CSR in Food Retailing: What’s on Customers’ Minds? Essay Sample

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Introduction of TOPIC

Eva Lienbacher, WU Vienna University of Economics and Business, Austria Christina Holweg, WU Vienna University of Economics and Business, Austria Nicole Rychly, WU Vienna University of Economics and Business, Austria Peter Schnedlitz, WU Vienna University of Economics and Business, Austria ABSTRACT Even if corporate social responsibility (CSR) activities have the potential to create stronger relationships between retailers and their customers, current studies show that the impact of CSR on consumers’ behavior may be overrated. This study presents an exploratory approach to examine the awareness and relevance of CSR in food retailing. Compared with prior studies, the results show that CSR is of minor importance for consumers. INTRODUCTION The precise nature of companies’ social orientation has been strenuously debated by scholars (Devinney 2009; Friedman 1970; Oosterhout and Heugens 2008). In recent decades, the discussion has focused on the concept of corporate social responsibility (CSR), and this paper builds on this concept. The motivation to engage in CSR differs from idealistic to strategic orientation (Bhattacharyya 2010; Hemingway and Maclagan 2004).

When companies follow a strategic CSR approach, among others, they communicate their CSR activities to their stakeholders. Thus, it has to be kept in mind that CSR communication is delicate and could be seen as “green washing” (Dawkins 2004; Du, Bhattacharya and Sen 2010; Greer and Bruno 1996; Schmeltz 2012; Ziek 2009). Current studies show that the impact of CSR on consumers’ behavior may be overrated as consumers are either not aware of it or it does not influence their purchase decisions (Öberseder, Schlegelmilch, and Gruber 2011; Pomering and Dolnicar 2008). As retailers play an important role in the economy and society (Bauer and Hallier 1999; Deloitte 2011), this study presents an exploratory approach to investigate the awareness and importance of CSR activities in food retailing from the consumers’ perspective in a European country. LITERATURE REVIEW Regarding the concept of CSR, companies have to first develop their own strategy (Bhattacharyya 2010). As an example, proactive companies may focus on moral and social concerns early and thus establish first-mover advantages (Piacentini, MacFayden, and Eadie 2000).

However, after defining the underlying CSR strategy, as a general rule CSR activities are afterwards communicated to the relevant stakeholders, such as consumers (Schmeltz 2012). At this point, the two central questions are as follows: (1) are consumers aware of CSR and (2) the importance of CSR in the buying process? Although many companies communicate their social activities via reports on their homepage, recent studies show that consumers are not aware of this information (Öberseder, Schlegelmilch, and Gruber 2011; Pomering and Dolnicar 2008). It seems that other message channels have a bigger impact, such as Word-of-Mouth (Bhattacharya and Sen 2004; Du, Bhattacharya, and Sen 2010). The literature on CSR communication is diverse and encompasses a plethora of theories and approaches (Ziek 2009). According to Schmeltz (2012), the following themes recur in consumer-oriented CSR communication studies: (a) CSR’s influence on buying behavior; (b) consumers’ response and attitude toward CSR; (c) the choice of rhetorical strategies; (d) credibility; and (e) the question of how to overcome skepticism.

Du, Bhattacharya, and Sen (2010) developed a framework for CSR communications (Figure 1) that offers a relevant overview. They provided insights and specific characteristics of the message content and the message channel. According to Du, Bhattacharya, and Sen (2010), company’s characteristics influence the outcomes of CSR communication. Becker-Olsen, Cudmore, and Hill (2006) state that specific characteristics of different branches need further examination. At this time, few studies have investigated the characteristics of retailers in the context of CSR (Brashear et al. 2008; Mejri and De Wolf 2010; Piacentini, Mac Fayden, and Eadie 2000). Retail marketing, in particular, raises the question of whether the retail format (e.g., discount-oriented or convenience stores) influences the outcomes of CSR communications (Gupta and Pirsch 2008). It has to be mentioned that the social responsibility of retailers has been discussed for a long time, although at that time the concept was not titled CSR. As an example, in the 13th century, Thomas v. Aquin, a European monk, stated, “extortion is a sin, because they sell things that do not exist” (Favier 1992).

