I have been featured in today's Small Business section of The Age. It's something that I do bang on about, but us independant retailers have to watch out when the big guys catch on...
Here is Michael Baker's article below.
Saving the planet and your business
Michael Baker | April 4, 2009 - 9:00AM
If you own a small retail business you never have to worry about how you're going to pass the time of day. You're anxious about whether enough customers will come through the door and if they will like what's in the store.
You're worried about whether you're marketing yourself effectively, whether you've ordered too much or too little inventory, whether the bookkeeping is shipshape and whether your customers are going to be slapped with another interest rate increase. And on it goes.
As if all that isn't enough to make you want to take two aspirin and pull a blanket up over your head every morning, you can now add another preoccupation to the long list: saving the planet.
Not all of us are tree-huggers by nature but that doesn't matter any more from a business standpoint because if there is one trend that's coming at you at full speed, hood down and radio blasting, it's this: you need to stand for something socially responsible. Moreover, the socially responsible position needs to be embedded not just in your personal philosophy but also in the products you're selling.
The trend first really came of age in the United States at the beginning of this decade. Supermarket chains offering a full range of organic produce and natural foods in recycled packaging took the idea of healthy lifestyles, which previously had been the preserve of yuppies and the alternative fringe, and plonked it down firmly in the consumer mainstream.
The ball hasn't stopped rolling since. Consumers now baulk at buying products that have unpronounceable ingredients on the label, or that are not packaged in recyclable materials.
Most of the world's largest retailers have significant and very public commitments to social responsibility.
On top of its long list of "green" commitments with respect to store design, energy efficient distribution and recycling, Wal-Mart is now turning to its merchandising. For example, this month the company is rolling out a line of organic and "fair trade certified" coffees. (Fair trade certification requires that certain economic, social and environmental standards be met by the product. In the case of coffee, it would mean that farmers receive a guaranteed minimum price.)
By the time Earth Day comes around on April 22, another US retailer, Toys `R Us, will be offering an environmentally-friendly toy collection featuring natural wood toys, natural cotton plush animals and organic cotton dolls.
Some of these initiatives end in tears. In Britain, Tesco announced back in 2006 that it was going to launch an organic clothing line designed by environmentalist designer Katherine Hamnett. Hamnett embarrassed the company a year later by pulling out of the deal because she thought Tesco was only window dressing and not really committed to environmental responsibility.
Here in Australia, our own large retailers are not particularly talkative about their green credentials. Unfortunately, that's not due to false modesty but rather due to the fact most of them don't have much to crow about. (To its credit Woolworths announced last week that it was trying to lift its game in that regard.)
But while most of our retail chains are not doing much yet, some of our smaller retailers are at the leading edge. Kara Smith is a good example. Smith, a Blue Mountains resident, makes the handbags and other accessories she sells in her internet store from vintage and recycled fabrics, like old coats and armchair upholstery.
A self-confessed scrounger as a child, she took up graphic design as a profession but never lost touch with her love of salvaging the discarded belongings of others and turning them into objects of art.
Smith will tell you she doesn't want to be rich but she is the sort of retail entrepreneur who could get rich in spite of herself. Her website makes those of our major retailers look plodding and unfunctional. Her products are aesthetically moving and command strong price points because they are so differentiated. She convinces the customer that the social conscience isn't just posturing for public relations purposes.
Smith is not alone and is being joined by many other small retailers in Australia as the social and environmental responsibility trend kicks into high gear.
For those with small retail businesses it is crucial not to underestimate the importance of this trend.
It has long been the standard mode of operation in Australian retail to maximise market share by trying to appeal to everyone. Of course, pitching to everyone means you can't actually stand for anything, much like the politician who promises everyone the world in order to maximise votes.
That is now changing. Social responsibility is no longer something you can stand for but something you must stand for. So if this is currently your point of differentiation you have a decided head start on many of your peers in retail-land.
Don't get complacent though. As more retailers get a social conscience you will need to put on your thinking cap and come up with something else to distinguish yourself from them.Michael Baker is a global retail and property analyst and consultant. He can be contacted at: Michael_Baker@earthlink.net