Inflation is high, and shoppers are rightly watching their spending as the rising cost of living dominates UK news headlines. At the same time, consumers are becoming more environmentally and socially conscious, with many wishing to align their shopping habits with their personal values, writes Ralph Robison, Head of Retail at BJSS.
This poses a challenge for grocers; committing to more environmentally-friendly practices and a more inclusive workplace are not new initiatives. However, wide-reaching and ambitious grocery CSR commitments don’t always become a reality, and the modern consumer is typically too savvy to fall for mere promises of goodwill. They want to see action.
Choices to make for consumers and grocers alike
A recent survey found that 77% of consumers in the UK want to actively reduce waste, and 51% plan to buy less plastic. Peter Aschomeneit, chief executive of insights automation platform Quantilope, said that “while consumers expect brands to take responsibility for the sustainability of their products, they are more than willing to do their bit to save the planet.”
This is easier said than done. While consumers want to shop sustainably, they increasingly cannot afford to. IGD chief executive Susan Barratt recently said that “Shoppers are having a hard time of it right now. We know from our ShopperVista data that sustainability is an important topic for shoppers, but the cost-of-living crisis is already impacting the trade-offs between affordability and sustainable shopping.”
This subsequently puts grocers in a compromising position. Those who have invested in and promoted big ESG plans are now having to balance them against the challenge of inflation, which shows no signs of slowing. As a result, cost continues to be the primary concern for grocers. Plastic packaging is still commonplace, processed food continues to be made more affordable than fresh, organic options, and the vast majority of deliveries are still made in petrol vehicles, as changing tact is costly.
Highlighting the reality of this dilemma, in July, Richard Walker, the Managing Director for Iceland, publicly admitted that the British supermarket chain will miss its target of being plastic-free by the end of 2022. Walker cited the COVID-19 pandemic and the ongoing war in Ukraine as reasons for the delay in progress. Additionally, Iceland announced in March that it would be temporarily reverting back to highly-controversial palm oil in some of their own-brand food items due to a dramatic increase in sunflower oil prices.
In this instance, Iceland has made a controversial choice to prioritise its margins and bottom-line results over its environmental pledges. A sensible move, perhaps, in a time of high inflation and interest rates, but how will conscious consumers respond? Shift Sustainability’s ‘Green Lies: Exploring Consumer Perceptions of Greenwashing’ report found that 40% of UK consumers would not recommend a company to friends or family if they thought the company was ‘greenwashing’.
The short game vs. The long game
In the short term, grocers have difficult decisions to make to mitigate the impact of inflation. If they choose to focus on protecting profits by prioritising affordability, their credibility when it comes to environmental and social values will be lost, as evidenced by Iceland.
In the long term, grocers should be looking at striking a balance between costs and margins versus leveraging their ESG credentials. This inflationary environment will not last forever, and consumers are unlikely to forget if their grocer is willing to ditch people and planet in favour of profit.
What can help grocers to manage these challenges?
Not shying away from the current economic challenges while continuing to demonstrate a tangible commitment to environmental and social practices needs to be the way forward for grocers if they’re to come out as winners. And many grocers are doing this. For example, under its first female CEO, Shirine Khoury-Hag, Co-op is recycling plastic bottles in-store, using compostable plastic bags, protecting store staff with body cameras, as well as leveraging its commercial entity by ensuring its suppliers share stats and progress on their supply chain. This will stand Co-op in good stead.
Additionally, many grocers have invested in agile technology to support their ESG goals. Again, Co-op has been leading by example with its new technology platform, Caboodle, launched in June, which helps retailers and communities tackle unnecessary food waste. The app allows supermarkets, cafés and restaurants to connect with community groups and volunteers so that fresh, nutritious, surplus food isn’t wasted. Customers can enjoy the dual reassurance of shopping with a retailer that is doing social and environmental good without it impacting their own wallets.
Co-op are by no means the only grocer using agile technology to help make a positive impact in this inflationary period. Another example is Walmart’s use of Returnity, a reusable shipping and delivery packaging company, which has custom designed a durable, multi-use bag for Walmart’s InHome Grocery Delivery Program. The bags are reducing packaging emissions by 60% and packaging costs by over 50%. The combination of reusable packaging and smart technology is allowing retailers to move away from single-use packaging while helping consumers and businesses alike reduce waste, resources, and emissions. California headquartered LimeLoop is also providing a platform to facilitate reusable delivery packaging – emphasising that there is absolutely an opportunity for grocers to leverage tech to help them achieve their ESG goals while they navigate inflation.
Navigating the future
With so much uncertainty ahead, grocers need to tread carefully and plan meticulously. They must keep an eye on both consumer expectations and inflation equally, and pivot accordingly. By investing wisely in the right technology, grocers can ensure they are not just benefiting the health and wellbeing of the planet and the direct community that they sit within, but also protect their bottom-line results too.
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