Category Archives: retail

Low-carbon products: when there will be a mass mass-market demand for them?

As stated in the last CBI report about UK consumers and low-carbon products, three quarters of the UK’s greenhouse gas emissions either directly or indirectly attributable to consumer actions. Companies are taking action to drive up standards and setting up pilot initiatives for green products. Energy efficiency and carbon labels and descriptions currently adorn many of our shopping shelves, increasing transparency. But many consumers do remain skeptical about sustainability being a MUST for our future.

The report shows that there is no trade-off between sustainability and profitability but, as we are always stressing in our ECOFFEE communication projects,”(Many business leaders acknowledge that) it is not sufficient to operate in a sustainable way – they also have a responsibility to inform consumers about green choices”. Business cannot boost demand for low-carbon products without the appropriate communication. Let’s take for instance Procter & Gamble’s successful Turn to 30 campaign with Ariel linked the financial benefits to consumers of washing at lower temperatures with the positive environmental impact. This campaign successfully create a link between a product, a consumer personal behaviour and the resulting more sustainable impact on environment.
Once a company has created a demand for its green products, gains arrive very fast.

Philips’ success in energy efficient lighting is an excellent example: the strategic decision to develop the energy efficient lighting side of its business led to successful positioning
at the forefront of innovation.

Retail plays a very important role in raising awareness among consumers and empower them to make greener choices. Tesco for example has worked to highlight the carbon
footprint of its products to help consumers understand the impact of their purchasing decisions. And it worked great.

Now the question is: why there is not such a mass-market demand for green products? It seems that there is a missing link between the consumer and the environmental impact of purchasing a green product versus a not-so green one. When asked about the top three or four factors shaping their choice of purchase, UK consumers top rated one is cost to buy, followed by quality and reliability and brand. The environmental impact is ranked 10 (8%). It seems that there is a disconnection between consumers and the environmental impact of their choices, especially when carbon emissions are concerned. Nearly half (48%) of survey respondents could see the link between low-carbon and helping to tackle climate change, whereas less than a third (30%) identified the link between climate change and energy efficiency.

Labelling plays an important role in raising consumers’ awareness and A-G labelling has been a particular success, being well recognised among those aged between 35-64 (76%) and those earning over £25,000 a year (83%). It is no coincidence that products where the energy efficiency story is most developed for consumers tend to be those where the A-G label is displayed, such as fridges.

To answer to the question “When there will be a mass-market demand for green products?”, it all relies on clear communication and on educating consumers about the impact of their shopping and daily habits on the environment.

Augmented Reality or Augmented Retail?

Is AR (Augmented Reality) in-store systems going to help retailers to boost sales? It would be interesting to know your opinion, in the meanwhile, watch these two interesting videos.

Kinetic Fitting Room by AR Room at the Topshop flagship store in Moscow

Cisco demo allowing shoppers to try on clothes via augmented reality, all enabled by interactive digital signage

New Terms of Engagement for Levi Strauss & Co. Global Supply Chain

Yesterday, Levi Strauss & Co.  announced a new Terms of Engagement for its global supply chain, moving beyond compliance to help improve the lives of workers in factories around the world. Under the new approach, LS&Co. will require contract factories to help make employees’ lives better by supporting programs for their workers that align with UN Millennium Development goals.

In a speech delivered today at the CERES annual conference, CEO and President John Anderson said: “We are proposing a new apparel industry standard of social, economic, and environmental sustainability that focuses on improving workers’ lives. If our ultimate goal is to improve not just factory conditions, but to make a material difference to the people and communities in our supply chain, then we need a more holistic approach and a more human perspective.”

The speech comes twenty years after Levi Strauss & Co. announced a Terms of Engagement that set a new standard of compliance for vendor factories in the apparel industry. The TOE required manufacturing factories to follow health, safety and environmental standards set by Levi Strauss & Co. This standard – considered pioneering at the time – rapidly became the norm for most companies with a global supply chain.

Anderson argued that companies need to do more to create progress and move the industry forward: “Compliance has us focused on two things: a legalistic standard of “do no harm” and factory-level monitoring and reporting,” said Anderson. “While we’ve made progress in a number of areas over twenty years, the hard truth is that we haven’t made enough progress on improving the everyday lives of the people who make our products.”

A New Terms of Engagement
The company’s new approach will focus on programs that align with the UN Millennium Development Goals http://www.un.org/millenniumgoals/ specifically: improving maternal and child health; combating HIV/AIDs, and other diseases; promoting gender equality and empowering women; eradicating extreme poverty and hunger; and ensuring environmental sustainability.

