RTT White Paper 4 by maclaren1

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									     KPMG / SPSL Retail Think Tank – White Paper #5
                                           July 2007

For immediate release


‘Retailers are not influenced by ethical consumers; it’s simply that a
socially responsible retailer is more profitable’


Introduction

The topic for this White Paper was debated by the KPMG/SPSL Retail Think Tank in July
2007 during a period of heightening public interest and increasing activity by retailers on
ethical issues. In debating this issue, the Retail Think Tank (RTT) came to the following
conclusions:

           There is no such thing as a standardised “ethical” consumer. Ethical and
            environmental concerns are not just an affluent urban middle class issue, but
            issues that have genuine scale and that are gaining momentum;

           The social responsibility considerations of a retailer go beyond the ethical issues
            which are top of mind for the consumer at any point in time;

           Retailer strategy and behaviour in this area is influenced by a wide range of
            factors including a small lobby of consumers with a disproportionate voice and
            the media power of the lobbyist NGO. Retailers who do not respond will, it is
            feared, be left behind;

           There is no direct link between social responsibility and profitability today, but the
            RTT sees a future where a less socially responsible retailer will be less profitable;

           Members agreed that there is no road map to success; retailers are very much in
            uncharted territory, and having to develop their strategy as they go along;

           Such is the speed of development and interest in ethical matters, retailers are
            having to take a lead themselves, rather than wait on frameworks and policies
            being drawn up by civil government.


What Do We Mean By Ethical Consumers?

The RTT agreed that „ethical‟ is not an easily identifiable „label‟, for either consumers or
retailers. This because of the broad and apparently constantly expanding range of issues
which can come under the term, some of which, as RTT member, Professor John Dawson of
the Universities of Edinburgh and Stirling, points out, can be contradictory; “for example,
reducing food miles and encouraging local sourcing may be antithetical to supporting
agricultural expansion in developing economies”.
Elements encompassed in the term „ethical‟ which were considered by the RTT include the
following;
             fair trade
             child/slave labour
             carbon footprint
             organic
             foodmiles
             animal welfare/testing
             recyclable/bio-degradable
             global warming
             supplier relationships

We can see simply from running our eyes down the above list that the term ethical, therefore,
encompasses moral, planet health, welfare, financial and matters-of-trust issues. All of these
have entered the public consciousness and stimulated debate to varying extents, some of
them for the first time over the last 12 months, culminating in the current massive interest in
the media and elsewhere.


Research from the Henley Centre Headlight Vision, published recently in Marketing, shows
that consumers from all backgrounds are going green. In the survey of 2,427 UK adults, 62%
said they have become more environmentally aware over the past 12 months. The same
proportion felt that climate change is the biggest challenge facing the world, and sustainability
has also become a growing issue; more than 80% want to buy local food, reduce product
packaging and recycle rubbish.


The study splits the UK population into five segments. The most committed environmentalists
fall into the so-called „principled pioneers‟ and „vocal activists‟ groups, which make up just 8%
of the population. At the other end of the spectrum, 26% of the UK falls into the „onlookers'
category whose interest and activities are more peripheral and limited. Between these lie two
big groups: the „conveniently conscious‟ (35%) and the „positive choosers‟ (31%); and in
many ways the most interesting segments that retailers need to appease. Both are
concerned about the environment and will change their lifestyles accordingly, as long as the
attendant actions are easy. Sian Davies, Member of the RTT and CEO of Henley Centre
Headlight Vision added; “Both these segments are aware of the issues around ethical and
environmental consumption and starting to do something about it in their purchase
behaviours.



“The Positive Choosers want to buy ethically from „good‟ companies and boycott „bad‟ ones.
They support their local community and buy local etc. This group is more affluent, less price
sensitive and thus a good target for more expensive ethical/environmental produce (eg fair
trade, organic). The Conveniently Conscious are making easy changes to their lifestyles, are
not willing to compromise on quality or value, but are an interesting target for major retailers


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who can offer them simple ways of „doing the right thing‟. Proctor and Gamble‟s Ariel 30
degrees campaign plays well to this segment. Members of both these groups are drawn from
across society. Being green is not just about being able to afford it.”


