CSR, SMEs AND FOOD RETAILING: Globalisation

Posted by Kathryn Schwartz on December 27, 2013
Retailing

Globalisation

Food is a basic commodity; one that we need on a daily basis. However food is far more than that, it is deeply culturally significant, it speaks volumes both to us and about us, food is eloquent about its origin and geography, about our class, ethnicity, and culture. Food has been described as ‘noisy’ (Smith J et al, 2007:397). In an increasingly connected and environmentally-aware world, consumers are becoming more aware of the social-responsibility implications of their food, and the CSR values of companies within the food chain. CSR has become a major feature of the business world over the last decade, as companies strive to demonstrate their good corporate citizenship. Increasingly, retail giants such as Tesco, which have relied on the lower prices facilitated by the globalisation of supply chains and the massive buying power that comes with sheer size, are finding that these low prices alone cannot guarantee customer loyalty. If the consumer priority is low prices alone, she can always patronise one of the hard discounters. If the shopper is willing to pay more than the minimum price, the relational marketers may well infer from this that this consumer is probably looking for other, intangible, quality attributes to the food they purchase, including environmentally sustainable production and socially responsible conduct by the retailer. Education

Globalisation has arguably assumed the mantle of a religion over the past two decades, with bankers as High Priests, imposing temples such as Canary Wharf, and a mysterious economic mantra of derivatives and futures that the common laity cannot understand. The God of Globalisation offers, not some future heavenly bliss but the present Earthly satisfaction of lower grocery bills now. Tesco has been one of the most successful ‘churches’ of globalisation, rising to a market share of 32% in the UK in 2007, operating in over a dozen countries with a combined population of some three billion, and posting profits for 2010/11 of nearly £4 billion. But when your God totters, so do you; the appeal of globalisation, with its vast corporations encircling the world in order to provide lower prices, has looked decidedly tarnished over the past few years. The 2011 anti-Tesco riots in a Bohemian part of Bristol are a sign that, at least for some, the ‘God We Trust’ on US Dollar Bills, Our Father who art in Wall Street, has begun to lose credibility. A central location of the Bristol rioters has been the so-called ‘Telepathic Heights’, supporting the assertion of G K Chesterton that “When people stop believing in God, they don’t believe in nothing, they believe in anything”.

Bristol is by no means the only place where Tesco has faced problems. In Hampshire, where Tesco had upgraded former One-Stop stores, the retail giant was accused of precipitating the closure of smaller independent stores in market towns such as Four Marks (Wrigley N et al, 2007). In Whitchurch, Hampshire, Tesco’s larger delivery lorries, as compared to the vehicles One Stop had used, were alleged to be blocking the road, creating traffic hazards, and even interfering with Methodist funeral corteges. Protests against Tesco in Hampshire focussed on small neighbourhood issues; the removal of an olde-worlde ‘Hovis’ sign in one village, the eviction of the post office in another. On the other side of the country, Tesco finally won a protracted battle to open a store in Sheringham, Norfolk, where many would have preferred a Waitrose; rather a Pyrrhic victory, given the negative publicity associated with the saga. Tesco’s habit of grinding down any council opposition by repeatedly submitting planning applications, when Tesco’s profits exceed the GDP of many small countries, never mind a rural council, has not improved its corporate image. Meanwhile, nationally, its market share has fallen to below 31% as it is squeezed on both sides, by the discounters and by the upmarket retailers.

In recent years a number of British towns, including Saxmundham and Sheringham, have been celebrated in the media as the smaller combatants in a sort of ‘David versus Goliath’ battle against the supermarkets (Shaw H, 2008). Saxmundham, a small Suffolk town, is another example where local communities have worked together to help the small retailer. Tesco finally opened its Saxmundham store in 2010, after a 13-year battle to keep it out. Although Tesco uses the clawback of trade principle to argue that a large supermarket can actually boost the footfall to local shops, the clawback factor seems to work only if the supermarket is close to the other small shops, bringing people past their front doors; also the local economy needs to be prosperous, already supporting a diverse array of shops, and if those small retailers can diversify and complement, rather than compete, with the supermarket by offering specialist foods that Tesco doesn’t sell. Three factors were evident in Saxmundham which appear to have contributed to the success of the town in preserving a small-shop economy. Firstly, the efforts of the main campaigner Lady Cranbrook, in galvanising residents and local SMEs to face Tesco together as a community. Secondly, the co-operation of all stakeholders, including non-grocery shops, wholesalers and local farmers. Thirdly, a supportive approach by Suffolk Coastal District Council. Saxmundham SMEs have continued to make a real effort to attract business and maintain a good rapport with the local community, especially with the spectre of Beccles down the road to spur them on; in Beccles, the local market ‘died the same week Tesco opened’. Neighbourhood stores often source food locally, pride themselves on the freshness of their produce, and give local services to those unable to access them easily, such as the elderly and disabled. SMEs are better able, therefore, to be aware of local community issues and respond in a way which benefits their customers, the wider community as well as their profit margins (Shaw et al, 2010).

Tags: , , , ,