CSR Initiatives a Strategic Imperative by Supermarkets - Essay Example

CSR initiatives – a strategic imperative by supermarkets Consumer consciousness has forced the companies and the supermarkets to review and assess how they conduct business. The voluntary adoption of policies of corporate social responsibility (CSR) is spreading in the private sector in response to consumers and other stakeholders in the society (Fliess, Lee, Dubreuil & Agatielo, 2006). Companies on their part pursue CSR as a strategy because it fetches them reputation advantage, competitive advantage and cost-related advantage. To understand factors that are most important to the consumers when they shop at the supermarkets, a study was conducted by Mintel in 2008 (Appendix A). The data collected through the report is available in the chart below. The data from this chart has been used through line and column charts while discussing the findings of the activities that the supermarkets conduct at their stores. In the supermarkets consumer define themselves with the product they buy. Consumers care about the children’s health, about the British farmers, packaging waste and carrier bags (Marketing, 2008). CSR is becoming a driver of loyalty and to retain consumers, more and more supermarkets are entering into this strategy. CSR as a strategy benefits the staff, the consumers and the suppliers alike. The National Consumer Council has launched a Health Responsibility Index which influences the in-store promotions and shelf space dedicated to healthy foods (In-Store, 2005). Waitrose emerged as the most health-conscious food retailer. A report of several supermarkets showed that where consumers shop can have an impact. The report found that retailers that have more of low-income shoppers do not pay attention to the standards as required. Supermarkets command a powerful position on the high street and they can dictate how people live their lives and how their suppliers should run their business (Anonymous, 2008). Morrisons is following the strategy of Marks & Spencer’s and has launched the first consumer facing CSR programme called “Today” (Bokale, 2008). It communicates the retailer’s ethical stand in a straight and down-to-earth manner. Morrison sis trying to reduce the environmental impact of its carry bags by 25% as through this initiative they would give away 10m reusable plastic carry bags. The retailer is also communicating the message to the consumers that they are taking such initiatives. This initiative holds value because 8% of the people surveyed have ranked recycled and reusable packaging as number 1 important factor when shopping at supermarkets as is shown in the column chart below. The Charity of the Year at Morrison’s is “Breast Cancer” which has been advertised at the store entrance (Jones, Comfort & Hillier, 2007). Pricing is a factor to which all the food retailers stress their commitment to the customers and most of them post this on the internet. They emphasize that they are providing value for money and Tesco also advertises this stand at its stores. They have set up banners, posters and shelf edge stickers that advertise price reductions and “buy one get one free” offers at prominent places within the store (Jones, Comfort & Hillier, 2007). Tesco, ranked third among the top ten retailers, has set up banners at the entrance proclaiming that the company supports “British Produce” which has been found to be the top priority in CSR by most consumers as per the survey results charted in the column chart below. Their organic produce is mostly shelf labeled. Some of the packaging on Fairtrade products contains information about the producers. They emphasize on health eating and have set up a Tesco Healthy Living Club. They are trying to ensure healthy eating starts at the infant stage and they focus on the goodness of fruits and vegetables. Another retailer, Co-op, employs other CSR strategies such as Fairtrade, support for local producers, healthy eating, organic products, waste recycling, and taking initiatives to support the local community (Jones, Comfort & Hillier, 2007). These factors have been ranked first by a good percentage of people specially factors such as supporting local producers and organic products. It also suspended colourful banners from the ceiling giving examples of the company’s local and regional suppliers. They have published a book entitled “Local Harvest Update” which provides features and photographic images on twelve local producers. Co-op engages in fair-trade and the packaging is around their own Fairtrade products containing pictorial information about the producers. Co-op is perceived as an ethical and socially responsible brand and this influences store choice by shoppers (Megicks, Memery & Williams, 2008). At Waitrose too, emphasis is on ethical trading, local producers, organic produce, food quality and labeling. They use shelf edge marking and distribute information leaflets in the stores to emphasize their commitment to these CSR activities. They use banners and posters in a very limited manner but they do display that “the birds are kept in small, purpose-built houses powered by wind and solar energy”. They also provide information about the producers on the packaging. Waitrose has set up a Waitrose Foundation to improve the lives and working conditions of the workers in South Africa that who are engaged in growing and picking citrus fruits. This information is available to the consumers on the information leaflet. Sainsbury’s has an “Active Kids” programme to promote sports and leisure activities within local schools (Jones, Comfort & Hillier, 2007). They do mark organic and fair-trade products but their CSR themes are much less than