Despite the heightened attention being given to ethical considerations, the RTT points out that
the majority of individuals are currently no more than mildly influenced when it comes to their
buying behaviour. Helen Dickinson of KPMG commented that “There is often a discrepancy
between what people say and what they do because of a fear of paying more, a fear of not
making a difference with their individual buying decisions or because of a lack of information
which enables them to make an informed choice. “


Given the wide spectrum of issues associated and embodied in the term „ethical‟ and the
diverse impact on consumer behaviour and preferences, the RTT believes that it makes little
sense to talk about the “ethical” consumer per se. Instead the RTT conceives that ethical and
environmental concerns are not just an affluent urban middle class issue, but an issue and
influence on consumer minds and actions that has genuine scale and that is gaining
momentum.


So what is a Socially Responsible Retailer?

There is one extra dimension that the RTT added to the constitution of a „socially responsible‟
retailer over the list of ethical topics given above. This comprises transparency in product
terms, particularly with respect to consumer health and dietary considerations. In particular,
the RTT considered terms such as “environmentally friendly”,
“additive/preservative/hydrogenated fat free”, “no added sugar” and “no artificial
colouring/flavouring”, believing that retailers should be encouraged to tighten up on their
terminology.


The RTT recognises that there is a significant „dose‟ of political correctness involved in this
movement. Possibly some retailers, they concluded, wish simply to be seen as „concerned‟
about ethical issues so that they can continue to enjoy the support of their ethical consumers
alongside those shoppers who are less interested.


RTT Members discussed therefore whether retailers believe that being “socially responsible”
is just a current fashion which might pass, as all fashions do, or whether they believe there is
real substance and longevity behind the trends and are planning accordingly. The RTT
agreed unanimously that the latter was the case.


It was felt, however, that the level of “social responsibility” in any retail business depends on
the establishment of a code of ethics for the whole company and on maintaining it. In most



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cases consumers may be unaware of the detail or maybe even the presence of these internal
codes of ethics, but they were subsumed within the intrinsic culture of the retailer, as for
example in The Body Shop.


The RTT recognised that such is the broad scope of ethical issues and social responsibility
considerations, that this, in itself, presents an enormous challenge to retailers, complicated
still further by the voracious speed of change and transience in public attitudes. Aligning
themselves, monitoring the evolution of their social responsibility policies and actions has
huge potential time, cost and restructuring implications for retailers, the RTT pointed out.

Members felt that three different kinds of retailer strategies around the „ethical‟ and „green'
issues would eventually be seen:

        -    Retailers who will make their changes behind the scenes, quietly and simply,
             driven by their internal principals, operations and business culture.

        -    Retailers who will be more visibly focussed in their ethical offering and ranging:
             e.g., around fair trade coffee, organic cotton etc. with the attitude that „if it works
             with our target customers, we‟ll continue it; if not, we won‟t‟.

        -    Retailers which adopt a very public, PR-oriented position. Their methods will be
             to respond to customer concerns in a corporate, „macro‟ approach across their
             entire supply chain and product range, announcing company-wide strategies
             laced with words like „commitment‟, „promise‟ and „guarantee‟ that aim to address
             the organisation‟s overall impact across all ranges of ethical issues.

The RTT agreed that retailers adopting the third strategy will, most likely, benefit in the short
term future hugely from these PR efforts, and if they get it right, they will be able to claim
some portion of the moral high ground and enhance their position with their customers. The
downside, of course, is that they will become far more of a target for that breed of
investigative journalist which loves to uncover hypocrisy. It will be, therefore, something of a
balancing act and one most suited to companies which already have a very visible ethical
presence and which enjoy high levels of customer trust.