LS& Co. committed to a nine-month advisory process with NGOs, other brands, labor unions and suppliers around the world. At the end of the process, Levi Strauss & Co. will release a white paper for public comment and then will begin implementing the new terms of engagement with suppliers in May 2012.

The company argued that a new terms of engagement is not only the right thing to do, but is good for business: “We are sure that if companies focus not just on the minimum legal requirements, but on a broader vision of social, economic, and environmental sustainability, they will be rewarded,” said Anderson.

Levi Strauss & Co. is a participant in the CERES Investor Business Roundtable for a Sustainable Economy announced this morning. The company made the commitment as part of a keynote speech delivered at the 2011 CERES Conference. For more information about the Roundtable, visit: ceres.org.

For the full John Anderson speech and more background information, please visit:http://www.levistrauss.com/new-termsofengagement. (Source: CSRwire PR)

Social responsibility, food and Government: the responsibility deal

The responsibility deal signed by the UK governement, backed by 170 companies such as Tesco, Unilever, Sainsbury’s, Carlsberg and Mars and Diageo, is going to rise a lot of controversy for a long time.

A key pledge outlined in the deal is the development of a new sponsorship code on responsible drinking while McDonald’s, Pizza Hut and KFC have agreed to place calories on their menus from September this year.

Other pledges include:
– Reducing salt in food so people eat 1g less per day by the end of 2012
– Removal of artificial trans-fats by the end of the year
– Rolling out Change4Life branding to 1,000 convenience stores

Achieving clear unit labelling on more than 80% of alcohol by 2013 is also pledged but this was a commitment made last year by drinks brands under work initiated by the last government.

Health secretary Andrew Lansley said: ‘Public health is everyone’s responsibility and there is a role for all of us, working in partnership, to tackle these challenges.’ He claimed that regulation is ‘costly and is often only determined at an EU-wide level anyway’.

ISBA’s director of public affairs Ian Twinn also adds “It has also been inclusive – businesses have volunteered to reinforce public health through their product development and marketing and health pressure groups have pledged to contribute through their campaigning activities.

The responsibility deal seems a great step toward the introduction of a more socially responsible fast-food industry, but not all the companies do have the same advise. Cafe Rouge, Bella Italia and Strada are expected to follow Subway and PizzaExpress by not signing up to the government’s health initiative. Subway, which already provides calorie counts on in-store posters, said the scheme was unsuitable for its stores. It is conducting a trial intended to establish the most effective way of displaying the information.

Meanwhile, a PizzaExpress source argued that displaying calorie levels is not consumer-friendly and clutters its menus.

One factor that will no doubt deter businesses, particularly smaller inde-pendents, is the costs involved. London restaurant chain The Real Greek says that, on average, it costs about £100 to test and certify each dish.

Being one of the first to make a move has its risks, not least the fear of being criticized in the press for selling high-calorie-content food. On the other side, being part of a movement that gives consumers greater transparency can deliver positive press coverage.

Toby Southgate, managing director of branding agency The Brand Union, believes the risks are worth taking. ‘Those brands that adopt early could win out, provided they handle the move carefully,’ he says.

Southgate cites McDonald’s, which has made efforts to ‘re-educate’ its con-sumers about healthier eating, arguing that disclosing calories on its menu board could provide incentive to consumption. (Source: BrandRepublic)

Ben & Jerry’s Fair Tweets for World Fair Trade Day


May 14th is the World Fair Trade Day, the first global campaign for The Fair Trade movement connecting producers and customers around the world and is endorsed by WFTO.
Ben & Jerry’s, known for its activism, has just launched this great campaign. The video explains how the “Fair Tweets” campaign works, a very simple but effective use of Twitter to help promote the Fair Trade Day.  
Just download the Fair Tweets application from www.fairtweets.com and the unused characters in your tweets will be automatically create relevant messages, or better, “Fair Tweets”!

LVMH Group to fund India’s Ready-to-Wear Fashion Retail

The world’s largest luxury goods conglomerate, LVMH Group, will launch its private equity fund in India, in an attempt to tap the burgeoning disposable income and rising aspirations of the country’s urban population, especially women.

L Capital, present in New York, Madrid, Milan, Shanghai and Singapore, will invest in India from its fourth fund, which is dedicated to Asia and has a corpus of $650 million. It also will focus on economies such as China, Malaysia, Indonesia and Thailand.

