Consumer Buying Power: A New Meaning in the Age of Trump?


In this new political age, retailers have power — and can easily lose it.

As my colleague Sydney Lazarus analyzed recently, corporate actions have almost outsized consequences now that we live in the Age of Trump.

The irony of the recent Nordstrom episode is that “Nordstrom was not taking a political stance,” writes Dick Polman in Newsworks. “It was simply acting in accordance with the traditional capitalistic precepts of supply and demand. The company said that sales of Ivanka [Trump] items had declined steadily over the past year, ‘to the point where it didn't make good business sense for us to continue with the line for now.’”

But acting on purely economic rationale doesn’t seem to matter, because these days a retailer can be made or broken when it comes to its relationship, even if only on Twitter, with President Trump. (Just ask Linda Bean.)

As politics have mixed with the broader consumer economy to create this frothy cocktail — from Starbucks to Uber to L.L. Bean — we can trace corporate social responsibility (CSR) right to the bottom of the glass.

And there we find that the ultimate power lies with consumers.

A report by Trade Extensions titled “Consumers’ Attitudes Toward Manufacturers, Retailers and Suppliers” has implications for many facets of the CSR trend — from brand reputation, to ethical sourcing, to the classic “what does it mean for the bottom line?

One finding from the report indicates that the retailer is the most important entity (above manufacturers and suppliers) that U.S. and U.K. consumers think about when buying something — which is perhaps related to why the Nordstrom firestorm was more about Nordstrom, not who makes Ivanka’s clothing line or how it sells. But the survey’s more interesting findings touch on fair treatment of suppliers.

Key Findings

Consumers are beginning to join businesses in at least the broader sentiments behind CSR efforts. Consider some of these results:

  • 76% of overall respondents said retailers and manufacturers should look after the welfare of suppliers
  • 74% said they were more willing to buy from retailers who could satisfactorily demonstrate that they treat suppliers better
  • 52% said manufacturers should be the primary party to ensure fair treatment of suppliers
  • 70% support legislation ensuring fair treatment of suppliers

Drawing the Line Between ‘Saying’ and ‘Paying’

The most intriguing question presented by any report about consumer attitudes when it comes to ethical/sustainable sourcing and purchasing always, for me, returns to this: How wide is the gulf between buyers expressing their willingness to pay a premium for ethically sourced goods, and actually following through with it?

Surely there’s tangible data available tracking the latter, but I’d imagine it would be much more difficult to hold consumers to their ethically minded, conscience-directed responses in a survey — an online survey, no less.

Interestingly, going by the survey results, the U.K. respondents in this Trade Extensions report were less likely to pay a premium than those in the U.S.:

For example, in the graphic above, just over a full quarter of U.K. respondents said they would not pay retailers extra for any products if the retailer were able to explicitly prove they treated their suppliers well.

Not only that, more U.K. respondents than U.S. ones offered paying the two lower-tiered percentage increases, and fewer U.K. respondents than U.S. ones offered paying the two higher-tiered percentage increases:

All that is to say: are U.K. respondents stingier? Or just more honest?

To be fair, the percentage of U.S. respondents who would not pay more was equally large — nearly a quarter of all respondents. Not only that, but 28% of all respondents did say they would be willing to pay between 5%–10% extra.

We all know companies are beginning to put their money where their mouth is when it comes to sustainability and CSR, and perhaps many consumers are finally joining in, which ultimately could create real, lasting change.

Takeaways for Procurement

The simple answer — work more closely and effectively with your suppliers to benefit both parties — is at the heart of EcoVadis and HEC’s recent recommendations for procurement organizations working on their sustainability, excerpted here:

  • Have quality external reporting on supply chain and supplier performance.
  • Be patient and persistent. It can take upwards of five years for sustainable procurement programs to bring in benefits such as increased revenue and improved brand reputation.
  • Find tools with efficiencies of scale, as the long tail of smaller suppliers can still pose significant risks.
  • Collaborate with suppliers in setting performance targets and improvement plans.

(That, and definitely don’t be like Tesco.)

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