CSR, SMEs AND FOOD RETAILING: Responding to the needs

Posted by Kathryn Schwartz on January 02, 2014

Rural SMEs in more affluent areas can often specialise in an upmarket range of goods; for example, stocking unusual cheese, organic wines and other locally-made goods. This non-food merchandise then cross-subsidises the grocery side of the business. Small grocery shops have the advantage of flexibility of stock range and can offer unusual and exotic foods such as tricoloured pasta or squid ink pasta. They may even stock a different foodstuff each week to maintain interest, following the WIGIG strategies of the discount supermarkets in non-food. In this way, the local shop attracts tourist trade and also draws custom from a large radius of neighbouring villages and towns; generating profits and enabling the shop to maintain a range of general groceries. Of course, not every village can have such a specialist shop and it depends on the general demographic composition as to whether such an enterprise is necessary or even desirable.

A town in Memphis, Tennessee had a large number of film buffs and so the town opened a shop which stocked a wider range of films than the local Blockbuster, and staff were chosen on the basis of their love of movies as they were expected to spend several hours a day watching the films so they could help customers with their choices. This endeavour produced both happy employees, satisfied customers and a thriving business. A local independent building supplies shop, again in the USA, stocked not only power tools but carried the spare parts for them, unlike the major chains, as a response to the needs of the community. Specialisation also works well in less affluent areas, for example North Lincolnshire has many canals, rivers and dykes, and is a key centre for recreational fishing. Recognising the need for a supplies shop and the owner being a keen fisherman himself, the fishing tackle shop was opened in a deprived area in Scunthorpe which now draws in custom from a wide area of Lincolnshire and Yorkshire. The shop also brings trade to other shops in the area, and a local pub, enabling them to stay open and offer grocery items and has invigorated what was a depressed community. Step Towards Success

The customer has also become more aware of wider societal issues which have implications beyond their local community, for example the environment and less-developed-country issues often inform their shopping choices. An ICM poll commissioned to mark the launch of AsdaWatch found that 83% of shoppers wanted tougher rules on ethical trading for supermarkets, with 75% of those polled believing that supermarkets should pay their staff and suppliers in less-developed countries, a fair wage (Shaw H, 2009). The size of corporations has made them less sensitive to consumer democracy, whereas in the case of SMEs, transferring custom from one shop to another on ethical grounds could make a real difference to the small factory owner or shopkeeper’s profits. This gives customers a real say in many aspects of the business, from its prices and range of stock to the service provided and even where it sources its goods and raw materials. In a world of small wholesalers, manufacturers, and primary producers, customers might even exert influence further up the supply chain; for example, they may be concerned that the copper in a particular radio has been sourced from mining companies with a reputation for acting in a socially responsible way, minimising pollution and helping the economic development of the local community living near the copper mine. Being aware of the possible significance of sourcing to his market, a small retailer may make the effort to know the identity of the wholesaler, who in turn knows the manufacturer, who in turn can verify its primary sources. In a world of many small companies, an ethically-aware customer might choose to buy the radio from such a shop whose supply chain lead back to a sustainable copper mine, albeit at a probably higher price.

As well as responding to ethically enlightened customers, SMEs can do much to promote relevant local ethical issues and help educate their customers even in areas where there are a significant number of poorer, excluded and less articulate individuals; the ‘subalterns’, who anticipate failure in getting their views heard above those of central government and the powerful corporate lobby because they ‘self-censor’ themselves ensuring their opinions are never heard or acted upon (Atkinson R, 1999:62). Small shopkeepers have been central to facilitating community groups and related agencies towards alleviating this problem of ‘organisational desertification’, targeting and subsequently mobilising resources to improve the local environment (Wacquant L, 1996). Getting the wrong agencies involved in a local CSR endeavour can create problems, for example, misdirected aid can arouse resentment towards the donor and those involved in eliciting the help. CSR initiatives need to be directed purposefully and practically, not just applied with passion and with liberal amounts of funding but in an unfocussed manner.

What is necessary for effective CSR policies is accurately aiming these where they will be most effective. This entails, rather than making assumptions based on a set of random and unreliable indicators, the SME actively engaging with its customers as to what their priorities and actual concerns are, also how they might get involved with a local socially responsible project. When customer groups give an explicit indication as to what they would like to support, that company then has a much clearer idea as to how to maintain and develop its customer loyalty base. This is important because after the initial burst of enthusiasm and once the CSR measure is implemented, then questions are asked about the real impact on the local environment, social value creation, and socio-environmental progress. Pendleton remarked that, as a symptom of increased [but possibly undirected] investment in CSR, assets in socially responsible mutual funds grew 40% faster than other comparable assets between 1995 and 2003, yet questions were still being raised about the real and tangible benefits to local people (Pendleton A, 2004). Christian Aid, for example, has observed that increased financial backing for CSR initiatives has not always produced a corresponding improvement in the everyday quality of life for recipient communities. It is likely however that SMEs are able to more effectively direct their efforts at the appropriate targets than their larger counterparts and ensure the better deployment of CSR funds and endeavours with good results, because of operating at the ground level.

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