I have long thought that any research done on consumers' willingness to pay for ethical products suggests that they are not (willing to pay). In general, when presented with two identical items, but plenty of labelling advertising that one of them was made with sweatshop-free labor (and is therefore slightly more expensive) and the other without specific labelling (and is slightly cheaper), that the cheaper version is selected. What is important about the article in the url below, therefore, is that it presents evidence that this is not always the case (or that what had previously been true is changing):
"In April, the British grocery chain Waitrose added a small yellow label to nine of its store-brand chocolate bars. 'Tony's Open Chain: Together, we'll end exploitation in cocoa,' it read."
What is interesting is that the supermarket (Waitrose) did not make a big deal about this, but it seemed to have been noticed by customers:
"The rollout wasn't accompanied by in-store advertising, and press coverage was relatively quiet. The price of the bars rose from 2 British pounds (about $2.50) to £2.20. Still, sales shot up by 43% year over year in the week after the launch, and averaged 34% in the first six weeks."
These results therefore clearly counter what has currently been accepted about consumers' unwillingness to pay for ethically produced products:
"In surveys, consumers frequently express a willingness to pay extra for products they perceive to be sustainable, but actual shopping behavior tells a different story. A 2022 study by the consulting firm BCG found that while 80% of respondents said they cared about sustainability, less than 7% actually paid extra for sustainable products."
One explanation for this is that the product is more of a treat or luxury good, which might mean consumers don't want to feel as guilty as they consume it. Or, it could mean that social mores are shifting and there is growing support for more ethical supply chains. Central to the Strategic CSR framework is the idea that companies and capitalism is neutral – mere tools that we have devised to allocate scare and valuable resources. This means that all organizations merely reflect the collective set of values among all stakeholders. In this case, if consumers are willing to pay more for ethically produced products, then that is what companies will produce, and global supply chains will adapt. The key, if true, is how wide is this effect, and how much of a price premium will consumers be willing to pay?
"It is even less clear how rich a 'sustainability premium' people are willing to pay. Recent research has put the number between roughly 10% and 25%."
On the other hand, given that Waitrose is a higher-end supermarket:
"At Waitrose, customers appeared willing to pay extra for ethical cocoa sourcing—though it is also possible shoppers didn't notice the difference. Inflation, and an attendant preference for store brands, might have played a role."
Take care
David
David Chandler
© Sage Publications, 2023
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
Grocer's Chocolate Sales Soar After It Vows Fair Pay to Farms
By H. Claire Brown
June 4, 2024
The Wall Street Journal
Late Edition – Final
B1, B2
