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Ethical and Green Retailing - UK - September 2009

ISSUES IN THE MARKET
Main themes
Definition
Retail Sales data
Abbreviations
FUTURE OPPORTUNITIES
Giving shoppers more reasons to buy ‘green’
Taking green consumerism to the next stage
Making information more meaningful
MARKET IN BRIEF
Consumer resolve weakened by the impact of recession
Consumers less inclined to pay green or ethical price premiums
Not all retailers delivering improvements
Major reductions in carbon emissions planned in the next ten years
Increase in environmental legislation is forcing retailers to take action
Retailers’ green initiatives not improving levels of consumer trust
Momentum building for greener living
Consumer support for recycling and waste reduction remains widespread
INTERNAL MARKET ENVIRONMENT
Key points
Top priorities for retailers are energy efficiency and emissions reduction
Measuring environmental impact
But not all companies make this information available
Will disclosure become mandatory?
Who has the highest carbon intensity?
Who is making the most progress on carbon intensity?
Figure 1: Percentage annual change in absolute and relative carbon emissions 2007/08-2008/09
Waste reduction a key objective
Who generates the most waste relative to sales?
Figure 2: Waste relative to sales, 2006/07-2008/09
Helping to reduce post-consumer waste by design and specification
HFCs – supermarkets refrigeration under scrutiny
Sustainable sourcing factors and issues
Local sourcing factors and issues
Ethical sourcing factors and issues
Is Fairtrade fair?
The market for green and ethical products has shown strong growth
More recent trends convey mixed messages
BROADER MARKET ENVIRONMENT
Key points
Climate Change Act now law
Carbon Reduction Commitment effective in April 2010
Climate change legislation stimulating greener products
Rising unemployment – a catalyst for change?
Use of financial instruments to stimulate greener buying behaviour
Carbon labelling rising up the agenda
Waste reduction driven by government
Carrier bags – 50% reduction target nearly hit
Recession undermining UK recycling strategy
WHO’S INNOVATING?
Key points
Greener store initiatives
Greener packaging
Refillable and returnable packaging
Compostables an alternative to recyclable
Unambiguous labelling
Greener services
Waitrose wants bikers
Offsetting (online) spending
Greener products
TOP 12 UK RETAIL GROUPS’ ETHICAL AND GREEN STRATEGIES
Key points
Tesco
J Sainsbury
Asda
Morrisons
Co-operative Group
Marks & Spencer
Alliance Boots
John Lewis Partnership
Home Retail Group
DSG International
Kingfisher
Next
THE IMPORTANCE OF ETHICAL AND ENVIRONMENTAL ISSUES TO CONSUMERS
Key points
Retailers know that consumers really do have a conscience
Figure 3: Trends in lifestyle statements on social/political/ethical and environmental issues, 2005-09
Ethical and green issues important to a majority of respondents
More people rate these issues as important than 12 months ago
Figure 4: Importance attached to ethical and environmental issues when shopping, March 2007, June 2008 and July 2009
Widespread basis of concern
Minor bias to more affluent consumers
As many Es as ABs rate these issues as very important
Young affluent consumers need reminding of their responsibilities
Children a catalyst for change
WHICH RETAILERS DO CONSUMERS TRUST?
Key points
Retailers slowly building trust
Only John Lewis/Waitrose built trust in both 2008 and 2009
No gain from Plan A for Marks & Spencer
Boots significantly underperforming
Primark has not suffered from bad publicity
Figure 5: Consumer trust in retailers, March 2007, June 2008 and July 2009
Co-op must trusted relative to use
Figure 6: Consumer trust in retailers compared to usage, June 2009
WHAT PEOPLE THINK ABOUT GREEN AND ETHICAL ISSUES
Key points
 CLOTHING SHOPPERS SEEKING REASSURANCE
Delegated trust
Widespread cynicism
Increasing reasons to buy
Risk of a backlash greater on ethical than environmental failings
Organic foods under pressure in the recession
Organic – increasing reasons to buy
Nearly one in five cannot afford to be green or ethical
Figure 7: Consumer attitudes towards ethical and environmental issues, July 2009
Widespread demand for reassurance on ethical provenance
Enlightened self-interest widely recognised
Risk of boycotts greatest among more affluent
ABs and families prominent in cutting back on organic foods
Younger people ignoring the issues due to financial pressures
Leading clothing retailers stand to gain from stronger ethical labelling
Response to ethically-inspired boycotts strong among shoppers of leading retailers
 IMPACT OF ECONOMIC DOWNTURN ON ATTITUDES AND BEHAVIOUR
Figure 8: Statements agreed on ethical and environmental issues – any adverse reaction to financial constraints (netted), July 2009
Greater numbers of less affluent people affected
Cost and convenience override green and ethical issues
ABC1 pre-families and families directly affected
HAS PEOPLE’S BUYING AND BEHAVIOUR GOT GREENER?
Key points
 MORE CONSUMERS ACTIVELY GOING GREEN
Disposable bags on the way out
Need for consistency
Car use under pressure – but fuel price growth less of an issue
No increase in interest in carbon labelling
Figure 9: Greener behaviour and buying, June 2008 and July 2009
Green momentum building
Figure 10: Repertoire of effort to be more environmentally-friendly, July 2009
Pre-family adults lagging in the conversion to low-energy bulbs
Younger people and men less likely to be using reusable bags
Switching off the standby mode has broad appeal
Less affluent householders slowest to adopt energy-saving technology in the home
Most affluent are cutting down on car use
M&S, Co-op and Morrisons shoppers have highest take-up of reusable bags among grocers
Carbon labelling hot spots
PERCEPTIONS OF PACKAGING AND RECYCLING
Key points
Awareness and responsiveness to packaging issues high
Sustained levels of active recycling
Complacency about rubbish and recycling?