As if to prove the point, however, about how vulnerable are „elite reputations‟ to scrutiny and
criticism, Whole Foods chief John Mackey recently apologised to stakeholders for
anonymously participating on on-line message boards. And all this opprobrium, despite the
fact that he has recently reduced his own salary to $1, donated his stock options to Whole
Food's charitable foundations, and set up a $100,000 emergency fund for team members.

Overall, the RTT members could not agree on the motivations behind such all-encompassing
PR stances; there was suspicion by some members that this may be more „packaging‟ than
actual „action‟ or „change‟. Members acknowledged, however, that to some extent this is still
uncharted territory, and wholesale changes to strategy, supply chain and delivery may not yet
be thoroughly thought through by the frontrunners, leaving opportunities for those who come


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second and use the experience of the early adopters so as to avoid their mistakes, and
consequently it is they who may get it right.


What is the Inter-relationship between Ethical Consumers and Socially
Responsible Retailers; Who is Influencing Whom?

RTT member Sian Davies pointed out that: “our segmentation shows only a very small
proportion of UK consumers are currently Vocal Activists (just 4%), who put pressure on
companies and lobby them to change their product offer and sourcing strategy. However, they
do have a disproportionate influence and, along with the wider NGO lobby, they can have a
very big negative brand and reputation impact on retailers if they chose to target or scapegoat
a particular company.”


Furthermore, the RTT panel believes that the number of consumers who do act „ethically‟ and
therefore put pressure on retailers around these issues can only grow from the very small, but
vocal original proponents. It believes this to be the case, particularly as the younger, more
green and ethically conscious generation inherits purchasing, and even political, power. Our
members were keen to point out, however, that the tides of fashion on ethical matters may
well wash in and out as areas of ethical concern are highlighted or pass gradually out of the
media to have their places taken by others. They concluded that although this may well be the
case, the groundswell of ethical concerns per se would not subside.


Although „ethical‟ and socially conscious issues may be „fashionable‟ and „PC‟ right now, the
RTT does believe that a growing number of consumers in the future will care about this more
and more, and retailers‟ challenge will be to understand their target market as it „morphs‟ and
grows into a more socially-conscious one. They feel that many children, taught about ethical
issues at school, such as disproportionate and „unfair‟ carbon consumption leading to global
warming, will push their sometimes reluctant parents into more ethical behaviour and thus
significantly influence buying and behaviour patterns.


Currently, retailers are answering to a small lobby of consumers with a disproportionate voice
around ethical issues; in future, the RTT believes that the majority of consumers will have a
socially responsible „bent‟, and make purchasing choices based upon it. Retailers who do not
adjust to this trend will, it is feared, be left behind.


The RTT reflected that it is partly as a consequence of a small body of motivated consumers
punching above their weight, backed by the media power of the lobbyist NGO and the
swelling interest in ethical issues, which is encouraging retailers to pick up the baton, develop
their policies and run with them.




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The RTT believes also that retailers – specifically those that are publicly led – will feel
pressure not just from customers, but also from shareholders and institutional investors keen
to flaunt their socially-conscious qualifications, too. The panel feels that well-briefed lobby
groups can cause not only embarrassment but even a change of leadership by asking
awkward questions at Annual General Meetings of publicly quoted companies. This will be a
scenario that every CEO, CFO and board of directors will fervently wish to avoid.


RTT members expressed the view that, because supermarkets are the biggest retailers in the
country, they may/will feel the most pressure to answer to the „food miles‟, „organic‟, „fair-
trade‟ and other key, ethical lobbies. As „easy targets‟ for NGOs and lobbies focussed in
these areas, supermarket retailers may be pressured to be at least one step ahead of their
non-food competitors to develop strategies that respond to these issues.


The RTT reasoned also that a few pence on a jar of coffee was likely to be more acceptable
to the ethically serious consumer than a few pounds on a dress or trousers which might then
really test customers‟ ethical credentials. The RTT has no doubt that many fashion retailers
will break into a panic sweat at the thought of having to price their clothes out of the „impulse‟
category and into the „planned purchase‟ arena. However, supermarkets are increasing their
non-food offer too and thus will also have to have strategies that respond to ethical questions
around those higher-priced products.


