Benefiting From Virtue
By
Bernice Hurst, Contributing Editor, RetailWire
Greenwash
is a new 21st century
word that has rapidly entered the general vocabulary. As more businesses
wave the flag of corporate social responsibility, scrutiny has frequently
generated skepticism. But it isn’t all about looking good. Many businesses
really are doing good.
Examples
given by The
Times in
the U.K. include farmers, chefs, and food manufacturers. Jordans Cereals,
for example, have been distributing “bee-friendly plants, lavender and
rosemary, and seeds for flowers that will help to feed the insects.” They
are also supporting exhibitions to teach people about bees and “the ways
they help human beings, not least by pollinating our plants.” As a marketing
tool, the program highlights the wholefood company’s so-called eco-credentials
as well as its own, and its customers’ dedication to practicing what it
preaches. “Consumers like the fact that they are supporting British farmers,
wildlife and countryside,” said founder Bill Jordan.
Bees
are also being looked after by honey-producer, Rowse. In this case, seeds
are being distributed but funding is also being contributed for research
into varroa, the disease believed to be causing global devastation to the
insects. Along with the British Beekeepers’ Association, Rowse has persuaded
the government to make a considerable contribution to research into the
problem.
Rowse’s
chairman explained their intentions by saying, “It wasn’t a commercial
opportunity, it was a genuine need…If we’d just sat there and done nothing,
it would have been a bad reflection on us. It’s not just about honey, it’s
about pollination. The environment is a jigsaw and this vital piece is
missing.”
The
Times explains
several other schemes linking food businesses with their communities
to create long-lasting win-win relationships. Thus one good deed leads
to another, creating a virtuous circle. Retailers supporting the projects
and those behind them will be squaring the circle by completing what
may seem to be an impossible task. By demonstrating to consumers that
their efforts are genuine and far more than greenwash, they could be
the real winners for a long time to come.
Discussion
Questions: Is the goodwill payback from consumers from do-good efforts
by companies more significant in the current climate than it was before
the recession started? Do you see opportunities for American food manufacturers
and retailers to benefit financially by creating virtuous circles?
The creation of a truly virtuous circle is a long-term effort. If you’re in it for short-term marketing advantage, you probably aren’t all that virtuous in the first place.
Greening up, sustainability, or whatever you choose to call it, is definitely a point of differentiation between companies these days and an important measure for many consumers. All things being equal in the consumer’s eyes–and I mean price, selection and convenience–why not support those who are trying to save the planet for future generations?
But being that you can only fool some of the people some of the time, you better mean it or your customers will see through it like a plastic grocery bag. Being disingenuous will cost you more customers, and sales, than you gain. I’ve seen it over and over again. It’s easy to spot the phonies.
On the other hand, take a page from Wal-Mart. I don’t think there’s a more successful sustainability program out there. Of course, there are those who don’t buy it. But they have made a Herculean effort to have this strategy pervade their entire organization. It may cost them some money, but people are starting to believe that their motives are unimportant; it’s what they do that counts.
However, let’s face another fact. In this environment, companies have to consider bottom-line implications. You can’t run a sustainability program that bleeds money.
There always seems to be a certain percentage of fringe consumers that will flock to green-washed businesses. There is goodwill payback to food companies but I don’t see it carrying over to consumers outside the fringe group. Most consumers are motivated by hunger and greed, not their conscience.
There’s more concern for green issues, but also more concern for the wallet. So I figure it’s about even. Consumer research I’ve seen says people are leaning to more environmentally friendly alternatives, but for the most part only when it is an alternative without a higher price attached. I agree with Ryan that this is a long-term process, and our industry has never been known for long-term thinking.
The consumer shift to supporting the environment and causes that are good for humanity is real. When consumers are stressed, their focus collapses into the home, the family, and the local environment, over which they still feel a semblance of control. Then, they exert that control by putting their money where their values are. The Shift to this thinking was well on its way in our culture and got a big kick forward from the recession. As a result, so many more are experiencing the satisfaction that comes with doing good by doing good! All generations are now invested, and as long as there are options that involve products and brands people trust, the actions will continue.
The risk is that more and more brands will jump in with inauthentic programs that consumers will sniff out in a second. If too many “fake programs” hit the marketplace, consumer turn-off could be fast and furious. I hope that marketers continue to approach causes with authenticity as their beacon.
I think customers are more sensitive to this issue now more than ever. Having said that, any retailer that doesn’t have a strong community program is lost. I’ve been preaching the virtue of local store marketing for years (here and elsewhere).
My very first act as a store manager way back when before electricity is forever seared in my brain. My first act as manager at a big blue and yellow video store was ordering extra Asian movies and setting up a big TV and VCR at a local Chinese retirement home. My DM was blown away by the idea and it became law in my region.
Retailers rely on the community for business so having community presence is a given. In my retail experience, being virtuous can help drive the bottom line.
Right now, the majority of consumer decisions are based on need and cost. All things being equal, for some consumers the green effort may move them toward a retailer. Different consumers give the nod to charity efforts. At this time, neither will override cost. After the recession ends, the weights may change.
At this point in our economy, feeling good is a cost most can’t bear. If a product that makes one ‘feel’ good costs more or requires a special trip, it’s likely not going to happen with the exception of the ‘elite’ that can afford to do so.
Mr. Mathews points out that it is a long-term proposition. He’s right. For those retailers that take that approach and can afford to–even in moderate ways, they will likely see incremental benefits in the long term.
For now, and at least the foreseeable future, consumers will be buying what they need, at the best price possible, without regard as to how they ‘feel’ about it. Virtue or not, that’s simply the hard cold reality of the economic situation that continues to deepen. This is not to say, however, that most would not accept the proposition of the virtue of the entire realm of potential ‘greenwash’ products and services.
