causes.
The Current State of Safety
Encouragingly, the study suggests significant improvements to product safety practices have been made over the last five years in major manufacturing markets across the world. However, it also reveals more than half (56 per cent) of organisations are still unable to trace all components in their products throughout their supply chain and almost half (47 per cent) cannot guarantee that the entire supply chain meet product safety requirements.
Ishan Palit, Chief Executive Officer, TÜV SÜD Product Service Division, said: “The complexity of modern supply chains in terms of both depth and geographic reach has made it increasingly difficult for organisations to trace all of the components in their products. However, complete traceability is not impossible and must be pursued because the first step to solving an issue is identifying the source of the problem.”
The research findings indicate that companies still have a long way to go when it comes to improving product safety measures, with one third (30 per cent) agreeing that their own company’s awareness of safety practices is low and nearly half (47 per cent) believe product safety is a serious issue in their industry. In addition, half of manufacturers, distributers and retailers do not undertake any form of independent testing on their products (50 per cent), despite the fact that more than 80 per cent of consumers consider 3rd party testing important.
Palit concluded: “Companies are working hard to improve product safety. However, the results of this research indicate that the issues highlighted such as limited component traceability, independent testing and awareness of basic safety practices are common across major manufacturing hubs. Hopefully this study will go some way to helping organisations understand that high product safety levels not only enhance consumer wellbeing but add genuine value to products and mitigate risk. These attributes are essential for remaining competitive and profitable in today’s fragile economic times.”
The research was undertaken in the United States, the United Kingdom, China, India and Japan – markets that represent almost half (47 per cent) of worldwide Gross Domestic Product. It included surveys of more than 5,000 consumers and 500 management-level employees in manufacturers, distributers and retailers that operate in the food and beverage, children’s products and consumer electronics industries.