However, given the huge and apparently ever growing list of topics landing on the ethical
platform, many of which are not necessarily compatible with others, nor with other purchase
drivers such as low cost, availability and choice, Members believe that retailers have their
work cut out to avoid any criticism.


Retailers who plan to actively make or be seen to make a difference face a double threat on
ethical issues; firstly from the ethically-based activities of rivals seeking to quickly claim the
moral high ground and secondly from the somewhat contradictory, hard to interpret demands
of ethically-motivated consumers. The RTT suspects that what many retailers are likely to do
is to act first, with a flourish, on those activities and changes which do not add significantly to
costs but which instead can generate an actual or perceived benefit, with only minor
adjustments to „business as usual‟. This will give them a breathing space in which to further
understand their customer attitudes and their ethical demands and then fashion their
response accordingly. In this respect, therefore, the Members feel that retailers are indeed
reacting to evolving consumer and lobbying pressure.


As Paul Clarke, of Barclays Retail & Wholesale Sectors said; “There‟s little doubt that lobby
groups can drive retailers. Which retailer wants protesters outside its doors? There is real fear
of consumer groups and what may make it worse for retailers is that they‟re not sure how to



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protect themselves except by being involved in some way with ethical issues. In reality,
there‟s no way of knowing where a lobby-group attack will come from and over which issue
that might have been entirely, and inadvertently, overlooked.”

Indeed, the RTT felt that there is an inevitability to the development of ethical strategies
among retailers. Without a credible, socially responsible aspect to its strategy, a retailer may
be less „fashionable‟, if not now, then certainly in the future as consumer numbers, and their
views, increasingly occupy the middle ground and move forward in this direction. Richard
Hyman of Verdict Consulting added; “The really important question here is to what extent
people care. In my opinion, most people really don‟t; they just want to feel ethically
responsible and all retailers have to do is satisfy that much and no more.”


Retailers considered to be at most immediate risk in regard to their ethical positioning include
the value retailers, which may well be widely perceived as exploitative of third world, low-
wage cultures. Our panel feels that despite their best efforts, retailers who source their
clothing, toys and other household goods from third world locations are, even if they believe
they have made every effort to preclude it, likely at some stage to find themselves accused of
such socially irresponsible practices as exploiting child or slave labour.


And yet, as Nick Bubb, Pali International, pointed out; “The people who shop in Primark are
not just the less advantaged. Its value proposition has strong resonance across the board
with the more wealthy bargain hunters too.” Tim Denison of SPSL added that; “Cost is not
everything here. If you source products that are more ethically sound in some cases their
quality may be compromised. So that‟s an important consideration for cut-price retailers and
their long-term goals.”

The RTT felt that many retailers are between a rock and a hard place; any „socially-conscious‟
strategies retailers develop at this point will be an investment on their part in their own future,
but one with an uncertain outcome. They know they have to do something but the choices are
only appealing if everyone else does it too and if they leave it to the last minute it may cost
them not only a large chunk of their business but their hard-won public trust,


Does A Socially Responsible Retailer Have a Competitive Advantage?

The simple answer to this; is both yes….and no. There have long been ethically-led retailers,
well before it became fashionable. The RTT acknowledged that in today‟s environment a
retailer without a socially-responsible response is strongly disadvantaged. However, where
the doubt comes in, is as to what constitutes a socially responsible programme which can
contribute to that sought-after competitive advantage.




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The Members believe that it is the grandiose schemes, grabbing the headlines and winning
the powerful PR points that are delivering some form of competitive advantage at this point in
time. For instance, the Thames is once again being used to move goods by Sainsbury‟s,
London‟s oldest grocer, from depot to store, as it did way back in 1869. If the trial is rolled out
to stores in the same area, the claim is that this could save 350,000 road kilometres every
year, the company claims.


