MK212 Retail Marketing Lecture 12: Retailing and Sustainability

MK212 Retail Marketing Lecture 12: Retailing and Sustainability

Introduction

  • Speaker: Aikaterini Karamoutsou

  • Affiliation: Strathclyde Business School

Learning Objectives

  • Examine the concept of sustainability and corporate social responsibility (CSR)
      - Appreciate its background and evolution over time

  • Understand various definitions, concepts, and theories related to social responsibility and sustainability

  • Evaluate trends and developments in sustainability and their implications for retailers

  • Understand consumer responses to sustainability developments

  • Discuss the phenomenon of greenwashing

Sustainability in Marketing

  • Impact: Business and marketing activities affect consumers, the planet, and society.

  • Critiques:
      - For Consumers:
        - Concerns about overpayment, deception, and encouragement to consume excessively.
      - For Society:
        - Adverse societal and environmental impacts created by marketing practices.

Business Responsibility Today

  • Address the evolving expectations and responsibilities of businesses in relation to sustainability and social impact.

Evolution of Sustainability

  • United Nations Definition (1987):
      - "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

  • Similar Concepts and Aspects:
      - Includes pollution control, pollution prevention, clean technologies, philanthropy, product stewardship, diversity, and energy efficiency among others.
      - Sustainability related terms: Corporate sustainability, sustainable development, business responsibility, CSR, etc., are used interchangeably but are not identical.

Triple Bottom Line Approach

  • Three pillars of sustainability:
      - Environmental Performance: Pollution prevention, waste management, energy efficiency, etc.
      - Social Performance: Philanthropy, community building, human rights protection, diversity in the workplace, etc.
      - Economic Performance: Transparency to stakeholders, value creation, market share, product quality, etc.

Corporate Social Responsibility (CSR)

  • Integral to sustainability discussions in business, referring to a company's commitment to ethical behavior and contributions to economic development while improving the quality of life of the workforce, their families, local communities, and society at large.

Frameworks for Sustainability

  • Sustainable Development Goals (SDGs): Established targets set by the United Nations.

  • Other Frameworks:
      - GRI Standards (Global Reporting Initiatives) and ESG (Environmental, Social, Governance).

Sustainability Marketing

  • Focus on sustainable practices that encompass resource conservation, waste reduction, and employee-related practices.

Examples of Sustainable Practices

  • Resource Conservation: Reducing energy consumption and emissions.

  • Employee Practices:
      - Promoting diversity, training opportunities, and staff development.

  • Community-Related Projects: Corporate pledges related to climate funding and sustainability projects.

  • Brand Programs: Initiatives for gender equity and stakeholder transparency.

Ethical Sourcing and Collaborative Efforts

  • Collaborations with tanneries for ethical sourcing and environmental impact measures through indices like Higg Index.

  • Greening communities through various initiatives such as tree planting and education programs.

Strategic Decisions in Sustainability

  • Understanding the motivations for companies to engage in sustainability, including:
      - Legislation & Environmental Laws: Compliance with regulations.
      - Environmental Motivations: Commitment from top management.
      - Financial Drivers: Necessity to differentiate and create competitive advantage.
      - Customer Expectations: Demand from ethical and eco-conscious consumers.
      - Social Drivers: Growing awareness among broader stakeholders, including communities.
      - Internal Business Process: Efficiency in supply chains.

Sustainability Strategies

  • Types of Strategies:
      - Reactive vs. Proactive: Responding to laws vs. adopting higher standards voluntarily.
      - Embedded vs. Peripheral: Integrated business models vs. philanthropic initiatives.
      - Stakeholder Oriented: Focusing on primary vs. secondary stakeholders in sustainability practices.

Stakeholder Theory and Management

  • Definition:
      - A stakeholder is anyone with a stake in the firm or is affected by the firm's operations.

  • Criteria for Stakeholders:
      - Power, legitimacy, and urgency of their claims.

Importance of Sustainability as Competitive Advantage

  • Growing demand for sustainable products due to eco-conscious consumers.

  • Sustainability is not optional; it requires a proactive approach for market reputation and financial performance.

Challenges in Embedding Sustainability

  • High investment costs and the need for comprehensive strategies across industries.

  • Necessity for strong organizational culture and top management commitment.

The Sustainable Supply Chain and Circular Economy

  • Definition:
      - Managing raw materials and services from origin to consumption while addressing social, ethical, and environmental concerns.

  • Key strategies include fleet optimization, energy efficiency, innovative technology, and improved supply chain relationships.

Sustainability Implications for Retailers

  • Address challenges such as cost pressures, global supply chains, and ethical sourcing issues.

  • Managing CO2 emissions and supply chain accountability: examples from brands like General Electric and Timberland.

The Circular Economy

  • Definition: Transitioning to systems that promote reuse and recycling, reducing waste.

  • Dell's Closed-Loop Supply Chain: Improvements in product design to allow for recycling and ease of disassembly.

The 3Rs (Reduce, Reuse, Recycle)

  • Reduce: Minimizing resource use, waste, and emissions during production.

  • Reuse: Extending product life cycles through remanufacture or repair.

  • Recycle: Converting waste into new products and creating incentives for consumer participation in recycling.

Consumer Behavior and Sustainability

  • Understanding shoppers' concern categories such as food safety, animal welfare, honest labeling, ethical trading, and environmental responsibility.

  • Preparing a class activity to assess personal consumer behavior regarding sustainability.

Consumer Engagement in Sustainability

  • Assessing whether consumers practice what they value, considering financial constraints and skepticism towards sustainability claims.

Greenwashing

  • Increasing consumer skepticism regarding deceptive sustainability messages in marketing.

  • Seven Sins of Greenwashing:
      1. Hidden trade-offs
      2. No proof
      3. Vagueness
      4. Irrelevance
      5. Fibbing
      6. Lesser of two evils
      7. Worshiping false labels

Case Studies of Greenwashing

  • H&M: Promoting a ‘Conscious’ collection while maintaining unsustainable fast-fashion practices.

  • Ryanair: Claims of being the lowest emissions airline without substantiation, resulting in ad bans.

Criticisms of Sustainability

  • Perspectives on sustainability being anti-business vs. pro-business, and the argument for a broader definition to include more business dimensions.

Recommended Readings

  • Literature on sustainability, marketing, and stakeholder theory to support deepening understanding of the topic.
      - Ennis (2015), Retail Marketing: Chapter 11
      - Mitchell et al. (1997), stakeholder identification and salience
      - Additional references in sustainability marketing and ethics.