At present, though, I see it way down the list of factors in the average consumer’s value equation. This may be either good or bad, dependent on one’s point of view. However, it’s the reality of the thickness of their wallets. In my region, they continue to grow thinner each month with no hope of otherwise.
Plain and simple, the idea of being a good and responsible citizen extends to brands and companies as much as it applies to people themselves. While not everyone is a good citizen, fortunately there are those that are. Same is true for companies and brands. Some are better than others when it comes to being ethical and responsible members of their communities.
In terms of business, companies and their virtues don’t apply equally to all customers. There are those that will be more engaged and valuable because of what companies do to help their communities and those for whom those activities have no bearing.
The biggest frontier of opportunity is likely customer segments where there is mixed levels of engagement both with the company and its community actions. This is where a company’s actions might indeed be a valuable tie-breaker for a lot of customers…really moving the needle and generating ROI.
Many brand marketers and retailers are trying to integrate sustainable initiatives into their longer-term business planning. For most, it is thinking about the choices available and considering the longer-term implications. Creating community-based relationships can work for everyone–tying produce procurement into local farms, and talking about it.
Partnering with local causes and agencies is always a good thing to do. Supporting suppliers who are finding ways to make their processes more sustainable–from energy and raw materials used to shipping efficiently. Being truthful in representing these initiatives is essential; greenwashing is easily discovered and sent across the social networks.
There is a payoff in letting consumers know that these things matter.
If we learned anything from the events leading to the recession, it’s that systems that aren’t sustainable fall into ruin. If anything, the economic collapse may have been an appropriate metaphor for the environment. In short, greed kills.
I think we’re in an extremely transitional state right now. Manufacturers, retailers and consumers are all trying to find their respective values on the subject. And as with all things, in the end their will be a spectrum of positioning. Only when we reach the point where “environmentally responsible” products become as expected by the consumer as “non-carcinogenic” products are will we have arrived.
The circle-of-virtue concept is interesting because it really goes to the core values of the company in the first place. If a company lacked strong values up to now, the green movement won’t help them.
Scanner is, in my opinion, dead on.
Right now, the consumer is scared to death as evidenced by well over a year of consistent, broad-based falling comps. Even those who can afford it are not spending (take a look at Neiman’s sales performance). More specifically, look at Whole Foods–negative comps, reduced opening store opening schedule, etc. Their core values and primary value proposition is doing good. What sums it up best, in my mind at least, is that Whole Foods is now being referred to as “Whole Paycheck” around the country.
There is no question that, on the margins, a solid program of doing good in the community can help build customer loyalty. At the moment, however, it is a large investment with highly questionable payback. Now is not the time.
Corporate social responsibility programs are either a self-serving wallpapering over cracks in the corporate image or evidence of innate virtue. As the comments above suggest, it depends mostly upon the world view of the observer.
From my perspective, more evolved companies that define and live by a set of core values are more likely to hew to standards of corporate citizenship compared with others who ascribe to a more narrowly defined profit ethic.
I’ve got nothing against profits, mind you, or shareholder value for that matter. But investment in genuine CSR must by its nature take a longer term, more holistic view.
Why support honey bee research or any “green” cause if you’re in the CPG business? Because a crop crisis would create economic chaos (bad for business) while a stable agricultural base supports a healthy and vibrant world (good for making money).
There are a lot of people who consider themselves “green” and want to live, and help others to live, a lifestyle which is gentle on the environment. But there is a noticeable emerging schism in what it means to BE green– which has been rising for a while.
The new Cash for Clunkers program has brought it to the fore. There are very sincere big thinker air and oil enviro greenies who welcome the removal of older vehicles as a way to achieve emissions and MPG savings. They believe such gradual improvements, even though minor, justify the significant cost of the program because it will improve life on earth for future generations and set new benchmarks for operational efficiency in new vehicles.
Other ardent greens consider themselves more “waste not want not” types. They love the “repair it, reuse it, recycle it” philosophy. They believe this model is the best a way to lessen the pressure on the environment because it teaches respect, and uses fewer natural resources and less energy to produce fewer goods. These green are appalled and angry that in a world of need the cars turned in have to be killed and crushed in order to meet the program’s requirements. They cannot believe that perfectly serviceable vehicles (which would die on their own anyway at some point) are being taken out of circulation. They note that some of our poorest and most vulnerable citizens rely on access to less expensive older cars to get around and get to work, and are unlikely to be able to afford a new PRIUS.
This is a long way of saying that companies which wish to benefit from greenwash need to be really careful–because “green virtue” is in the eye of the beholder.
Well, Starbucks is and has been one of the most environmentally conscious companies out there (if you’re a purist, I’m sure you’ll find that statement offensive), with their support for organic product, recycled paper, new green store design and employee education. Yet, the minute the recession hit and McDonald’s (not as green) attacked them on the price side, their numbers dropped off substantially. This is just one case study of many that proves that American’s think with their wallets first, period (unfortunately for all of us–good book out there now: Cheap; The High Cost of Low Cost).
Being a good environmental steward is nothing new; on the contrary we all should be adding value in our daily walk. As for corporate responsibility verse consumer consumption; that questions still needs time for long term results. Customers are less loyal today then ever before, do they consider your corporate footprint; yes, will they become raving fans? Five points to consider.
When you suspect you’re getting behind the green curve-and that your customers are noticing-it can be tempting to rush out there with a half-baked plan, but that can easily backfire.
Work with organizations that have proven themselves to be good partners with companies in your industry, that have the numbers to back up their promises, and that listen to you.
Transparency is critical.
Once you do have an authentic and successful strategy for doing business while doing good, share it with everyone to get the word out! At the end; your long term loyal customers will give the grade by their purchasing.