Sainsbury‟s is certainly not alone, however, in attempting to find answers, draw headlines and
claim the moral high ground in the ethical agenda. In January this year, Marks and Spencer
announced a business-wide £200m eco-plan to reduce the company‟s environmental impact
by 2012. The 100-point „Plan A‟ includes commitments on climate change, waste, raw
materials, fair partnerships and healthy eating. M&S CEO, Stuart Rose, who recruited in
Jonathon Porritt - now founder director of Forum for the Future - to lend credibility to the
whole scheme, said; “This is a deliberately ambitious and, in some areas, difficult plan.


“We don‟t have all the answers but we are determined to work with our suppliers, partners
and Government to make this happen. We believe a responsible business can be a
profitable business. We are calling this Plan A because there is no Plan B.”


Helen Dickinson, of KPMG, said; “Is this kind of commitment a shift in fundamental thinking?
I think the answer is undoubtedly; yes, would M&S would spend £200 million unless there had
been some serious analysis of what the return on investment would be?”


Other Members of the Retail Think Tank are more sceptical. One commented; “It may well be
that M&S made a splashy announcement about what they are going to do simply because
they might otherwise be perceived to be falling behind Asda, a company whose parent
Walmart has learned very much the hard way how easy it is to be seriously hurt by lobby
groups and NGOs on ethical-behaviour issues.”


Richard Hyman of Verdict Consulting added that “Personally, I don‟t think that the change is
going to go that far. In businesses in the west, it will become a formula like part of the overall
packaging – a kind of ethical kite-mark. It‟s seen by the most aggressive retailers as a
window of opportunity, to gain competitive edge. How far will they go down that road? It
depends. I feel that there will, eventually, be Government-legislated standards of ethical
trading, to do with all the people you do business with, but how far that will really go remains
very much to be seen.”


Despite some differences, all RTT Members acknowledged the one thing that Tim Denison
pointed out: “The retailer‟s imperative and top priority will always be to respond in ways that
are also profitable. Like any other commercial enterprise, retailers are in business to provide



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goods and services profitably and to grow shareholder value.” Sian Davies agreed: “I think
that retailers are being influenced by rapidly changing consumer attitudes and behaviours. Of
course their priority will always be to respond in ways that are also profitable. Our research
suggests there are win/win opportunities for socially responsible retailers and their
consumers.” And at a recent business presentation, ASDA‟s CEO, Andy Bond, affirmed that
its „green action‟ is linked with making money too. He also affirmed that going green will not
automatically drive business costs higher.



Picking up a point that Richard Hyman made earlier, Members generally foresee a time when
a series of government–regulated „standards‟ are developed which will enable businesses to
operate in a more „formulaic‟ one-of-the-pack way, along socially responsible lines. The
timber industry was highlighted as an example here, where efforts have been made to
regulate, brand and only allow timber to be used from carefully managed and sustainable
resources. However, if this is to be a template for other ethical policies it‟s already a heavily
floored one (no pun intended). Journalists have uncovered graft and corruption on a massive
scale leading to serious and endemic hardwood de-forestation in certain third-world countries,
allegedly supported by military and government at the highest level.


Nevertheless, at present the RTT sees a „window of opportunity‟ for retailers to establish a
competitive edge in this space soon and gain publicity and position from it. It believes that
retailers are beginning to seize the initiative from ethically conscious consumers and drive the
ethical debate to their advantage. The RTT recognises that retailers are genuinely trying to
figure this out now, and may have the key role to play in working out the answer, helping
Government form its policies, educating the consumer and helping customers to make sound
choices.


Currently there exists no integrated strategy but instead many local, one or two-dimensional
efforts which may respond to one issue (e.g. food miles), yet create, impact on or even
worsen another perhaps, such as child labour. There appears to be a commercial rationale
for retailers to take the lead, and perhaps work with government, to help create the way
forward. Suppliers too will be instrumental in both driving and solving this, as they are closer
to the source.