By this statement, Aquin criticized the missing contributions of retailers within the manufacturing process of products. Even as farmers bred animals or cobblers repaired shoes, the contributions of retailers was not visible at first sight. Nowadays, the contribution of retailers, such as the storage or transfer of products, is widely described and documented (Oberparleiter 1955). Several studies (Ganesan et al. 2009; Grewal and Levy 2007; MSI 2010) state that research into CSR in retail and marketing will be important in the near future. Today, retailers have great power as their size and capability to monitor and react to consumers’ needs, interest and pressure have increased. Initiatives such as electronic data interchange (EDI), radio-frequency identification (RFID), efficient consumer response programs (ECR), and customer relationship management (CRM) programs have built strong bonds between retailers, suppliers, and customers. Along this line, the role of retailers in enhancing socially responsible practices across the supply chain is of greater importance (Brashear et al. 2008).

Moreover, the resources on our planet are limited (Bovensiepen and Zentes 2010). In the recent past, it seems as if retailers, as well as other businesses, started to communicate their social activities more intensively to their stakeholders (Kroger 2012; Safeway 2012; Walmart 2012). This tendency is also reflected in academic papers, where activities of retailers have been widely investigated in recent decades (Lienbacher, Schnedlitz, an

d Walter 2011). Current studies addressing the CSR communications of retailers are often descriptive

and present an overview of CSR online communications (Ählström 2010; Islam and Deegan 2010; Kolk, Hong, and Van Dolen 2010; Lee, Fairhurst, and Wesley 2009; Newell 2009). Consumer-oriented studies, in contrast, frequently investigate CSR activities in experimental designs (e.g., Barone, Norman, and Miyazaki 2007; Ellen, Mohr, and Webb 2000; Folse, Niedrich, and Grau 2010; Gupta and Pirsch 2008) or ask for the whole CSR image of retailers (Anselmsson and Johansson 2007; Megicks, Memery, and Williams 2008; Williams et al. 2010).

When talking about the outcomes of CSR communications, one must keep in mind, as mentioned, that despite the amounts of CSR reports produced by companies on a yearly basis, consumers are often unaware of the CSR messages (Öberseder, Schlegelmilch, and Gruber 2011; Pomering and Dolnicar 2008). Although many empirical studies discuss the CSR communications of retailers, we have identified a lack of studies regarding the question as to whether consumers are even aware of food retailers’ CSR activities. In this context, it is also important to investigate the kind of message channel that is suitable from a consumer’s point of view in food retailing. From this, we derive our first research question American Marketing Association / Winter 2013

(RQ): Are consumers aware of CSR activities in food retailing? (RQ I). When consumers are aware of the communicated CSR activities, companies have to check whether CSR is important in the buying process or not. If not, they may ask whether the resources to set up a CSR or a sustainability report, or a comprehensive web platform are good investments. Studies have postulated on the importance of underlying motives in connection with the impact of CSR on consumer behavior. The motivation of companies to act socially responsible ranges from an idealistic to a strategic orientation (Hemingway and Maclagan 2004). Although CSR motives have been investigated in empirical studies (Becker-Olsen, Cudmore, and Hill 2006; Ellen, Webb, and Mohr 2006; Forehand and Grier 2003; Piacentini, MacFaden, and Eadie 2000), we propose further insights in the context of the CSR motives of food retailers from a consumer’s perspective. Moreover, some authors assume that consumers react more sensitively to the unsocial or unethical behaviors of companies than to CSR (Bhattacharya and Sen 2004; Wagner, Bicen, and Hall 2008). Especially in food retailing, we found a lack of studies in this context and therefore suggest that a deeper understanding is needed about how and if the CSR activities of food retailers influence consumers’ behavior.

From the discussion above, we derive the following second research question (RQ): How important are CSR activities by food retailers for consumers in their buying process? (RQ II). CSR activities and outcomes measures differ in academic studies (Peloza and Shang 2011) due to the lack of a general and accepted CSR definition (Dahlsrud 2008; Maignan and Ferrell 2004). It is presumed that diverse forms of CSR impact consumer behavior in different ways (Aguilera et al. 2007; Maignan and Ferrell 2004). Therefore, Peloza and Shang (2011) reviewed the extant literature to outline the CSR activities and outcomes that have been included so far. The most important implication of their review is that researchers must be deliberate and specific about their CSR activity selections (Peloza and Shang 2011). Otherwise, the results of CSR studies cannot be aggregated and may be biased.

