Time for sustainable purchasing

Even though European retailers acknowledge the importance of sustainability, the ultimate recognition still has to happen: sustainability becoming a regular part of purchasing discussions.


After all, what is wrong with giving sustainable suppliers a better deal or with rewarding producers who help the retailer to reach his sustainability goals? Nothing at all! Still, almost every purchasing discussion only revolves around the “p” of price.


Wal-Mart sets sustainable example 

In 2009, Wal-Mart was the first to present the sustainability scorecard, allowing the American retail giant to measure the sustainability score of every product it sells. British Sainsbury's followed that example this month with the installation of the Carbon Academy: a training program for employees and suppliers to limit the CO2-emission caused by Sainsbury's's activities as much as possible.


Sainbury's follows with Carbon Academy

“We want to make sure all our colleagues and suppliers are becoming advocates in the battle against CO2-emission”, says Neil Sanchev, director of real estate at Sainbury's. “We hope to make new environmental technologies as common and usual as possible.


“Our diary development group is a good example how we at Sainsbury's reward sustainable suppliers. This group lets Sainsbury's reward farmers who improve animal welfare, reduce the pollution load and work more efficiently with a higher price for milk”, says Ooi. “We hope this approach will find its way into every purchasing process.

 Extra condition in purchase discussions

Nice words and targets indeed, but isn't the fastest and most effective way to accelerate the realisation of sustainability targets simply its permanent inclusion in purchasing discussions?


“A very interesting question”, says Sainsbury's spokesman Darragh Ooi. “I will suggest it right away.” Only a few hours later comes the disappointing formal answer: “The conditions of our contracts with suppliers is sensitive information and we can not discuss it in public”.

Sustainable purchasing is still not mainstream with retailers, but there is hope: thanks to the growing attention of sustainability monitors like Wal-Mart's, ever more people realise that both retailers and suppliers really can make a difference.


By Pascal Kuipers, Alsano Communicatie


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Test supermarket for the visually impaired

French supermarket chain Casino has joined forces with the “Institut de la Vision” to improve access to its supermarkets for the visually impaired. The first result of that cooperation is a test store in the centre of Paris.


Test store for the visually impaired

The Casino in the rue Moreau (XIIth district) looks like a normal corner store, like countless others in the French capital. Yet, this is a special test laboratory, to see how the chain can help the visually impaired in their shopping.

“We want everyone to come to our stores, so we should think of this group too. And not just our physical stores, but also our web shop and our home delivery service”, says Thibault de Pompery, director of innovation, in newspaper Le Parisien. “Our partnership with the Institut de la Vision is unique and allows us to let the visually impaired test our innovations several times per month.”


New technologies to improve readability

Innovations include new lighting that makes small details on the packaging easier to see and a new type of label that features the most important information more clearly. “Of course, we do not intend to do this for each of our products as that would ruin creativity”, says de Pompery, “but we will apply it for the basic products that everyone uses every day.”


Casino also tests new technologies, like a gadget that lets the customer zoom in on labels and packaging. Another service includes a downloadable map that shows obstacles like doors, stairs and steps, ... The first test phase lasts for six more months, after which test phase two will start: opening a real supermarket that actually incorporates the ideas from the lab and the new technologies. Casino hopes to open that supermarket, also in Paris's XIIth district, in 2012. “If test phase two is a success, Casino will include its conclusions and ideas in all the Casino supermarkets”, says de Pompery.

So why does Casino go through all that effort? “Today, France counts 2 million people with a visual handicap”, says Emmanuel Gutam of the Institut de la Vision. “Many of them are older than 75. But as humans tend to live longer, that number will have doubled by 2040.” Four million people, a consumer base that a supermarket can not afford to neglect.

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Carrefour looking for Brazilian capital

French newspaper Journal du dimanche states that Carrefour has started negotiations with Brazil’s biggest supermarket chain CBD about a possible merger of CBD and Carrefour's Brazilian activities. The French chain would have asked Bank Lazard to explore this possibility.


Biggest Brazilian food retailer

Carrefour has been looking for new capital for some time and has earlier been trying to introduce its real estate branch and a discounter brand to the stock markets. Its new target, the "Companhia Brasileira de Distribuição", is the biggest Brazilian food retailer with 1800 stores and 140,000 employees. The Diniz family (famous for its Formula One driver Pedro and one of the richest in Brazil) would join Carrefour's capital. 


French obstacle

The main obstacle in joining the 30 billion dollar group and the "disappointing" activities of the French chain lies in another part of France: Carrefour's rival Casino holds 35% of CBD's shares, about as much as the Diniz family does. Neither of the European chains wanted to comment the possible merger. 


Papin dropped out of French director position

It looks like Lars Olofsson, general director at Carrefour, has to take charge of Carrefour's French activities somewhat longer, as the main candidate for his succession has dropped out. Serge Papin, strong favourites with analysts, would stay on as CEO of Carrefour's competitor Système U - that has just taken over 46 Carrefour franchisers. 