“We are looking at investing in companies in the lifestyle arena in Asia, primarily from the aspirational segment, meaning people who are moving from mass-produced goods to the next layer up,” said Ravi Thakran, managing partner of L Capital. “We are not keen on top-end luxury in India. We may look at that, but that is not our main focus.”

Mr. Thakran said Indian high-end designers are missing out on the real growth story in fashion by focusing on couture, which caters to the richest 500 families, and the wedding apparel business. The opportunity, he said, is in the ready-to-wear segment.

Mr. Thakran–who previously worked at the Swatch Group and helped launch Indian jewellery brand Tanishq in the U.K.–also, is betting on discretionary spending gaining pace in India.

“Today the world is moving towards a new center stage, which is certainly Asia, but China and India are two pillars of that,” he said. “This was the case pre-crisis but post-crisis it is even more so.”

However, India lags behind China when it comes to scalable brands and businesses. “In China, there are already at least 10 businesses we might be interested in which are worth $200 million to $250 million, whereas in India none of the (best known) designers have even reached the $100 million scale,” Mr. Thakran said.

L Capital is looking to bring in expertise on operational improvements in areas such as product design, logistics, store design, visual merchandising, talent search and training and development. Assistance in these areas for an early stage growth company is more important than capital, Thakran said.

He will be looking for deals in shoe, apparel and wine businesses, makers of lifestyle furniture, beauty brands, apart from skincare centers and spas.

“This is where the new consumption is rising in India,” Mr. Thakran said. “When aspirations and disposable incomes rise, consequently consumption in new arenas, our targeted sectors, also rises.”

Fashion designer J.J. Valaya, in an e-mail response, defended the prevalent focus on couture and wedding dresses, citing “lack of infrastructure, distribution and adequate capital.” He added that ready-to-wear is profitable only if it achieves volume.

“At present the top names in the country are not prepared to reach those numbers single-handedly,” Mr. Valaya said. “In the West too, a Louis Vuitton or a Jimmy Choo achieved reach through strategic corporate associations.” According to Mr. Thakran, Indian fashion businesses suffer because the creative force, the designer, is forced to look after operations due to lack of resources.

This shortage of resources has prevented recognized Indian businesses from transforming themselves into brands with greater economic value, he said. “If the creative guy is busy sorting out the accounts and logistics, and looking after the retail store, he cannot focus on the creative part,” Mr. Thakran said. “If you can bring to them knowhow in these areas and to build that front end, these brands can really unleash their potential.” (Source: Online WSJ.com)

How to implement grocery retaling and e-tailing in India

We found this article by Avinder Batra, published on IndianRetailer.com very interesting because of its very detailed approach to the implementation of a home delivery service for those small groceries retailers that are facing the competition with by multinational like Wal-Mart. This is also a business model which is very sustainable, by lowering CO2 transportation emissions and by mainting vital the traditional small retail grocery business.

Batra identifies a big trend in the grocery business- home delivery- due to two main reasons:

-High fuel price: Indian families are not interested in spending time on these products
-Families want more leisure time for themselves: Since both the partners are working, shoppers find this activity as waste of time to collect groceries in weekends

“When most of the big retailers are fighting for larger space, opportunities can be foreseen where you do not have compact space and can still run successfully through Etailing the Grocery model” Batra says.

The solution could be a mix of website, mobile, IVR.

High rental costs have made the retail business cumbersome for the independent players.  As told by Ragib Hussain, VP, Vice President Strategy at e.Soft Technologies,  “This type of model does not need much of investments. Etailing models (having virtual shop) can help retailers in expanding the business thus by covering larger area & reap good volumes.”

Small independent retailers need to increase their customer base: Online services and then home deliveries would fetch revenues only when you have large customer base. Margins are the rewards which an investor gets and this is what he has to work on to have with minimum liable cost.

Develop tie-ups/partners: Developing partnership agreements with the kirana shopkeepers and others nearby shops in the area that would reach the consumers through home delivery systems. This should  be the initial step of building a strong network in the areas concerned you want to cover.

 Also, it would decrease the liability on the retailer—warehouse cost, maintenance cost, procurement cost, etc. 

Develop your own site and make a strong viable back-end system for smooth functioning of the business model: either by creating your own hosted website or by opting for cloud services, this is a very important step. Cloud services would play a vital role to make updated connections with your suppliers, logistics suppliers, CRM updates and drop shipping suppliers. Because time is a critical factor, efficient distribution is of utmost importance. Technology plays a key role in enabling an efficient dairy distribution model.

