Comment: Communication key for next stage of Sainsbury's CSR push
Sainsbury's, analysts in the wider industry, corporate responsibility experts and campaigners argue ethical and environmental issues remain important to consumers
Sainsbury's share of the UK grocery market is at its highest level for a decade and chief executive Justin King often insists the retailer's "values" have been a key factor in how the company has thrived amid the worst economic conditions for a generation.
Given the mass of data on buying habits Sainsbury's has at its disposal through its Nectar loyalty scheme, it would be difficult to disprove that claim, although it could easily be asserted that the retailer's efforts on improving how consumers perceive its prices (via initiatives like Brand Match) and on expanding its store network (the company opened its 500th convenience store yesterday) have also been vital to its success.
One could argue that, while Sainsbury's core, traditional shoppers are most tuned into its "values", the retailer's success in winning shoppers from elsewhere and therefore market share could be more closely tied to price-comparison schemes like Brand Match and its investment in the convenience and online channels.
However, Sainsbury's, analysts in the wider industry, corporate responsibility experts and campaigners argue ethical and environmental issues remain important to consumers - at least, broadly, they have not fallen off a shopper's radar amid a weak economy and squeezed disposable incomes. And, anecdotally, that argument does hold some water.
Therefore, Sainsbury's needs to be more proactive in getting the message about its work on corporate responsibility across to consumers.
Recent converts to Sainsbury's may not yet be aware of its work on ethical or environmental issues. Even within the food industry and the wider corporate responsibility field, the level of recognition of Sainsbury's initiatives is, in some areas, very low. This week, the retailer held an event in London to provide an update on its 20 x 20 corporate responsibility programme, which sets out a range of targets to meet by the year 2020. The scheme was launched last year and, a year on, Sainsbury's - to its credit - wanted to transparently provide information on the progress it had made (or not made in some areas) and to ask suppliers, NGOs and others what it should be doing on issues like environmental sustainability.
Ahead of the event, Sainsbury's polled attendees on how they thought the retailer was faring on issues like Fairtrade, animal welfare and sustainable fish. On nearly all of the 20 issues, most of those polled did not know how Sainsbury's was performing, stark evidence of the communication challenge in front of the retailer. If those in the industry do not know, how are consumers (and consumers the retailer itself says are becoming more aware and more interested in these issues despite the downturn) supposed to know?
To be fair, Sainsbury's acknowledges the work it has ahead in communicating to consumers what it is doing. With surveys out there claiming consumers are embracing ethical issues more, the business imperative is clear. There is also an element of competition (although perhaps not as much as some campaigners would like) with rivals such as Marks and Spencer arguably enjoying greater recognition among consumers for its work on corporate responsibility with its Plan A programme, which does rankle with some at Sainsbury's HQ. However, perhaps a bolder, more vocal approach is needed, not just to earn plaudits Sainsbury's may feel it deserves but also to win a greening pound.
As a CEO of a leading UK supplier said to just-food on the sidelines of the event, retailers like Sainsbury and M&S will reap the rewards if they are seen to be continually active in these areas and at the vanguard of developments, especially compared to others that may be perceived by consumers to just "dip in and out" of these issues.
Communication, then, is key for Sainsbury's to see the commercial success of the work it is doing. Better use of social media to target younger consumers, who are, broadly, more ready to listen to ethical messages could be an answer.
Consumers, of course, want retailers to take the lead on such complex issues. Being seen to be at the forefront of developments and new thinking on such issues is key. King told the 20 x 20 event that water will be the biggest resource issue of the next decade - but that consumers are yet to really switch on to the problem. Retailers like Sainsbury's, then, will have to lead the debate on an issue, which for some of its suppliers in developing markets, is a real concern.
Of course, one way retailers like Sainsbury's can lead the way on environmental issues is through choice editing, when companies limit the products consumers can buy, often for environmental reasons.
Sainsbury's has worked hard with its own-label suppliers to ensure their businesses can help the retailer fulfil the corporate responsibility "promises" it makes.
However, there is the argument that Sainsbury's should delist branded products that does not meet its "values", a contention forcefully put to King by author and environmental consultant Julia Hailes.
King, however, disagreed, labelling choice editing as "choice denial". He said: "No business in retail will be successful denying large numbers of consumers the opportunity to buy what they want to buy as part of their weekly grocery shop," he said.
It falls to consumers to, in effect, vote with their wallets, he said. "When you stop buying as consumers, we'll stop selling, it's that simple," King insisted, which could, to some, sound like passing the buck.
Nevertheless, let's give credit to Sainsbury's for the ambition and transparency of its corporate responsibility programmes - and its decision to open up its initiatives to scrutiny. The UK retailer is one of the few truly proactive companies in the industry and should stand alongside the likes of M&S, Unilever and Nestle (witness the food giant's work on cocoa sustainability) as FMCG businesses that deserve plaudits for their work.
Sainsbury's, as the others do, recognise there is much more to do, much more. And key to its work for the next year and up until 2020 and beyond is communication.
- The just-food interview: Bega Cheese CEO
- Sustainability Watch: The US packaging challenge
- Maspex: M&A opportunities in eastern Europe
- Why "simple" and "real" will be industry buzzwords
- Nestle's 2014 results: 10 Things to Learn
- UPDATE: Mondelez confirms Irish plant changes
- WhiteWave launches "Australian-style" yoghurt
- Bright Food "to buy 70% of Tnuva"
- Saputo's Warrnambool to buy Lion's cheese arm
- Thorntons sales, profits fall