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Tesco expands own brands, focuses on webshop

Tesco's strategy for the near future include a focus on its own-level brands and the conquest of online markets in the 14 countries the group is active in. Its CEO Philip Clarke announced that the world's third-largest retailer had seen its online sales grow 15% last year.
Today Tesco only has web shops in the UK, Ireland and South-Korea. Clarke announced he wants to make Tesco “an outstanding international retailer, in stores and online”. To spread his view, the new CEO – replacing Sir Terry Leahy who was CEO for over 14 years – has scheduled meetings with all of Tesco's over 5000 senior managers.
The new brands should create an added value, building on current examples like F+F (clothing), Technika (consumer electronics) or Go Cook (kitchen goods). The aim is to start own brands in fields as distinct as pharmacology and apparel. “When people develop higher levels of disposable income, they want to treat themselves”, Clarke told Reuters. “They do not want to just buy Tesco Value shower gel, they want to have something in their bathroom that looks like it is a brand. So we create brands.” Clarke also mentions that in any field, Tesco's own brands should embrace a rigorous definition of sustainability.
New markets, such as finance and telecom, should enhance Tesco's performance on its home market, and should afterwards be internationalised. The British Tesco stores could use some help from these new programs, because of the tough circumstances they are facing. High fuel prices, high taxes and the fear for massive job cuts under the new Cameron government have led to a mediocre year for Tesco standards.
“Our strategy has worked fine for over a decade, but now we need to adapt to the new situation.” said Clarke.  “In short, this is “a change of gear, not a change of direction.”

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Aldi invades inner cities

A few years ago, when Aldi UK opened a store in Manchester's city centre, the public opinion was that it was just a marketing trick: to open a hard discount store on such an expensive location could not be profitable. Now we know better: because of the economic crisis, the inner city stores are bringing in the biggest money.

Brilliant move

Aldi's new store in Queens (New York) is exemplary for the 'new look' Aldi in inner cities, says American retail expert Len Lewis. “New York is a fantastic market because of the high population density. The Queens store serves four times as many people as an average Aldi does. A marketing trick? More like a brilliant move!”

Not only Aldi, but also Lidl is keen on opening stores in such locations as Manchester city centre (like Aldi did) or the North London borough of Camden (like Lidl did). Retail expert Roberts points out that this is not a new evolution, but the internationalisation of an old strategy: “Although the typical Aldi location is on the edges of cities, several old Aldi stores have been built in city centres.”

Because of the current situation in the UK, where so many places in city centres and shopping centres are disused, this scenario is also possible there. Exactly the same economic situation that makes running a business in these locations so very difficult for most companies, makes it possible for hard discounters like Aldi to do so.

Two arguments in favour of city centres

High profile locations obviously cost more to rent, but Lewis sees two reasons why discounters should still consider opening stores there.  “Owners are more likely to lower their prices for respectable companies that are certain to pay the rent in time, than for a small store with a higher chance to go bankrupt.”

“The second reason is the very high population density in places like New York or Boston. These locations, while very expensive, have such a high number of shoppers – often inner city inhabitants who do not own a car – that these locations are still quite profitable. In the US, you have the example of dollar stores like Aldi's daughter Trader Joe's, who are very successful in both poorer city centre neighbourhoods and in the more expensive ones.”

There is however a big difference between the two Aldi chains. Aldi Nord (North Germany, Benelux, France, Spain and others) is much more conservative, while Aldi Süd (UK, Ireland, South Germany, Central Europe, Greece and the US) fully endorses this new policy.

- Pascal Kuipers, Alsano Communicatie

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Tesco ends Lowest Price Guarantee

Supermarket chain Tesco withdraws its “double the difference” price guarantee after finding out that certain customers abused the system. Tesco ended its campaign voluntarily, as opposed to Dutch chain Albert Heijn, who were forced to end their “always the lowest price!” guarantees which competition agencies found to be “misleading and unfair”.


Buy for £81, get £90 refund

Tesco started its “double the difference” campaign after competitor Asda claimed its prices were always “10% lower than any other supermarket chain”. In response, Tesco promised to refund any articles that consumers found cheaper elsewhere, and to double the price difference. 


Several customers took advantage of the scheme, using social networks and websites like MoneySavingExpert to share which supermarkets had short term promotions, buying there in large quantities and then reclaiming the difference, doubled, from Tesco. In one example, a customer bought a shopping cart full of items for £126 at Tesco, only to show that Asda's promotions had the price of the cart down to £81... earning him twice the difference (£90) in Tesco coupons.


Asda enjoys self-inflicted damage

Tesco's response of ending the programme after only two months was met with Schadenfreude by competitor Asda – who directly caused the campaign in the first place: “they made a promise they could not keep”. Managementtoday also blamed Tesco, stating that these customers did exactly what the programme was for: finding cheaper articles in other supermarkets and being rewarded with twice the difference. “So basically, Tesco is criticising customers for taking full advantage of a deal they'd been offered. Not exactly a PR triumph...”


Dutch supermarket chain Albert Heijn also revoked its Lowest Price Guarantee last month, after being forced by a competition agency. The Dutch chain had found out that its customers can be “overactive” too, and had during the two years of the Guarantee limited the application of its guarantee ever more. “In the Netherlands” became “in the same city”, “any item” became “one item per day” etc., until the programme was shut down completely. 

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