Thus, the impact of different forms of CSR on consumer behavior merits further investigation (Aguilera et al. 2007; Lii and Lee 2011; Maignan and Ferrell 2004; Peloza and Shang 2011). By following this analysis, our explorative approach seeks to identify different forms of CSR activities in food retailing that may affect consumer behavior. METHODOLOGY To answer the two proposed research questions, a qualitative focus group approach was chosen. According to Churchill and Iacobucci (2005), focus groups are ideal to generate new ideas and insights. In September 2011, two focus groups were assembled in the capital city of a European country. Each group consisted of five to six persons with a balanced mix according to household sizes, ages, household incomes, and preferred retail formats. The small group size allowed every participant to describe and discuss his/her beliefs about this matter in detail. All participants were responsible for shopping for their household grocery products. The focus groups were moderated by an experienced moderator. We developed a questionnaire to investigate their CSR awareness in food retailing based on the qualitative study of Öberseder, Schlegelmilch, and Gruber (2011), who examined the importance of CSR in the buying process in general.

The final and adapted questionnaire was then discussed with experts in the field. Thus, we did not ask consumers directly about their perception of the importance CSR in food retailing. Only after we discussed why the participants shopped at their preferred food retailers did we mention CSR. The focus group interview guide is shown in Table 1. The questions were asked in the specified order that is shown within the brackets (1 to 7, see Table 1). FINDINGS The findings are presented according to the proposed RQs that will be answered in this section even though the questions were asked in the focus groups in another order (see Table 1).

Awareness of CSR Activities in Food Retailing First, we asked the focus group participants introductive and general questions regarding their purchases of grocery products. Beforehand, they were not informed that we would be examining them on the topic of CSR in food retailing for this study. The participants stated the following arguments about why they shopped at their preferred food retailers: (a) prices, (b) advertisements, (c) locations, (d) sales room, (e) merchandise, (f) service, and (h) tradition. These statements are more or less similar to the well-known retail marketing mix instruments (Berman and Evans 2010; Levy and Weitz 2006). For example, one participant said: “(…) when I get off the tram, there is immediately a retailer. . . .” Nobody said that he/she would shop at a special food retailer because of the social prestige of that store. This result supports the findings of Öberseder, Schlegelmilch and Gruber (2011) in the context of food retailing as CSR is not explicitly stated as the reason for buying from a specific retailer.

After these introductive and general questions regarding the buying process in food retailing, we asked the focus group participants to write down all of the social activities conducted by commercial companies that came to mind. If possible, they had to assign these social activities to specific companies’ retail formats. This task began with a discussion of exactly what is a “social activity” by a retailer. Then the participants identified 24 social activities. We categorized these CSR activities according to the reference system of Brashear et al. (2008) in which the CSR activities of retailers may be (a) consumer-oriented, (b) supplier-oriented, (c) internal actor-oriented, or (d) external actor-oriented. The aforementioned CSR activities are shown in Table 2. Although the participants prepared a list of 24 CSR activities in food retailing, the allocation of these activities to retailers, or at least retail formats, was all but impossible. Therefore, we found no differences among retail formats. It seemed that the participants assigned the CSR activities independently from any retail brand or retail format. Next, we wanted to find out where the consumers learned about the noted and discussed CSR activities.

The focus group participants gathered their CSR information from two different sources: company communications (POS, advertising, etc.) and independent communications (word of mouth, media coverage, etc.). None of them stated that he/she would read a CSR or other sustainability reports or related information on a retailer’s website. In this regard, we answered our first RQ, “Are Consumers Aware of CSR Activities in Food Retailing?” as follows: Consumers are barely aware of CSR in food retailing. When asked directly why they shopped at their preferred food retailer, the participants did not cite CSR activities as the reason for their purchases. Moreover, the participants of the focus groups were at odds about precisely defining a CSR activity by a company. Although they identified 24 CSR activities, they were not able to allocate all of them to a specific food retailer. So we found no differences between retail formats concerning CSR activities from a consumer’s point of view. CSR communication channels that actually reach customers in food retailing are both company communications and independent communications.

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