Tesco, Waitrose and Co-op. M&S marks its organic produce with shelf edge labels and has no other prominent CSR theme. Asda has prominently marked its Halal meat range while some smaller retailers such as Spar and Somerfield Stores focus only on price benefits and “Buy one get one free” offers. Jones, Comfort, Hillier and Eastwood (2005) actually tried to find out the extent to which these supermarkets or the food retailers implement their CSR claims. As far as sourcing is concerned, which is one of the major factors that concerns the consumers, the food retailers recognize that distance and the existence of political and regulatory regimes make the process complex. Sainsbury expects the suppliers to respond to the competitive environments in which Sainsbury operates. Most retailers claim to engage in Fairtrade but Co-op is the market leader because they actually stock wide varieties of coffee, teas, cakes, chocolates, fruit juices and wine. M&S is trying to reduce the amount of pesticides and dyeing used in food products and they are trying to balance the need for sufficient quantities of food against environmental concerns. Waitrose is trying to redesign and reduce the packaging costs and reduce packaging waste for consumers. Iceland became the first food retailer in the UK to ban GM foods from its own label products. It had removed all artificial flavours and banned the use of mechanically recovered meat in all its products much before the BSE scare in the mid 1990s. However, all the claims and aspirations of the supermarkets on the issue of CSR may not reflect in everyday operations because of the fierce competitive environment. Supermarkets like Netto, Lidl and Aldi ask customers to pay for their 100% recyclable plastic bags to encourage re-use. The National Consumer Council (NCC) found that while most supermarkets are trying to become environment –friendly on issues such as sustainable fishing and reducing the Carbon-dioxide footprint, not a single supermarket has improved in all the areas (Gough, 2008). The even the top supermarkets such as Waitrose and Co-op have failed to implement the basic measures in every store. Most of the supermarkets are members of the Ethical Trading Initiative (ETT) but the membership is not enough. The supermarkets have not been able to take initiatives to implement the changes. While supermarkets claim to be serving the community, their presence drives the smaller retailers out of market. Tesco claimed that they were not squeezing profits from the suppliers but still the Federation of Small Business found that nearly 2000 independent retailers go out of business every year. This is because the supermarkets are able to sell things at no mark-up. They are trying to be competitive but in the process it is unfair to the smaller independent retailers and businesses. Thus, in conclusion, the main CSR activities at the supermarket focus on Fairtrade, organic produce, local suppliers, healthy eating and community issues. The bigger ones are printing all information in leaflets and distributing leaflets in the stores. Tesco even provides information on their website. The findings corroborate with the research conducted by Mintel on the elements that are important to consumers on the food and drink sector. This is because the supermarkets believe that integrating CSR into their business provides them with long term growth and greater security. However, not all claims are actually implemented as they do have to give in to the competitive business environments. Bibliography Anonymous. (2008). Do supermarkets need CSR policies more than other retailers? Anonymous. Marketing. London: May 21, 2008. pg. 24, 1 pgs Bokale, J. (2008). Morrisons emulates M&S with first environmental strategy. Marketing (00253650); 5/14/2008, p1-1 Fliess, B., Lee, H., Dubreuil, O.L., & Agatielo, O. (2006). CSR AND TRADE: INFORMING CONSUMERS ABOUT SOCIAL AND ENVIRONMENTAL CONDITIONS OF GLOBALISED PRODUCTION. Retrieved online 14 may 2010 from http://oecd.org/tad Gough, V. (2008). Supermarkets in the dock for CSR strategies. Retrieved online 14 may 2010 from http://www.mycustomer.com/item/133794 In-Store. (2005). Waitrose tops index of healthy retailers. In - Store. London: Jan 2005. pg. 8 Jones, P., Comfort, D., Hillier, D., & Eastwood, I. (2005). Corporate social responsibility: a case study of the UKs leading food retailers. British Food Journal. 107 (6), 423 Jones, P., Comfort, D., & Hillier, D. (2007). Marketing and corporate social responsibility within food stores. British Food Journal. 109 (8), 582-593 Marketing. (2008). Do supermarkets need CSR policies more than other retailers? Marketing (00253650); 5/21/2008, p24-24 Megicks, P., Memery, J., & Williams, J. (2008). Influences on ethical and socially responsible shopping: evidence from the UK grocery sector. JOURNAL OF MARKETING MANAGEMENT. 24 (5/6), 637-659. Appendix A Food Provenance - UK - March 2008 - What Do Shoppers Consider Most Important? Figure 7: Factors in food and drink purchases, by rank, December 2007 Foreign origin of product (eg New Zealand lamb, French goats cheese) British origin of product (eg Devonshire cream) Organic Free range/ animal welfare Non-GM Fair-trade Free From… Bio-degradable/ compostable/ recyclable Natural/ whole-foods Food mile infor-mation % % % % % % % % % % Rank 1 11 31 24 28 21 12 18 8 27 9 Rank 2 17 23 22 29 17 22 17 18 21 15 Rank 3 20 17 18 21 18 20 14 16 16 12 Rank 4 18 10 10 10 16 17 13 12 12 11 Rank 5 11 6 9 5 11 11 12 12 7 15 Rank 6 8 3 6 2 8 8 4 11 5 12 Rank 7 5 1 4 1 3 3 8 12 3 9 Rank 8 3 2 1 - 3 1 4 6 1 10 Rank 9 1 - - - 1 1 4 2 1 2 Rank 10 2 - - - - 1 2 - - 3 Not ranked 3 7 6 4 2 4 4 2 7 1 Base: 1,000 Internet respondents aged 16+ Source: Ciao/Mintel, (2008) Read More