Richard Hyman commented that; “Getting it right,” he said, “is still more about maintaining
profits, than outright charity. The UK is the fourth richest nation on Earth, but how many of us
would really give even half our wealth away?” Helen Dickinson of KPMG agreed; “That‟s the
problem. If being ethically sound was free, we‟d all do it tomorrow.”




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Conclusion: So What Does it All Mean?

Overall, the RTT‟s view was crisply summarised by Paul Clarke in as much as its Members
felt that retailers „can be ethical and still profitable, but to be profitable, going forward, they
may have to be ethical‟. Whilst its Members believe that there will remain a considerable
number of consumers who in the words of Vicky Redwood, of Capital Economics, will
continue to go on purchasing; „without conscience‟, time cannot be turned back and
increasingly more consumers will inevitably be making their purchasing decisions with a more
ethical viewpoint. This, the RTT believes, will present retailers with little choice but to adapt
their strategies to what are quickly becoming overwhelmingly their customers‟ wishes.


The challenge faced by retailers is considerable, not least because there are so many
different aspects to sourcing, delivering and marketing ethically, which emerge and evolve
continually. Members also agreed that there is no road map to success; retailers are very
much in uncharted territory, and having to develop their strategy as they go along. When it
comes to ethical issues, they cannot work on pure marketing principles, and rely on listening
to their customers to deliver what they want, because their customers are often ill-equipped
and ill-informed on these matters to know themselves.


Furthermore, Members pointed out that such is the speed of development and interest in
ethical matters, that retailers are having to take a lead themselves, rather than wait on
frameworks and policies being drawn up by civil government. In this regard, the RTT felt that
there is currently scope for individual retailers to gain some competitive advantage, until
legislation or directives come into play. The successful socially responsible retailer of today
will be taking up the challenge and driving its strategy forward, rather than reacting to the
ebbs and flows of a complex ethical platform. They will assume responsibility for every part of
the supply chain, working with all parties in an informed and considered way from source to
shopping basket, consistent with their own ethical position, policies and operating practices.


Definitions

   ‘fair-trade’. This term is usually used to denote products whose raw ingredients or basic commodities were
    purchased at so-called fair trade prices from the growers or producers directly by the manufacturer or in a
    process overseen by an appointed agent. The aim is to give farmers and their families a living wage. Some of
    the earliest „fair trade‟ products were commodities such as tea, coffee and chocolate (cocoa beans).


   ‘child/slave labour’. One aim of ethical retailers is to source goods not made by children or under unacceptable
    working conditions. Such conditions would include working unreasonably long hours with few or no breaks or
    paid starvation wages or excessively exposed to dangerous chemicals such as toluene (a solvent in glues) or
    denied the right to strike or resign etc - in short, those who work in sweat shops or as indentured labourers.




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   ‘ethical credentials’. Some ethically minded consumers are concerned that the companies whose products
    they consume are not involved elsewhere in unethical activities such as, for instance, investing in the arms
    industry, dumping powered baby milk on Africa (where contaminated water supplies put babies at risk), killing
    dolphins and whales in nets or clearing tropical forests. The list of corporate activities to which ethically-minded
    consumers may take exception is almost endless and may take into account politics, pan-
    nationalism/globalisation, tax-avoidance, species extinction, pollution, personal histories of directors, bribery and
    corruption, military activities, labour-relations etc.


   ‘environmentally sound’ An ill-defined term, usually backed up by some research which shows how much
    worse it could be if the product or service was „environmentally unsound‟.


   ‘organic’. This denotes food produced without the benefit of chemical fertilizers, growth-promoting
    hormones/antibiotics or artificial pesticides according to the standards of the Soil Association or its varying
    national equivalents. The use of the organic brand is tightly controlled in the UK.


