The Impact of People’s Growing Environmental Consciousness and Responsibility on Major Grocery Retailers in the UK

Table of Contents

1. The trend towards a greater environmental responsibility
1.1 Consumer’s growing environmental interest
1.2 Government’s and other organisation’s growing environmental interest

2. The response of grocery retailers to the growing environmental interest
2.1 Packaging
2.2 Plastic bags
2.3 Food miles
2.4 Provenance and seasonal food
2.5 Trolley recovery
2.6 Marks & Spencer
2.7 Tesco
2.8 ASDA
2.9 Sainsbury’s
2.10. Waitrose

3. Impact of the current recession on consumer’s behaviour

4. Future development
4.1 Aging population in the UK
4.2 Green labelling of products
4.3 Carbon offsetting

Appendix 1

Appendix 2

Appendix 3

Appendix 4

Appendix 5

Appendix 6

References

Bibliography

1. The trend towards a greater environmental responsibility

“The food we eat is responsible for one-third of our impact on climate change – so it’s vital that the big supermarkets make green shopping much easier.” Larry Whitty, Chair of the NCC

Environmental issues are more and more on the path to be on everyone’s radar and to change the behaviour of many. The popularity of the environment as well as the popularity of healthy eating, fair trade, organic and premium lines increased greatly over the last couple of years. (Mintel Group Online, November 2008, Food Retailing-Europe, retrieved 9th April 2009) Political parties, big companies as well as consumers are increasingly committed to the environment and start to adjust their agendas, business objectives and their way of living. Grocery retailers just as pretty much every other company cannot afford bad publicity that creates a reputation of not being environmentally friendly, because consumers prefer green companies over non-green ones and adjust their purchasing behaviour accordingly. Thus retailers have to keep up with the trend if they are to retain and enlarge their customer base.

1.1 Consumer’s growing environmental interest

It cannot be denied that people nowadays are better informed and more questioning when it comes to the environment, which is partly due to an extensive media coverage of everything related to the topic. Another reason is the introduction of many environmental issues to be discussed by the government. While some consumers believe that they have the duty to protect the environment for future generations others buy green products out of guilt towards the environment or out of redemption. The growing concern about environmental issues causes consumers to carefully consider the impact of their purchasing decisions, as it is shown in the figure below.

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Environmental concerns also increased the recognition of organic products, which are produced according to certain standards, including the avoidance of use of pesticides, additives and artificial fertilisers. Furthermore, they tend to produce a lower carbon footprint. Another factor growing in importance for consumers is the local sourcing of products, not only because they are perceived as higher quality, but also because of a shorter route of transport.

According to the Mintel Group, (February 2009, Influence of the Environment on food shopping-UK, retrieved 8th April 2009) “consumers go through three decision stages when developing a green conscience: green awareness, then green actions like recycling and finally green buying”.

It seems that even though people are increasingly willing to pay a price premium for green products a lot more people would decide to do so if the costs would be lower. The ability and willingness to make green choices is linked to the level of income more than anything else. Usually the environmental awareness grows with age which is why older customers normally take more environmental decisions. The same applies to the higher social classes. Both of these groups tend to have a fairly high income. The figure below attempts to group consumers according to their green purchasing behaviour.

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1.2 Government’s and other organisation’s growing environmental interest

By introducing the Climate Change Bill (CCB) the UK created the duty to reduce CO2 emissions by 26% by 2020 and 80% by 2050 (base: 1990). The Committee on Climate Change (CCC) advised the government to reduce the country’s emissions to a greater extent. The Bill as well as the Committee raised consumer’s awareness of the topic and influenced how retailers manage their business, as well as how they are seen by their customers and also how customers make their purchasing decisions. (Mintel Group Online, February 2009, Influence of the Environment on food shopping-UK, retrieved 8th April 2009)

On April 22nd, 2009, Gordon Brown announced the Labour government's annual budget to parliament. Part of its environmental content is the reduction of carbon emissions to the level of 34 % by 2020, make an additional £375 million available to support energy and resource efficiency in businesses, public buildings and households over the next two years, and to increase the fuel duty by 2 pence per litre on 1st September 2009, and from 2010 to 2013 by one penny per litre each year. (HM Treasury Online, 2009, retrieved 24th April 2009)

