Promoting Charity at For-Profits
Interested in paying a $40 for a t-shirt? Retailer Nordstrom is betting you will -- for a good cause, that is.
Nordstrom’s partnership with supplier EDUN, the fashion brand started by U2’s Bono, means that $10 of every $40 t-shirt bought goes to an anti-AIDS fund in the African nation of Lesotho. And while Nordstrom is only one of four retailers worldwide selling the tees, they’re one of many retailers taking a closer look at promoting charity through their products.
In fact, according to executives in marketing and retail as well as outside observers, charity is no longer an option but a requirement in retail. But, they warn, to be truly successful in marketing these initiatives, philanthropic programs must heed the business’s overall objectives and strategic goals.
Laura Hartman, associate vice president of academic affairs and professor of business ethics at Chicago’s DePaul University, says the EDUN and Nordstrom partnership is a classic example of pairing the needs of those who have with those who don’t. And retail is well-positioned to leverage that, exploiting consumers’ willingness to pay a premium for commodities that help others.
Nordstrom is not alone. Macy's, for example, sells baskets woven by African widows and has featured women weaving the products live at store events. Office Depot focuses its giving on children and education, donating branded products to poor kids and schools. By doing this, the retailer nurtures the brand equity of Toshiba, 3M and PaperMate and Office Depot’s relationship with these suppliers at the same time as it propels its own company forward in its retail category, says Mary Wong, director of community relations.
In fact, Office Depot is so serious in its charitable efforts, that seven years ago it brought its charitable programs under a single umbrella staffed by niche marketers in corporate social responsibility.
These are not lone examples. Compared to companies in other industries, retail companies on average donated almost twice their share of before-tax-profit in 2005, according to the Committee Encouraging Corporate Philanthropy in New York. To the layman, those percentages may look relatively small when broken down, with retail companies giving 1.7 percent of their profits before paying taxes, compared with a figure of 0.9 percent for companies in other industries. But retail contributions to charities still grew in 2006 over 2005 amounts and are expected to be larger still this year. To industry watchers, those numbers are significant.
Sales will reflect positively on the store only when they reflect the retailer’s corporate values, says Hartman. “You need to be careful about reputation management and participate in a way that makes sense to consumers,” she says.
For those retailers that partner with a cause unrelated to their product offerings, there is little return on the investment. Shoppers likely show less support for the cause, sales lift is thin or insignificant and the responsible marketers do not learn skills to leverage for career advancement.
Take Homebase as an example. In 2005, the British home furnishings retailer promoted the Cancer Research UK’s skin cancer awareness campaign. Posters in Homebase stores reminded shoppers to cover skin with t-shirts and sunscreen and stay in the shade during peak daylight hours.
Homebase’s takeaway was experience in charitable partnerships --Cancer Research UK was its first venture into philanthropy. But the two parted ways in 2006, and Boots, the British pharmacy, became the primary supporter of the skin cancer prevention message instead. That partnership made better sense to consumers, generating more support for the nonprofit and increasing Boots’s average sales.
Internal Buy-In, Consistent Message Key
To be most effective, companies also benefit from clarity of message.
Office Depot takes philanthropy so seriously that it has incorporated it into its recruiting and interview processes, reviewing the company’s corporate responsibility and sustainability efforts with job candidates, says Wong. The retailer seeks candidates who endorse the charitable vision.
The company also works hard to communicate a consistent message among employees internally.
A clear directive from the executive team means the company is better able to disseminate information about the retailer’s charitable acts. Additionally, Wong meets with store managers, assistant managers and regional vice presidents regarding marketing materials that are distributed at the point of sale and delivered through in-store public address systems and displays.
The benefits to companywide buy-in are clear, says Wong. “There is a profit benefit to our giving, but even when our stock is not doing so well, our brand communicates ‘committed and consistent in giving,’” says Wong. “This is the one area in which there is no competition” for Office Depot from OfficeMax, Staples and other big-box office supply chains, she says.
OfficeMax’s philanthropic activities center around donations of product to schools and nonprofits and are at the discretion of local stores. Staples only established the Staples Foundation for Learning five years ago and supports a less robust back-to-school discount campaign each year that benefits Boys & Girls Clubs in Staples communities.
Change the World, Advance Your Career
“Success evidences a great ability to inform people inside and outside of the firm,” says DePaul’s Hartman. “It validates the ability to connect strategy and mission, and have an impact in not-your-traditional way in both nonprofit and for-profit. It is a testament to fabulous project management.”
Retailers aren’t necessarily making it any easier for marketers within the organization. Because retailers are introducing more socially conscious programs, they are hiring marketers from advocacy organizations. Still, Wong believes that Office Depot shows that marketers can build that competency while on staff.
“We have created a standard for our competitors to play by,” she says. In fact, Office Depot has become so good in this arena, that in the past seven years, the company has created a new business for itself -- one of consulting other companies and marketing agencies on corporate philanthropy and sharing best practices. “We take it as a charge, and we take it very seriously,” Wong says.
Says Hartman, “Within the organization, if you’ve been able to push something so cross-disciplinary through, it really opens you up to a lot of opportunities in the for-profit sector. Philanthropy is one of the few topics where it is possible to satisfy numerous stakeholders.”