The Retailer SUMMER 16_v7

customer focus

Retailers Ignore Consumer Demands for Ethical Brands at Their Peril

Frank Woods retail insurance expert NFU Mutual

THE APPETITE FOR BRANDS WHICH CAN DEMONSTRATE AUTHENTIC, SOCIALLY-RESPONSIBLE CREDENTIALS IS SHAPING THE FUTURE OF MAINSTREAM RETAIL. We’ve all fallen victim to fads at some point in our lives. Who doesn’t own a toasted sandwich maker now consigned to a cupboard of forgotten gadgets, or a dodgy outfit hiding shamefully in the wardrobe? The difference between a fad and a trend is the former is all hype over substance. Trends answer genuine consumer needs and gather momentum through cultural shifts in lifestyles. It is easy to mistake one for the other; correctly identifying and satisfying an unmet consumer need is the Holy Grail for businesses. There has been a noticeable rise in brands claiming to be authentic, ethical and local; packaging and advertising proudly express their socially responsible credentials. But can this be dismissed as another fad? This situation does mirror a shift among consumers living healthier, more ethical lives as they turn their backs on brands lacking authenticity or transparency. We want to feel good about the things we buy and will seek out options enabling guilt-free consumption. Whether buying from a farmers’ market, endorsing favoured brands on social media, or choosing local business over corporate giants, consumers are sending a message. Brands must now take action to avoid potential criticism. It’s a fine line between luxury and wastefulness; where the exotic was once desirable, locally-sourced is now the ultimate badge of honour. Connected consumers shun generic, globalised offerings. They want true authenticity and as a result we see simple, natural products are in demand - stripped back to the elements and difficult to mass produce. Trend Predictions Global market researchers Mintel identifies key European consumer trends, claiming: “We’ll see brands react to consumer concerns by offering greater transparency in beauty and household ingredients. Also, a shift towards more ‘kitchen cosmetics’ as consumers seek to eat themselves pretty with those foods promoting their European or local purity credentials.” Multinational professional services firm, Deloitte ’s consumer tracker report identified: “Health wellness and responsibility as the new basis of brand loyalty.

Emotional ties to national brands will likely decline due to growing consumer discontent, with large companies’ perceived values coupled with an increased consumer focus on personal health, the environment, and social impact.”

In its 2016 report, Euromonitor International concludes:

“Consumers are prioritising locally grown, seasonal food for environmental, thrift, freshness and health reasons. Shopping nearer home in smaller retail formats, such as convenience stores and smaller branches of supermarkets, and buying street food, are both sustained trends. Farmers’ markets, often selling organic fare, epitomise this local trend and are now a global phenomenon.” Mainstream Adoption Supermarket shelves groan under the weight of products advertising traceability as a key feature. Larger retailers have caught onto the fact that the buying public demands local, artisan products. However, faking it is not an option. Consumers in the digital age are increasingly capable and willing to debunk misleading claims. Hard won plaudits for social responsibility can quickly be undone for those accused of misleading customers, resulting in the risk of damaged reputation. Phil Bicknell, the National Farmers’ Union’s Head of Food and Farming, highlighted Tesco’s recent move to rebrand some of its lines with the names of ‘fictitious’ farms. Having praised the supermarket giant’s sustainable approach to working with milk suppliers, Bicknell questioned its decision to create seven farm names to replace its Everyday Value range. “The names of these farms don’t have any link to where the product has been sourced from, something that has the potential to confuse or even mislead customers,” he argued. “Tesco are not the only retailer to have launched a brand such as this. Morrisons use the ‘Market Deals’ brand to sell New Zealand lamb legs on promotion and both Aldi and Lidl use farm names within their branding. The key question to ask with this is,

10 | summer 2016 |

retailer