The EU Directive on Packaging and Packaging Waste set targets for the minimisation of creating packaging waste and promotes energy recovery, re-use and recycling of packaging. In the UK the directive is implemented by the Producer Responsibility Obligations Regulations 2007 and the Packaging Regulations 2003. These regulations in turn set targets for UK businesses to make sure the country as a whole can meet the targets set by the EU.2 (Defra Online,2009, retrieved 20th April 2009)

In 2005, the Courtauld Commitment was brought into being by WRAP (Waste & Resources Action Programme) and some of the UK’s major grocery retailers to reduce the amount of packaging and food waste produced by households. By March 2009, 37 retailers and suppliers have signed the agreement1. (WRAP Online, retrieved 18th April 2009)

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WRAP itself was created by the government in 2001 to reduce the amount of waste, increase recycling and to deal with climate change.

The main UK food retailers are members of the Industry Council for Packaging and the Environment (INCPEN) and act upon the Responsible Packaging Code of Practice including the minimisation of the environmental impact of packaging and educating it. (INCPEN Online, retrieved 20th April 2009)

The British Retail Consortium is one of the leading trade associations in the United Kingdom, which represents retailers. Its environmental policies aim to support government policies in general and the Climate Change Bill in particular. The goals they set, are not only included in many retailer’s action plans, they even set higher goals for their companies. (British Retail Consortium Online, retrieved 19th April 2009)

Many food and drink manufacturers catering grocery retailers are members of the Food and Drink Federation (FDF), which developed a green agenda including the reduction of CO2 emissions, minimizing food and packaging waste send to landfills and the reduction of water use to name a few. (Food and Drink Federation, 2008, retrieved 19th April 2009)

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2. The response of grocery retailers to the growing environmental interest

A survey conducted by NCC, (National Consumer Council) found that so far no UK retailer has become a truly green business. Even the retailers with the best ratings partly failed to implement basic measures in their stores, which is reflected by the fact that no food retailer got top marks for the proportion of UK in-season produce on sale. The NCC also found that the performance in terms of unnecessary packaging and plastic bags varies extremely from one retailer to the other. (Natural Choices Media Online, 2007, retrieved 20th April 2009) The retailers were tested in the fields of seasonal food and organics, sustainable sourcing and cutting waste. In 2006, Waitrose came off best and Sainsbury’s also achieved a good rating. (National Consumer Online, 2006, retrieved 20th April 2009)

As described above grocery retailers reacted to the trend by adjusting not only their product ranges but also their business models and future policies, often included in their Corporate Social Responsibility programs. One aim of their programs is to reduce negative externalities, “which occur when economic decisions create costs for people other than the decision taker”. (Griffith & Wall, 2005, p.278)

Retailers continuously launch green products with modified packaging, ingredients and manufacturing processes. (Mintel Group Online, February 2009, Influence of the Environment on food shopping-UK, retrieved 8th April 2009) Since consumers increasingly judge companies by the degree of environmental efforts they undertake, responding to the trend of greater environmental responsibility is not only a necessity for consumer’s acceptance, but also provides competitive advantages in the market. It can also increase customer loyalty and offers the possibility of reducing operating costs. Thus green marketing becomes a must for retailers, advertising not only their corporate social responsibility but also green brand values of their products.

When communicating their green actions retailers need to be careful that taking environmentally responsible actions is not misinterpreted. Some people believe it is only another way to save money, an excuse to charge more for products or simply a tool for self-publicity. As research shows, a high degree of scepticism and lack of trust towards retailers exists, which implies that their strategies have to become more sincere and credible. (Mintel Group Online, February 2009, Influence of the Environment on food shopping-UK, retrieved 8th April 2009)

Retailers invest heavily in making their business and production operations more environmentally friendly.

The most important factors and precise activities as well as concrete targets are outlined in the paragraphs below.