Packaging issues not important enough to influence shopping behaviour
Sustained interest in reusables
Time to consider other packaging options
Low levels of confusion about recyclable materials…
… but people want retailers to do more to reduce waste
Recyclable packaging needs local support
Figure 11: Consumer attitudes towards packaging and recycling, July 2009
Men and younger people lag behind on recycling
Retailers held responsible for the amount and recyclability of packaging
Widespread support for reusable bottles
All shoppers demanding on-packaging specification
Shoppers of all the leading grocers are supportive of reusables
APPENDIX – INTERNAL MARKET ENVIRONMENT
Figure 12: Leading 12 retailers’ turnover, 2006/07-2008/09
Figure 13: Leading 12 retailers’ trading area, 2006/07-2008/09
Figure 14: Leading 12 retailers’ CO2 emissions, 2006/07-2008/09
Figure 15: Leading 12 retailers’ CO2 emissions relative to turnover, 2006/07-2008/09
Figure 16: Leading 12 retailers’ CO2 emissions relative to space, 2006/07-2008/09
Figure 17: Leading 12 retailers’ waste generated relative to turnover, 2006/07-2008/09
APPENDIX – THE IMPORTANCE OF ETHICAL AND ENVIRONMENTAL ISSUES TO CONSUMERS
Figure 18: Agreement with lifestyle statements on social/political/ethical and environmental issues, by demographics, 2009
Figure 19: Agreement with lifestyle statements on environmental issues, by demographics, 2009
Figure 20: Agreement with lifestyle statements on environmental issues, by demographics, 2009
Figure 21: Importance of climate change, environment and ethical issues when shopping, by demographics, July 2009
Figure 22: Importance of climate change, environment and ethical issues when shopping, by stores visited in last 12 months, July 2009
Figure 23: Importance of climate change, environment and ethical issues when shopping, by stores visited in last 12 months, July 2009
Figure 24: Importance of climate change, environment and ethical issues when shopping, by stores visited in last 12 months, July 2009
Figure 25: Stores visited in the last 12 months, by importance of climate change, environment and ethical issues when shopping, July 2009
APPENDIX – WHAT PEOPLE THINK ABOUT GREEN AND ETHICAL ISSUES
Figure 26: Attitudes towards ethical and environmental issues, by demographics, July 2009
Figure 27: Attitudes towards ethical and environmental issues, by demographics, July 2009
Figure 28: Attitudes towards ethical and environmental issues, by stores visited in last 12 months, July 2009
Figure 29: Attitudes towards ethical and environmental issues, by stores visited in last 12 months, July 2009
Figure 30: Attitudes towards ethical and environmental issues, by stores visited in last 12 months, July 2009
Figure 31: Stores visited in last 12 months, by attitudes towards ethical and environmental issues, July 2009
Figure 32: Stores visited in the last 12 months, by attitudes towards ethical and environmental issues, July 2009
Figure 33: Agreement with statements on ethical and environmental issues – any adverse reaction to financial constraints (netted), by demographics, July 2009
Figure 34: Stores visited in last 12 months, by agreement with statements on ethical and environmental issues – any adverse reaction to financial constraints (netted), July 2009
Figure 35: Repertoire of agreement with statements on ethical and environmental issues – any adverse reaction to financial constraints, July 2009
Figure 36: Repertoire of agreement with statements on ethical and environmental issues – any adverse reaction to financial constraints, by demographics, July 2009
Figure 37: Attitudes towards ethical and environmental issues, by repertoire of agreement with statements on ethical and environmental issues – any adverse reaction to financial constraints, by demographics, July 2009
Figure 38: Stores visited in last 12 months, by repertoire of agreement with statements on ethical and environmental issues – any adverse reaction to financial constraints, by demographics, July 2009
APPENDIX – HAS PEOPLE’S BUYING AND BEHAVIOUR GOT GREENER?
Figure 39: Efforts to be more environmentally-friendly, by demographics, July 2009
Figure 40: Efforts to be more environmentally-friendly, by demographics, July 2009
Figure 41: Efforts to be more environmentally-friendly, by stores visited in last 12 months, July 2009
Figure 42: Efforts to be more environmentally-friendly, by stores visited in last 12 months, July 2009
Figure 43: Efforts to be more environmentally-friendly, by stores visited in last 12 months, July 2009
Figure 44: Stores visited in last 12 months, by efforts to be more environmentally-friendly, July 2009
Figure 45: Repertoire of efforts to be more environmentally-friendly, by demographics, July 2009
Figure 46: Efforts to be more environmentally-friendly, by repertoire of efforts to be more environmentally friendly, July 2009
APPENDIX – PERCEPTIONS OF PACKAGING AND RECYCLING
Figure 47: Agreement with statements on packaging and recycling, by demographics, July 2009
Figure 48: Agreement with statements on packaging and recycling, by demographics, July 2009
Figure 49: Agreement with statements on packaging and recycling, by stores visited in last 12 months, July 2009
Figure 50: Agreement with statements on packaging and recycling, by stores visited in last 12 months, July 2009
Figure 51: Agreement with statements on packaging and recycling, by stores visited in last 12 months, July 2009
Figure 52: Stores visited in last 12 months, by agreement with statements on packaging and recycling, July 2009
Figure 53: Stores visited in last 12 months, by agreement with statements on packaging and recycling, July 2009

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