Should retailers be transparent with customers about their financial performance?

As with many industries today, the retail sector has been experiencing a period trend of transparency. Customers are beginning to care where their clothing is made, what it is made out of, and who it is made by. This trend of transparency brings many to question, should retailers be transparent with customers in regards to their financial performance?

Such transparency could potentially be beneficial in a few ways. First off, transparency builds trust. With customers wanting to know as much as possible about the products and the brands they consume, adding in another dimension of transparency could further their trust of the brand and allow them to become more invested in it. In addition, if the retailer’s financials depict substantial growth in the company, this could affect the customer’s consumer behavior positively. Knowing the retailer is going through a period of exponential growth could make a customer infer it is a popular brand amongst consumers and make them want to shop there too or simply continue to shop there.

However, this may have the opposite effect if the retailer is experiencing slowing sales and even- in the case of many department stores- considerable declines. For example, department store giant, Macy’s, has been experiencing constant declining sales, in which they expect to continue this year. This announcement can lead consumers to question the popularity of the store and whether they should still shop there as well. This situation is fairly similar for most brick-and-mortar and/or traditional retailers.

With this, I would say financial transparency may not be the best idea for retailers who have not dominated the e-commerce domain such as Amazon, who’s growth is projected to explode over the next few years. However, with many of these retailers being publically traded, it seems as though transparency is their only option.

Source:

http://fortune.com/2017/02/21/macys-results-decline/