 This is the back bone of the whole concept when the business starts working and it is the most challenging part of the business to make real-time connectivity with them.

Home delivery services: By tying up with the partners in the local areas, investor can direct the orders to those shops and through delivery boys; the task can be executed smoothly. This would even increase the revenue prospects of the local partners.

 If the business model is churning profits, there is no harm in having your own warehouses and company owned shops in the localities. This could be the way to expand your business model and make it stronger.

Each small outlet should be centrally connected to the warehouse to record the sale and updates are on real time basis. This would help to replenish the goods which are going out of stock.

Delivery system: Tempos and other mini trucks can be used to provide deliveries in the located areas if orders come in bulk in particular area. (Source: IndiaRetailer.com)

Cosmetics industry faces sustainability

We always talk about sustainability in the retail sector dealing with products such as food and apparel, but what about cosmetics? There has been increased interest from the cosmetics industry toward sustainability, the reason why a  Sustainable Cosmetics Summit, is going to be held in New York from May 12 – 14.

In the cosmetics business too, sustainability has become very important to help companies to steer their way out of the recession and tap into the big opportunities that are likely to arise over the next five years.

As stated by Irina Barbalova, head of beauty and personal care for Euromonitor, the four key trends in the cosmetic industry include focusing on the ever-growing emerging markets, new media in western markets, offering better value for money to consumers who continue to be hard hit by the economic downturn in western markets and communicating sustainability through brands.

As stated by Aveda‘s VP, Chuck Bennet “The environmental footprint of a cosmetic, or any product, must account for the full ‘life cycle’ of the product. This includes many factors such as energy and water consumption, emissions to the environment. It can significantly misrepresent the actual footprint of a product if the focus is limited to, for example, manufacturing only.”

According to market researcher Accenture, co-operation with packaging suppliers in efforts to reduce the overall carbon footprint of products. Pressure to reduce environmental impact, and to reduce costs generally, is forcing companies to take sustainable packaging seriously. A supply chain view of packaging provides the breadth of vision required to develop optimal solutions: for example, the recycling of some packaging materials and the switch to reusable packaging. To address sustainability, Accenture recommends companies scan their supply chains to determine the true value proposition of different strategies to reduce, reuse, and recycle.

The research firm estimates that companies can save 3 to 5 percent in supply chain costs by adopting green packaging initiatives, in addition to the revenue uplift from green consumers.

In the US, L’Oreal for example made inroads to reduce the environmental impact of its beauty product packaging by introducing two new assessment tools to its package design process, while Unilever has looked to reduce the amount of waste used in the packaging of a product, yet maintain protection. Unilever has minimised the packaging on its stick deodorants as well as making them more lightweight, to reduce the impact of transporting the goods.

In France, Clarins has built an alternative model, such as agreeing long term Fairtrade contracts with producers of katafray in Madagascar, offering 5% of the sales price from relevant brands to help local communities. “I believe consumers today are more knowledgeable than before, thanks to the media, so they can see through companies that greenwash,” said Yvette James, head of Clarins‘ responsible development division. (Source: CosmeticDesign.com, warc.com. Picture credits: Americanspamag)

A Pop-up revival in retail marketing

Over the past 12 months, a growing number of brands has turned to pop-up activity to provide a burst of PR activity and another reason for consumers to interact with their brand – hopefully ensuring that the effect of these events are going to last even after the shutters come down. The last news about a pop-up store is related to Marni, the Italian fashion brand, located at the Ocean Centre in Hong Kong and featuring the whole Marni Edition.

The pop-up phenomenon dates back 2004, when fashion brand Comme des Garcons opened a guerrilla store in Berlin, followed by a long list of known brands, such as ony Ericksson, Levi’s, Breil, Uniqlo or the most recent ones of Apple, Nokia, and Adidas Originals.

The pop-up strategy allows brands to tap into new markets at low cost, as rents are cheap and the ‘concept store’ strategy creates a buzz without investing in advertising.

Even thought they are an excellent way to deliver a brand experience there is a question over their reach, as they engage only those consumers who actually visit. Jeremy Rucker, head of Hotel Retail, experiential agency RPM’s pop-up and retail division, says the growth of pop-up activity is partly in response to the levels of empty retail space on high streets. ‘With so many brands turning to online-only channels, pop-up activity helps bring excitement back to the high street,’ he adds.

