Corporate Social Responsibility and the economic downturn

Given the unstable nature of the world economy at the moment, how will the latest corporate trend, Corporate Social Responsibility, fair as companies tighten their belts and look to cut costs?

All major retailers have Corporate Social Responsibility (CSR) statements proudly displayed on their web sites, and being green and being seen to be green, is high up the agenda in all PR and Marketing departments. Retailers are fighting to have sector leading green credentials with the humble carrier bag thrust into the limelight, centre stage. Corporate Social Responsibility is not just about being green though, it's about promoting sustainability and one of the leading bodies to define standards for business sustainability, the Global Reporting Initiative, defines five areas where business needs to focus;

o Economic
o Environmental
o Human Rights
o Labour
o Product Responsibility

With the price of energy increasing all the time, it's easy to see that focusing effort on reducing your Carbon Footprint, is good business sense, as well as providing good PR material. The green movement has successfully persuaded companies that being green makes commercial sense. However being green is only a part of a companies CSR strategy, so as times get harder will we see a relaxing of the commitments made across the other key areas.

With sales weakening across the high street many retailers will be asking their supply chain to bear the costs of poor trade. Changing payments terms for suppliers and asking suppliers for extra discount are some of the ways retailers can put the squeeze on their suppliers. For suppliers though, struggling with their own increased energy costs, this additional pressure will be most unwelcome and for many, could push them close to the edge.

This doesn't strike me as a sustainable business strategy. Sure, your suppliers will need to bear some of the costs, but the sustainable way out of the downturn would be to work together. How sustainable can it be to destroy your supplier base?

Off-License 2.0

I've introduced my local off-license and it's over friendly owner, Pete, in my previous post about the impact that merchandising has on replenishment. Being a small shopkeeper, Pete only has limited capital to invest in the business, so it needs to be highly targeted to where it adds most value. Pete still uses a pricing gun and an old fashioned till. It's obvious that this costs him a lot in time and effort, but it's his own time and he likes doing it so he carries on, the benefit isn't worth the investment.

This might seem a little old fashioned but in another way Pete is on the cutting edge of off-license retailing. Pete has just introduced the concept of off-license 2.0, social network retailing in beers, wines, spirits and confectionary. I mentioned before that the real purpose of the shop is to engage customers in conversation and Pete has now taken this to the next step by installing sofa's in his shop, near the checkout, to extend the social interaction both to customers and non-customers. Regular customers can now come in for a sit down and a chat whether they are buying anything or not.

It's hard to work out the impact on trade that this will have. I'm sure that the regulars now become even more regular and will often be tempted into impulse purchases when they'd no intention of buying. For others,me included, I'm less impressed with the innovation. Before the checkout process used to take 5 minutes and was a necessary evil. Now of course this can be extended as other people can chip into the conversation. Maybe the two balance out.

The benefit to Pete though, of this investment, is huge. Now he can hold conversations whether there are customers in the shop or not, as there tends to be a steady stream of loafers willing to come in and sit down. It's not all about trade and numbers, there are other factors, often competing that contribute to a healthy and stable business. Larger retailers are trying to balance shareholders vs employees, or customers vs suppliers. Off license 2.0 might not have had a huge impact on trade but it's certainly improved some of Pete's other KPI's and therefore worth every penny.