   ‘carbon footprint’. Carbon in the form of CO2 is said to contribute to „global warming‟ (ibid). Products that have
    come a long way to the end-user using transport fuelled by hydrocarbons are said to have a large carbon
    footprint. Similarly products with manufacturing processes requiring extended or very high temperature heat
    generation from hydrocarbons are in the same boat, sometimes literally. Everybody, apparently, has a carbon
    footprint of their own which they can get „measured‟ by visiting the Government website:
    http://www.direct.gov.uk/en/environmentandgreenerliving/actonco2/DG_067197?cids=Google_PPC&cre=CO2C
    al


    Those who buy items such as seasonal berries flown around the world, accumulate ever-larger carbon
    footprints. They add further to the size of their carbon footprint by undertaking extensive air, road and other
    carbon-fuelled journeys; overheating their houses or washing their clothes at high temperatures.


    An independent, Government funded organisation the Carbon Trust (an NGO) is seeking, with limited success,
    to persuade food manufacturers to adopt a carbon trust logo on their packaging to show their carbon footprint
    awareness and commitment. Walkers Crisps (part of Pepsico) and Innocent Drinks are current front runners.
    There are some interesting anomalies in the carbon debate; e.g. a recent report showed that roses for
    Valentine‟s Day imported from Holland but intensively reared in heated glasshouses had a larger carbon
    footprint than roses flown in from Africa, where they were grown in the open.


   ‘low carbon / carbon-neutral’. Conversely, locally sourced or traditionally less intensively produced foods are
    said to be low carbon or even carbon neutral. There are three elements to the carbon footprint of a product,
    however, at least one of them poorly understood. They are as follows:
         1.    Production: The carbon expended in creating the crop e.g. carbon is expelled by tractors, by pumping
               water, from the lorries which deliver fertilizer and from the manufacture of the chemicals used etc.
         2.    Harvesting, distribution: This refers to the carbon used in harvesting, washing, grading, packaging,
               pricing and distributing the product.
         3.    Bacteria: This is the little understood carbon-emitting activities of naturally occurring or fertilizer-
               promoted bacteria in the soil or in the guts of farm animals associated with the product.


   ‘carbon offset’. A term denoting the method by which high carbon producers can buy carbon credits from low
    carbon producers, perhaps in other countries.


   ‘food miles’. The distance travelled from source to shelf.




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   ‘animal welfare/cruelty/testing’. This is one of the areas of „ethical‟ debate which seems to have encouraged
    the most reaction amongst individuals and lobby groups. The debate started decades ago about force-fed geese
    for foie gras, battery chickens, smoking beagles, nursing sows in restrictive cages and veal kept in crates and it
    may well be that the first examples of retailers responding to such debates was via the introduction of free-range
    eggs and the virtual disappearance of veal from British supermarkets. Into this pot we may also stir;


                           live animal exports
                           the human consumption in foreign nations of animals which we regard as „pets‟ or „friends‟;
                            such as the horse by the French, the donkey by the Italians, the dog by Koreans, the guinea
                            pig by Peruvians.


   ‘global warming’. A phenomenon largely agreed by most environmental scientists to be brought on by man‟s
    profligate use of hydrocarbons which have previously spent millennia locked up in the ground in fuel oils, coal
    etc. Scientists warn that global warming, unless somehow stopped or reversed, will lead to serious climate
    change, causing melting ice sheets, the submerging of low-lying land, species extinctions, changing weather
    patterns, famines, floods and yes, even pestilence. Not every scientist or government agrees, however. Even
    those governments which pay it lip service are apparently taking very few real steps to lower their nation‟s
    carbon emissions as by doing so they also seriously affect their competitiveness.


   ‘recycled/minimum packaging’. This term denotes efforts to reduce packaging waste, to re-use or recycle
    packaging into new packaging or to use as little packaging as is practicable in order to „save the planet‟. Of
    course, recycling packaging by dragging it across the face of the earth to be recycled can be more carbon-
    heavy and polluting than simply putting it into land-fill or even using it to light a house-fire.


