Retailers can be the greatest force for social good on the planet, says author and business-for-good advocate Afdhel Aziz – in part because of their scale.
“You have unbelievable abilities to control the brands that come into your stores. And you have the ability to influence them to make decisions on so many different things. On social and environmental issues, to helping people get paid fairly, to reducing packaging and plastic use.
“If there’s a revolution coming, you guys are the keys to unlocking it,” Aziz told more than 200 delegates to a BrandLoyalty conference in Amsterdam.
Examples of the power of retailers impacting on social good can be seen around the world. Aziz spoke just days after a fatal shooting in a Walmart which prompted America’s largest retailer to stop selling guns and ban customers from bringing them into their stores.
“I know it seems crazy to people in Europe, but in America you can walk into a store carrying a gun and Walmart was responsible for 30 per cent of all handgun sales. So they’re taking a hit when they say we’re not going to do it anymore. But you can’t have a business when people are dying in your stores.”
Other examples include Ikea working on circular-economy initiatives such as experimenting with rentals and recycling returned goods and McDonald’s, which buys 2 billion eggs a year, shifting to cage-free eggs. Starbucks offers free college education to its staff (and in China has just announced a program funding insurances, pet care, study and charity work). Boxed pays the tax on feminine-hygiene products and adventurewear brand Patagonia pays the fines for any staff arrested while protesting for environmental causes.
“All of these are amazing examples of how retailers can be a force for good. This idea is no longer niche: it has now become mainstream.”
Aziz sees three massive shifts for good hitting businesses simultaneously. First, consumers are wanting to buy products and services from companies that do good, secondly a growing number of employees want to work for those companies and third, investors are seeking out businesses doing social good.
“Social activism is now the second-leading driver of brand strength. So all other things being equal – product, price, packaging and promotion – you’re now seeing the purpose-driven brands outperform the market.
“This is a massive economic opportunity. The global annual spending power of millennials is US$2.5 trillion and 95 per cent of them say they will switch brands to one that has a good cause in an authentic, meaningful manner.”
Every time a consumer spends money with those brands, they are casting a vote for the kind of world they want.
“These generations feel disenfranchised at the ballot box. They are voting with their wallets, and they want brands in their lives to stand up for their values.”
Brands doing genuine good, that are focused most on delivering stakeholder value and looking at everything from a social or environmental perspective, are now outperforming the rest of the S&P 500 by 26 per cent.
“So the myth that purpose cannot drive shareholder value is now being exploded. What you’re seeing is … ethical funds impact investing. There is more money entering the sector than they know what to do with.”
The trend, he says, is only just beginning. What happens when all of these generations – Gen Z, millennials, Gen X – realise that they can put their pension funds into supporting companies that do good, that they can choose to invest in fossil-free companies, companies that don’t support guns? There are trillions of dollars sitting in pension funds waiting to be put into companies that do good, he says.
Larry Fink, chairman and CEO of BlackRock, the single largest institutional investor in the world with $6.84 trillion of assets under its management, has announced that from now on, every company BlackRock invests in needs to show social impact alongside its financial returns.
“Profits are in no way inconsistent with purpose. In fact, profits and purpose are inextricably linked. The best companies on the planet today have figured out purpose drives profit.”
Employee driven
Aziz believes the changing attitudes of employees is one of the most surprising places where the business for good movement is attracting attention. “You are now seeing two new generations entering the workforce – millennials and Gen Z – with vastly different expectations: 85 per cent of Gen Z employees believe companies have an obligation to help solve social problems.
“An obligation,” he stresses. So if retailers want to future proof their business for the next two generations of talent, they need to make sure these generations of workers understand their employer is doing something meaningful besides their core business.
Aziz has seven simple steps for businesses wanting to do good.
- Know your purpose. Know why you exist to do more than just make money.
- Find your allies with a common purpose: suppliers, organisations doing good. “You cannot do this alone.”
- Think about people as citizens, not just consumers.
- Lead with the cool. Cool is a weapon, a competitive advantage to bring people in to do good.
- Don’t just advertise. Solve problems in people’s lives.
- People are the new media. Through social media and the scale of word of mouth. “This is the new way of getting your message out there.”
- Make sure you back the promise up with the proof. “This is crucial. You cannot just talk the talk, you have to walk the walk.”
Among Aziz’s favourite examples of major corporations doing good is CVS Pharmacy, the drug-store network with more than 10,000 stores across North America. In September 2014, the company stopped selling cigarettes and tobacco products, previously accounting for US$1.5 billion of its annual sales.
“They were wellness company, and they realised they couldn’t stay true to their purpose of being a wellness company if their products were also killing their customers. So they made that call. And the good news is that the market has rewarded them, their profits have increased. But more importantly, they had a massive societal impact. In states where CVS’ share is higher than 50 per cent, smoking went down considerably … there was a ripple effect in their communities.”
CVS, he explains, is an example of a retailer making a decision based on integrity, recognising that taking a stand means you may lose money. But they made the decision for the greater good, because of the health of their consumers and the society that they are a part of as well.
Ingenuity in the aisles
Another example of retailers doing business for good is a Finnish supermarket chain S-market, which launched the world’s first grocery happy hour. By 6pm all the products which are perishable are discounted at a rate that progresses through the evening until closing time.
By 9pm, they are half price. This drives consumer demand at the exact time retailers have traditionally had to throw the perishables away.
“It’s not rocket science. It’s just a price,” Aziz says.
Elsewhere, apps are being developed that prevent food waste at retail stores by alerting nonprofits who collect it to feed the homeless.
A restaurant in Amsterdam called Instock invites customers to fight food waste with a fork. It crafts meals from food that would otherwise have been thrown away by by grocers like Albert Heijn. The menu changes daily depending on what is available.
“They are creating a living, vibrant, thriving restaurant that teaches people how to cook out of this idea.”
Beyond CSR
In closing, Aziz says companies are moving beyond the era of Corporate Social Responsibility into a new era of Corporate Social Opportunity.
“Problems are gold mines for those companies willing and brave enough to go out and solve them. But you have to let your values drive your value. In other words, you have to learn to use your heart, not just your head. The heart is a muscle that gets trained out of us in business. But to do this kind of work, you have to use your heart as well as your head.”
To be a leader, he says, you need to have the brain of a CFO, the heart of a storyteller and the soul of an activist.
This feature originally appeared in the Inside Retail Asia’s magazine edition, available by subscription in digital or print versions.
