Unlocking the competitive advantage of responsible retailing


Posted by Claire Rutherford

Wal-Mart’s recent announcement of its ‘Sustainability Index’ marks a positive step by one of the world’s biggest retailers.

Currently, the index rates Wal-Mart’s suppliers - rather than individual products – on a limited range of sustainability indicators, but the eventual aim is to arrive at a product labelling scheme.

Our research indicates that consumers with responsible attitudes usually don’t act on them, and that confusion about what responsible messages really mean may be an important reason for this. By eliminating the confusion, a transparent rating scheme could have a meaningful impact on consumer behaviour.

However, the ultimate success of the scheme will depend on how well it is communicated to the consumer.

Assuming Wal-Mart doesn’t fluff it, engaging those consumers who are already responsibly aware should be relatively easy. As long as they trust the scheme, the benefit will be clear to them; they get to feel better about the products that they buy.

The problem is in persuading those consumers who are not responsibly aware.

Our research shows that such consumers could represent as much as half of the population, a significant proportion of whom aren’t just ignorant of the issues, but actively don’t care about the responsible agenda.

A sustainability index offers such people little in the way of benefit; they don’t need to feel better about the products that they buy. Therefore, to drive mass engagement with their Sustainability Index, Wal-Mart and its partners may need to start at the beginning and establish the salience of the entire responsible agenda, not just the labelling scheme.

Whether a retailing behemoth can find a way of conveying this message credibly will be interesting to see. This consideration may be one of the reasons why Wal-Mart is at pains to point out that it does not ‘own’ the index. It’s designed and implemented by an independent consortium that includes academics as well as other companies.

However, Wal-Mart is now inextricably identified with the index and, after all, any eventual labelling scheme will be visible in their stores on their own-brand products. Wal-Mart’s brand image will be a significant influence on the reception of the Sustainability Index and vice versa.

In a sense, none of this matters. Even if the Sustainability Index just helps consumers who are already engaged to make better choices, this is obviously a good thing.

But if Wal-Mart wants to unlock the competitive advantage a labelling scheme offers and not just follow in the wake of responsible sentiment, it may need to give some serious thought to how it prepares the ground.

Tags:  Wal-Mart Sustainability Index Retail Labelling Competitive advantage consumer engagement

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