   ‘recyclable/biodegradable’. This means fit for recycling „where facilities exist‟ or ready to break down quickly in
    the soil in land-fill. Several supermarkets have introduced biodegradable carrier bags which break down
    relatively easily and quickly in the environment, thus no longer alerting passers-by to the otherwise profligate,
    non-ethical credentials of those that foolishly printed their names on these trillions of free bags in the first place,
    as they flap in the bushes and trees. Some retailers such as IKEA, Lidl and Aldi charge for carrier bags using
    the logic that you‟ll only buy what you really, really need, thus cutting waste.


   ‘kind to the environment / environmentally friendly’. This is the description of anything that, based on plant
    and animal toxicology tests and impact on dynamic systems such as rivers and their creature inhabitants, is less
    harmful than other, rival products. These descriptors are usually associated with products that are used in
    cleaning and/or are water-based. Interestingly in the last big upswing of the ethical consumer starting around
    1980, „environmentally friendly‟ products such as Ecover washing powder stole a big lead on Unilever and
    Proctor & Gamble for a while. Supermarkets will be well aware of this and thus alerted to the dangers of ignoring
    the ethical debate.


   ‘additive free’. Difficult to concisely define, as without any additives the box would be empty. The general
    supposition is „we haven‟t put anything nasty you wouldn‟t expect to find in the ingredients list into this product‟.


   ‘preservative free’. Does not contain chemical preservatives (e.g. sodium nitrite or sodium nitrate).


   ‘trans-fats free/hydrogenated fat free’. Trans fats is another name for hydrogenated fats which are oils which
    have been infused with hydrogen to make their performance in baked and other goods more predictable and
    stable. Unfortunately they also have a very poor human health record. In the USA the FDA has stipulated that if
    a „serving‟ has less than half a gram of hydrogenated fats the manufacturers can proudly label the product
    „trans-fat free‟.




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   ‘No added sugar’. A product may be rich in natural sugars derived from its ingredients; such as fruit sugars,
    dairy lactose etc. However, so long as no other sugars are added it can claim „no added sugar‟. It m ay also be
    rich in artificial sweeteners such as those containing „a source of phenylalanine‟.


   ‘Healthy’. This is possibly the most contentious label of all. There is no absolute scale against which it can be
    assessed.

                                                      ends
Note to Editors: First mentions of the Retail Think Tank should be as follows: the
KPMG/SPSL Retail Think Tank. The abbreviations Retail Think Tank and RTT are
acceptable thereafter.

The RTT was founded by KPMG and SPSL in February 2006. It now meets quarterly to
provide authoritative ‘thought leadership’ on matters affecting the retail industry. All outputs
are consensual and arrived at by simple majority vote and moderated discussion. Quotes are
individually credited.

The Retail Think Tank has been created because it is widely accepted that there are so many
mixed messages from different data sources that it is difficult to establish with any certainty
the true health and status of the sector. The aim of the RTT is to provide the authoritative,
credible and most trusted window on what is really happening in retail and to develop thought
leadership on the key areas influencing the future of retailing in the UK.

Its executive members have been rigorously selected from non-aligned disciplines to highlight
issues, propose solutions, learn from the past, signpost the road ahead and put retail into its
rightful context within the British social/economic matrix.

Members are:

Nick Bubb, Pali International
Paul Clarke, Barclays Retail & Wholesale Sectors
Sian Davies, Henley Centre HeadlightVision
Prof. John Dawson, Universities of Edinburgh and Stirling
Dr. Tim Denison, SPSL
Helen Dickinson, KPMG
Richard Hyman, Verdict Consulting
Vicky Redwood, Capital Economics
Mark Teale, CB Richard Ellis

The RTT is free of any political, commercial or financial bias. It does not seek to be
sensationalist, nor is it afraid to speak its collective mind. The RTT does not aim to ruffle
feathers but it will not flinch from expressing its democratically-arrived-at opinion.

The intellectual property within the RTT is jointly owned by KPMG (www.kpmg.co.uk) and
SPSL (www.customercounting.com).

For media enquiries please contact:

Theo Chalmers, Managing Director, Verve Public Relations
Tel: 01908 275271 or 07932 004632
E-mail:t.chalmers@vervepr.co.uk




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