ANALYSIS: Retailers take on a social role

Large retailers are fighting to make moral as well as financial capital from their marketing. Julian Lee and Harriet Marsh report on care in the community

Large retailers are fighting to make moral as well as financial capital

from their marketing. Julian Lee and Harriet Marsh report on care in the

community



‘I have to recognise that we are not universally loved,’ admitted Terry

Leahry, deputy managing director of Tesco in his speech to the London

Economics conference on Retailing Key Strategy Issues last week. ‘Old

fashioned specialist food stores, the grocer, the wet fish shop, the

butcher - seem to inspire affection. The all-purpose village store

inspires affection. The urban corner store, open all hours, perhaps

inspires affection. But the large supermarkets do not.’



His speech highlighted a longstanding conundrum for the supermarkets -

they have captured the public’s wallets, but have yet to win their

respect.



With this in mind, retailers are increasingly looking to their marketing

departments to provide promotions that serve the dual purpose of

encouraging customer loyalty and enhancing their standing in the local

community.



Sainsbury’s decision to extend its school equipment promotion, whereby

customers can collect vouchers for their local school on every re-used

carrier bag or pounds 10 spent in-store, and to support the move with

national TV advertising, shows that ‘social’ promotions can be highly

beneficial to the retailer.



Jonathan Smith, head of strategic marketing, anticipates a dual benefit

from extending the scheme, a perception that the retailer cares about

the community and a build-up in sales as parents are encouraged to spend

more at Sainsbury to benefit the local school.



Social investment



Sainsbury is certainly not alone in realising the value of the ‘social’

pound. Tesco adopts a similar policy with its ‘Tesco Computers for

Schools’ promotion, which is to be run again between March 18 and May 26

this year. The scheme enables shoppers to collect one voucher for every

pounds 25 spent, which can be redeemed by the school of their choice

against computer equipment.



The promotion, which is currently in its fifth year, has resulted in

Tesco giving away pounds 22.4m worth of computer-related equipment to

schools. The scheme costs around pounds 7m annually, including the cost

of purchasing the equipment from Acorn and other suppliers, producing

and distributing information packs and delivering the equipment to the

schools.



‘‘Tesco Computers for Schools’ aims to encourage customers to shop at

Tesco for a ten-week period and to develop their loyalty, while

involving whole communities in an initiative which provides additional

resources to school-age children in their areas,’ says Jenny Gilmore,



national marketing controller at Tesco Stores. ‘This, therefore, raises

awareness of Tesco as a responsible contributor to the communities which

play such an important role in the company’s operations.’



Gilmore reports that it is ‘difficult to calculate’ the extra profit

made directly from the scheme due to crossovers with other in-store

promotions.



The scheme has been popular with existing customers and has been

‘successful in attracting new customers to the store,’ she says. ‘It is

these additional customers that have enabled the scheme to break even.’



Morale booster



While these two schemes are the most grandiose examples of how retailers

are using promotions to put something back into the community, the

realisation that a community focus helps to boost staff moral and the

perception of the retailer as part of that community is growing.



Barclays staff were all approached to gauge their views of how its

annual pounds 1m charity budget was to be spent. The result was ‘New

Futures’, which offers schools professional support for the project of

their choice - be it anti-bullying or a scheme against crack addiction.



Asda also says staff involvement in local schemes helps the motivation

of colleagues, which is then recycled into the store to generate a

‘personality’ for that store. In turn, this helps sales and creates a

feelgood factor.



‘In the majority of the places we trade in, we are a major focal point

for the community,’ says an Asda spokeswoman. ‘As such our involvement

has reached a level where people expect us to take a part in what is

going on.’



Such promotional schemes that are cloaked as ‘community projects’ are,

however, coming under fire. Educationalists argue the Tesco and

Sainsbury promotions breach the barely discernable line between

sponsorship and marketing and have often criticised schemes because not

only do they not fit into the teaching curriculum but, ironically, they

create more work. Barclays made sure it consulted teachers before it

went ahead with ‘New Futures’.



‘You have got teachers telling children to shop in one store or another.

They are actively directing people’s shopping habits,’ says one

consultant who wishes to remain anonymous. ‘Once that starts happening

you have got to start questioning, is that the role of teachers?’



As this field is relatively young in this country, we have to look to

the US to see the flipside of such schemes. The publicity that the

companies court with their community sponsorship programmes can

eventually end up working against them.



US broadcaster Channel One was recently criticised for an educational

scheme in which the company installed televisions in classrooms and

broadcast a number of educational programmes to children throughout the

day. It emerged, however, that the price to pay for such a service was

that the children would be exposed to advertising as part of their daily

televisual diet.



In this country, McDonald’s education packs came under the scrutiny of

The Money Programme.



It questioned the educational worth of the pack’s word games which

included - rather conveniently - such words as burger and fries.

McDonald’s maintains the packs serve a useful purpose in the classroom

and are not just advertising.



Despite the pitfalls, sponsorship consultancy Kallaway, which runs,

among others, the Barclays scheme, says this area is a burgeoning area

for company marketing departments, as they see the worth of actively

participating in a community rather than just marketing to it.



‘It is about giving them a human face and distinguishing them from the

competition in a crowded market place,’ says Kallaway head of

communications Bea Malleson. ‘For these large companies it is often a

more effective way of saying to their customers, ‘we are interested in

you’, which goes beyond the normal exchange between you the consumer and

us the company.’