The State of New York announced this week that it is suing national pharmacy chains CVS (CVS) and Rite Aid (RAD). Allegedly the NY outlets of these pharmacies had a bad habit of leaving food, medicine, and baby formula on their shelves well past the products' expiration dates.Most recent lawsuits and judgments against major retail chains >>
Certainly in every "Retailing 101" book there is a chapter on rotating perishable products. And certainly those basic rotation practices couldn't be more important than they are for the types of products sold in a pharmacy. CVS and Rite Aid employees certainly must have received this news in their new hire training. So how could such a basic operational infraction occur in such consistently large proportions?
It might be the same thing that happened with Southwest Airlines before they grounded 44 planes in March which hadn't received the required inspections and maintenance. It might also be the same thing that happened when physical appraisals were replaced by cursory reviews and computer comparisons in the home mortgage approval process at Washington Mutual.
Cutting corners is just not a good business practice. It's different than cutting back, which is a necessary scaling down in response to business demand. Cutting corners, by contrast, is sacrificing quality by doing something cheaper or quicker. In a panic to keep pace or survive, businesses can't afford to confuse cutting back with cutting corners. The consequences of that confusion could be dire.
Losing flight revenue for 44 planes for a day like Southwest did is bad. Defending yourself against consumer fraud lawsuits like CVS and Rite Aid are now doing is bad. Losing $24 billion, 3,000 employees, and 12 years of stock value like WaMu did is really, really bad.
But, if you add all of those consequences together, it's still not as bad as losing your reputation, the integrity of your brand, and your customers' trust. Just ask Arthur Andersen. In all industries, believe it or not, some things are more valuable than money.More Lawsuits and Judgments in the U.S. Retail Industry >> Trending Retail Topics | Free Retail Newsletter | E-mail Quote of the Day
| Pinteresting Retail Pins | Follow on Twitter | "Like" on Facebook |