Retailing with Purpose : A strategy for sustainable growth
In the world of retail today, it is not enough for brands to compete on strategies that are just grounded on being bigger, better, faster and/or cheaper than competition. The sad reality is that most retailers today compete relying only on such strategies to succeed. It becomes only a matter of time until they are knocked-off their leadership perch by some other retailer who is even bigger, better, faster and/or cheaper. The demise of long standing retailers from big box chains such as Borders or Circuit City, to small privately owned businesses, should serve as a sobering reminder (and warning) about the risk that comes with market instability and reliance on unsustainable growth models.
It is no wonder that retail and innovation have become such an important force and combination in driving market leadership. But even “innovation” is not enough. Because in the world of retail innovation, just as in any other industry, there is a huge difference between innovation that is incremental versus that which is transformational. “Innovation” has come to mean everything and nothing in retail. It’s a broad term that refers to everything that is either new, first to market, proprietary or different.
Innovative Retailing should be “transformative” and create positive, lasting social impact. This can come in the form of a new product such as the IPOD or the introduction of a whole new level of service delivery and retail experience as we have come to know through Amazon.
Beyond Amazon and Apple, there are other ways to create retail innovation that is truly transformative, enduring and life-enriching.
This strategy is about building business and brand by enriching the people and the places they live.
You may be thinking, “Wait a minute – isn’t this essentially Corporate Social Responsibility (CSR)? It is. But it is equally a smart and sustainable strategy for building long-term market growth.
All too often, CSR is overlooked and under-leveraged as a competitive advantage and driver of transformative innovation. Perhaps it is because CSR and business are often thought of as being mutually exclusive. Or a constant balance or conflict between for-profit interests versus non-profit values and vision.
But the inspiring opportunity is that business and CSR can coexist to create a powerful competitive difference for business/brands. When businesses lift-up the very people who have the potential of one day being a customer or employee– it is a direct investment in a business’ future growth potential. So beyond the feel good benefit that CSR offers, it is a pragmatic way of increasing the likelihood of a retailer having a thriving community to serve in the future, and the customers and local talent needed to stay in business.
“We need to be asking the question of what exactly we are doing to benefit the people without college degrees beyond assuring them that if we attract more people with college degrees everything will be looking up for them. “ - Aaaron Renn – The Urbanophile
To compete for consumer preference, retail must give people more reasons to emotionally connect to their business and brand versus another. When retailers see themselves not solely as a business entity, but as a locally engaged citizen, “retail” can naturally evolve towards a role that genuinely transcends commercial interests. By adopting a more humanized and socially responsible way of building relationships with people and their communities, retailers can engender loyalty even during the most difficult economic times and challenging market conditions.
The Pick n Pay Way of Business
An inspiring example of how this strategy of building business and brand by building people and place is Pick n Pay. It is one of Africa’s largest and most successful retailers of food, general merchandise and clothing. It was founded in 1967 as a family owned business with four small stores in the Western Cape. Today, the Pick n Pay Group has a total of 775 stores, made up of Hypermarkets, Supermarkets and Family Stores (which are franchise stores).
What is unique about the Pick n Pay story is their longstanding history of advocacy for social change within a challenging and fragmented environment. Their mission is to serve all, both the under-served and the affluent, in ways that are aspirational and enriching to all interests.
“Retailing with a difference. Retailing with a conscience. Retailing is not about maximizing profits. Nor is it about seeing a fantastic opportunity and saying “hey we can make big bucks there. That is not retailing.
Retailing in the emergent world is about growing the communities, engaging with society and trying to maximize the potential of the entire community. We need to use retail as the opportunity to test and grow local resources… The developed markets have not caught onto this concept yet….We (emergent markets) need to teach the rest of the world how to do retailing with a difference”
- Suzanne Ackerman-Berman/ Pick n Pay – Corporate Transformation Director
I’ve referenced Pick n Pay in past posts. But just recently I met Alan Schreiber, Managing Partner of the Pick n Pay account for Y&R South Africa, when I attended WPP’s Retail Innovation conference in Santiago, Chile. It was during our conversations that I realized how much more there was to the Pick n Pay story. Our conversation inspired the writing of this post.
“Social responsibility is part of Pick n Pay’s DNA. It is not something done to satisfy sustainability progress watchdogs or consumer calls, it is engrained in the business philosophy, and has always been.”
- Alan Schrieber, Managing Partner Y&R South Africa
The building blocks of Pick n Pay’s social conduct were laid down by founder Raymond Ackerman more than 42 years ago at the Company’s inception. Since then, his philosophy of “Doing good is good business” has been brought to life as a driving force in their business strategy and market growth.
A business’ strength of commitment to CSR will often be tested when dealing with the realty of cost premiums associated with doing business differently. Since doing business the “right way” oftentimes does not mean the “cheapest way.” Over the years, Pick n Pay has had to defend its commitment to CSR purpose over that of investor profit. Pick n Pay leadership has courageously faced the reality of this conflict of interest by declaring one of their core principles to be “Sticking to values – even if this puts us at a competitive disadvantage.” The continued growth of the business and respect for the brand is a clear indication that “Sticking to values” has given them the competitive advantage.
There are three ways that Pick n Pay leverages CSR to creates meaningful change on a community level:
- Enterprise development – through PnP Small Business Incubator (SBI), ongoing mentorship is provided to encourage the hope, and nurture the skills of aspiring entrepreneurs. Pick n Pay hires local talent for their stores and through their SBI program, they provide franchisees with the educational and business start-up support to ensure they have the confidence, know-how and resources needed to run a successful Pick n Pay franchise store. And through support of initiatives such as the All Season Milk Factory, they’ve enabled rural farms steady viable market access for their products.
- Environmental sustainability -From consumer friendly tips on how to lead a greener life. To championing the fight to restore over-exploited fish stocks by being the first SA company to commit full transformation of their entire fresh, frozen and canned seafood operations by end of 2015. Pick n Pay has been acknowledged as the South African company doing the most in promoting awareness of green issues.
- Cause Marketing - many of the programs supported by Pick n Pay aims to give children from disadvantaged communities the skills and experiences they need to succeed in life. Sponsorship of programs such as Velokhaya Life Cycling Academy gets them off of the streets and promotes self-esteem
And while some of the above initiatives may seem common relative to other CSR programs. It is important to note the way in which they are brought to life. Because of the authenticity of the Pick n Pay commitment to social purpose, their CSR efforts have had lasting and noticeable impact on both people and business results. When business is able to grow along with the communities and people they serve by leveraging CSR as a competitive difference – it is retail innovation at its best.
Let’s take every opportunity to celebrate those who have the courage and ingenuity to defy conventional wisdom at retail and have proven that purpose can ultimately create profit and sustain growth for all. Please take a moment and add to the comments section additional examples of such retailers whether big chains or small local stores. Their efforts deserve to be recognized by others.
Special thanks to Pick N Pay and Y & R South Africa for allowing me to share their inspiring work as a live example for this post. Also special thanks to Jack Temple for the lovely CSR boat photo.