2.1 Packaging

A very important factor influencing the purchasing decisions of consumers is packaging, or rather the nonexistence of it and where packaging is needed than also its recyclability. According to Mintel Group, (February 2009, Influence of the Environment on food shopping-UK, retrieved 8th April 2009) two thirds of consumers favour loose products over products with packaging. Hence retailers and their manufacturers are put under pressure to improve their use of packaging by increasing the use of sustainable or already recycled materials. According to Mintel Group’s report on food packaging, (February 2008, retrieved 8th April 2009) 20% of household waste in the UK is used packaging. Even though the amount of rubbish thrown into landfills decreased, Britain still sends more waste to landfills than any other European country.

A great example of possible reductions of dispensable packaging was created by WALMART in the 90’s when they abandoned paper boxes for deodorants. They did not add any value to the product and until then only caused the waste of cardboard and of fuel for transport. (Fishman, 2007, p.1)

2.2 Plastic bags

Since 1977 plastic bags were available for free for every customer at grocery stores. Customers greatly took advantage of it, so that in 2007 approximately 220 bags were used by each person in Britain, which amounted to 13 billion plastic bags. Barely any of them are recycled and their biological degradation can take up to 500 years. Consequently there have recently been many complaints about their distribution and the trend finally seems to be reversed. Bills to ban the free disposal of plastic bags have been introduced by Councils and charges for the bags have also partly been implemented (see 2.6.). Many retailers aim to reduce the use of the bags to decrease waste as shown in the paragraphs below. (The Economist Online, 2007, retrieved 20th April 2009)

2.3 Food miles

The concept of food mile count is an easy but misleading comparison tool for consumers. They can simply look up the country of origin on the label and subsequently estimate which product has a higher food mile count, thus presuming that this product also generates more carbon emissions. But this assumption does not take into account the total carbon emissions generated by the product. Furthermore, it counteracts with the concept of Fairtrade production, which aims to increase the standard of living for people in the developing world and ensures that they are paid at a reasonable rate. Since Fairtrade products are normally sourced in developing countries, they consequently travel long distances. In view of the fact that retailers are put under pressure by the increasing interest in carbon footprints, Tesco sets a good example by attempting to solve the problem through decreasing air freighting to 1% of their products, of which every single one will be sourced from developing countries. (Mintel Group Online, April 2007, Impact of the Environment-UK, retrieved 8th April 2009)

2.4 Provenance and seasonal food

Even though consumers are interested in the provenance of their food and increasingly choose locally sourced products over products with a long transportation route, this trend is limited in expansion because consumers also expect food items to be available in every season and they are not yet ready to entirely give up this possibility. (Mintel Group Online, November 2008, Food Retailing-Europe, retrieved 9th April 2009) The concern grows that the sale of food produced to the highest environmental standards in overseas developing countries will suffer due to consumer’s preference of locally sourced food as already stated above.

2.5 Trolley recovery

A good example is set by the Crawley Borough Council. The public can use a free phone number to report information on any abandoned shopping trolleys, which is then forwarded to the local Marks & Spencer’s store. A trolley recovery will then remove the trolleys from the reported location and will also check the popular areas where to find abandoned trolleys. (Defra Online, 2007, retrieved 14th April 2009)

Every retailer needs to provide such a system, which in addition needs to be fast and publicly advertised to reduce the environmental impact of abandoned trolleys in country sides and watercourses.

2.6 Marks & Spencer

Marks and Spencer has a very high number of green shoppers3 and enjoys the highest percentage of trust from consumers when it comes to reducing the environmental impact.4 To create an even greener image, Marks & Spencer launched The Look Behind The Label campaign in 2007, which focused on the communication of green values of their products.

The publication of Marks & Spencer’s Plan A (because there is no plan B as the company states) in 2007 is probably the most popular declaration of corporate responsibility. According to the company’s website, (Marks & Spencer Online, 2009, retrieved 17th April 2009) the plan was introduced to “address challenges in the key areas of climate change, waste, sustainable raw materials, fair partner and health”.

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