The big question for brands is how to drive investment beyond the life span of the pop-up store and the PR generated at that time. ‘Data capture is fundamental, but creating engaging ways for the brand to interact with the consumer that can a develop a life of their own should be considered,’ says Owen Cato, creative director of retail agency Live & Breathe. ‘Extending activity in the pop-up store online and into social-media activity would work well.’

Claire Stokes, managing director of experiential agency The Circle Agency, adds: ‘Previously, when brands have talked about experiential, it has been all about being in the live space. Now it is about building new digital layers to ensure the halo effect of any given event stretches beyond just one single event.’ For example, when EA Games promoted its key Christmas video-game releases in shopping centres, it encouraged consumers to ‘check in’ to win titles. More than 3000 consumers took part, promoting the event far beyond the boundaries of the event venue.

However, industry experts warn against investing in digital at the expense of the core event. Trevor Hardy, founder of creative agency The Assembly, contends that pop-up activity should be viewed as another marketing channel. ‘The more sensory and multichannel the experience, the better it becomes,’ he adds. ‘The risk is that interactive and social media may dilute the experience – 100% of the efforts should be dedicated to ensuring the experience is the best it can be.’

However, the fact that even retail brands with a consistent high-street presence are turning to pop-up activity perhaps suggests that brands should be creating the excitement of a pop-up shop in their existing retail space every day. Hardy argues that this is not possible, as the ‘focus is on getting the maximum return per square foot’.

Caroline Wurfbain, client services director at experiential agency Jack Morton Worldwide, predicts that more brands will launch pop-up activity over the next 12 months. ‘The challenge is that if ideas don’t change, there is a risk that the market will become saturated and consumers will get bored,’ she adds.

Many of the most successful pop-up launches and events of recent years have not been the work of commercial brands, but independent chefs and artists. As a result, a raft of brands has attempted to mimic the halo effect of organic movements such as Hidden Kitchen, a private supper club that serves 16 people a seasonal 10-course tasting menu paired with wines. However, if these brands fail to offer consumers a compelling reason to interact with them, their experiential strategy risks being dangerously insubstantial (Source: Marketing Magazine)

Chinese consumers are willing to pay for sustainability

We have already talked about China as one of the fastest growing markets in terms of customer awareness towards sustainability: Chinese do appreciate and search for sustainability.

A study released on April 18th by global advertising and international marketing firm Ogilvy & Mather answer to the question that our customers usually ask: “Do consumers are willing to pay more for sustainable products?”. The study shows that the answer is “Yes, Chinese consumers are willing to pay a small premium for environmentally friendly products”, but they place responsibility to fix China’s environmental woes on the government.

Convenience is the main factor driving shopping decisions for more than half of the 1,300 Chinese consumers across China, but 71 percent said they would pay up to 10 percent more or higher for some “green” products.

“Within about a 15 percent price band, if two items have comparable brand image, people will go for the sustainable option,” Kunal Sinha, the lead author of the study and head of the company’s sustainability practice in China, told Reuters.

“But if you were going to sell it purely on its sustainability credentials, it wouldn’t fly,” he said, referring to the range of green products and sustainable behaviors covered in the study, from toiletries to food and vacations.

Shoppers were willing to open their wallets the widest for sustainably produced milk, at premiums of 17 to 20 percent, the study said, an indication of how severely scandals involving tainted milk have damaged China’s dairy industry.

The study noted large gaps between the sustainable behavior Chinese consumers profess to and their actual consumption habits, a trend that also exists in developed markets such as the United States.

One measure of their optimism: more than 90 percent of those surveyed said they thought the sustainability movement was growing. But fewer than a fourth or respondents said they felt empowered to solve environmental problems on their own, and instead looked to the government to fix the country’s environmental woes.

Chinese consumers have long been hesitant to loosen their purse strings, more so than consumers in other countries at a similar stage of development. But domestic consumption is picking up quickly and many analysts think it has reached a turning point.

That means Chinese consumers’ buying power may be out-pacing their green ethos. The survey said the concept of sustainable living is not yet mainstream, with respondents saying those leading the movement in China are seen as idealists.

Joel Backaler, a director at the consulting firm Frontier Strategy Group who blogs on Chinese consumption trends, says mainstream Chinese consumers are focused on aspirational purchases in the short to medium-term and will not begin focusing on green and sustainable consumption for years.

“The vast majority of China’s middle class are for the first time learning how to spend and join the consumption phenomenon that their counterparts in the U.S. and Western Europe have long enjoyed,” he told Reuters in an email. (Source: Reuters)