6 Reasons Retail Brands Should Invest in Corporate Social Responsibility

At the Shoptalk retail show in Las Vegas, Narayan Iyengar, SVP, digital and ecommerce for Albertsons Companies, explained that the company can’t “out-Amazon Amazon.” Instead, Albertsons plans to focus on highlighting its ties to local communities.

For most of the history of retail, such ties have been strong. Before the first enclosed mall went up in Minneapolis in 1956, most shopping happened on Main Street, in stores with roots to the local community.

In 2018, though, a good portion of retail occurs online (especially in the awareness and research phase of the customer journey), and Amazon takes the lion’s share of those sales. For brick-and-mortar, national retail chains dominate the landscape. A 2017 analysis showed that about 70% of grocery shopping occurs at national chains. While the retailers years ago might have had more of a stake in local communities, for many workers, national chains are anonymous places to work that view their employees as interchangeable.

With significant competition from Amazon though, more such chains might want to follow Albertsons’ leads and take a “People, Planet and Profit” approach that is key to attracting and retaining socially conscious customers and employees. Here’s why this approach makes sense:

Connecting emotionally attracts customers

A recent Cone Communications survey found that 87%  of consumers are apt to purchase a product if the company supports something they care about. A recent Nielsen study showed that about three-fourths of Millennials are willing to pay more for sustainable offerings. Many retail brands are taking note and action. For instance, Unilever recently purchased Seventh Generation and Schmidt’s Naturals to address consumers’ demands for sustainable and naturally sourced products.

It increases customer engagement and empowerment

Consumers are increasingly looking to engage with purpose-driven brands that empower them to make a difference. Marketing becomes much more meaningful and can attract more engagement and social sharing when underpinned with a purpose-driven message that helps advance a customer’s own personal values. This may or may not be led with a sales message, and in fact, could run counter to the normal intuition for retail brands to increase sales. REI’s #optoutside campaign is an example of a retail brand striving to build long-term loyalty over short-term wins.

Purpose offers retail brands a way to stand out in a crowded market

At a time when the quality of most products is good or better (there are no more new cars that can be dubbed lemons, for instance), offering a sense of purpose gives a brand a point of differentiation. As Gina Boswell, President, Customer Development, Unilever, told Shoptalk attendees recently, “purpose-driven brands grow faster.” Supporting this thesis is the Cone 2017 CSR Survey, which found that 89% of consumers are likely to switch brands to one that is associated with a good cause given similar price and quality.

It is good for community relations

National chains are often portrayed as being more concerned with profit than supporting the local community and developing relationships. Walmart, in particular, has been seen as a destructive force for America’s small towns. But in this environment, taking Albertsons’ approach and supporting charity initiatives in local communities can generate good will with the community.

It attracts and retains employees

More so than previous generations, Millennials and Gen Zers really care what their employers stand for. According to the 2017 Cone Millennial Employee Engagement Survey, 76% of Millennials consider a company’s social and environmental commitments when deciding where to work. Gen Z is the workforce’s newest generation, as most Millennials are now in their late 20’s or early 30’s and have advanced beyond entry level roles. However, like the previous generation, Gen Z likes to align personal purpose with the values of their employers.

It attracts investors

Commitment to sustainability and purpose has become a requirement for the most influential investors. Though some investors are driven by ideology, others see companies that don’t commit to such values as being vulnerable to scrutiny from public opinion and not strategically positioned for long-term sustainability. There is a lot of debate about the effects of CSR on stock price, but according to the latest Responsible Investment Association Trend Report (2016), 75 per cent of professional investors consider a company’s position on environment, social and governance issues before deciding whether to invest. Likewise, Project ROI reports a CSR program can reduce systemic risk by 4% for large, publicly traded companies.

Values on display

As long as the programs that a brand support have integrity and are aligned with the brand’s values and culture, there’s no downside to making the programs evident to consumers. In addition to online and offline retail messaging, brands should make use of social media to both promote their causes and their involvement.

Retailers should learn from such examples and make their values known to consumers, potential employees and investors.
Charlie Vanek is Vice President of Product Management and Business Development, Blackbaud

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