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Retailers must not abandon sustainability during downturn

Saturday June 7th 2008

Despite the economic slowdown it is crucial that food retailers do not put on hold their strategies for sustainability and for building ethical businesses as there is a risk that they could be left behind.By Glynn Davis

Speaking at the IGD Global Retailing conference in London Joanne Denney-Finch, chief executive of IGD, suggested it would be tempting for companies to take a step back from sustainability until the economy improves but this would be a mistake because those companies that have started to tackle the problem are recouping
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the benefits.

“Sustainability is about making your business future-proof. There is a massive transformation taking place and we urgently need to use the world's scarce resources carefully,” she says.

Denney-Finch highlighted how large operators like Wal-Mart can make a major difference by focusing on the environment, especially when it involves its suppliers: “It wants its 65,000 suppliers to reduce carbon use and this will have a bigger impact than any governments.”

But she warns that none of this is easy for retailers as shown by recent research from IGD. It found that of 134 companies surveyed 89 per cent had a corporate policy on sustainability but only 17 per cent had been able to break it down into targets. “The biggest challenge is converting a policy into a plan,” says Denney-Finch.

What will help UK-based retailers is the finding from an IGD survey of 4,000 consumers that British shoppers are the most ethically active in Europe. As many as 41 per cent of people in the UK are dedicated ethical shoppers, compared with 34 per cent in Germany and the Netherlands, 31 per cent in France, and a lowly 12 per cent in Spain.

Denney-Finch suggests the research shows that it is unlikely the current downturn will result in people ceasing to shop ethically. “These shoppers are more affluent and they won't abandon their deep-seated principles. During hard times it may slow things down but it won't stop it,” she forecasts.

One potential blockage to growth in ethical shopping is price, with 54 per cent of those surveyed believing it to be a barrier. One way of ensuring consumers continue buying such goods (whatever the cost) is through 'choice editing' by retailers but this is a hard decision for merchants to make.

In the UK there is a divided view among consumers on whether retailers should go down this route, while elsewhere in Europe consumers are against it, preferring to make the choices themselves and not have the retailer make it for them.

Denney-finch forecasts more close partnerships between retailers and consumers will take place in the future as a way of helping merchants make the decisions on the choice of goods available in their stores.