Retail recession – who’s really getting squeezed?

Tesco, Asda, Sainsbury and Morrison’s are facing a major crisis, shoppers are cutting back and it seems that the only way they can hold on to customers is to cut prices. In the war between the big four there is a surprise winner – Aldi. But the real losers could be workers in the Third World. Tesco currently (I use that word because we could see a massive change) dominates the supermarket scene. 1/7th of high street spending goes into their pockets and they made £2.8 billion profit last year. The problem with being leader, rather than a challenger brand, is you have to both grow and defend your business. And the last thing Tesco, or any of the others want, is a recession and the resulting price war needed to lure customers back. Food inflation is running at approx 9% and some analysts believe the average family could see their annual shopping bill rise by almost £1000. Combined with rising energy costs, it’s no wonder consumers are tightening their belts. Not surprisingly, the big four are nervous about customers moving over to the ‘pile them high, sell them cheap’ no frill stores like Aldi, Iceland and Lidi – all have seen increases in sales at the expense of the big boys. Aldi has seen a 20% rise and Iceland 15%. Meanwhile M&S has seen a 3.2% decline. In a recession premium products get cut out first and both M&S and Waitrose have seen profits grow due to wealthy times. Tesco and Asda (owned by Walmart) may hate a price war but out of all the supermarkets these two can afford to go the distance. A similar thing happened in the travel market in the 90s. The big boys pushed out everyone else, giving the consumer less choice and a worse deal long term. Tesco have already announced an aggressive series of cuts – 50% off 3000 items, while Asda’s strategy is to sell a wide range of basics, like bread and milk, at just 50p and have even started selling a 2p sausage (I dread to think what’s in it). Sainsbury have their ‘feed the family for a fiver’ campaign and Morrison’s have slashed the price of over 2000 items. Even M&S are pushing a price message. It’s panic all round. These cuts, combined with soaring energy costs (both electricity and fuel) means margins and profits will come under threat. Traditionally that means the supermarkets will pass this down the line to farmers and suppliers. But most are now working on such low margins there’s no way they can cut back. NGOs like ActionAid and War on Want will be watching closely to make sure Third World workers are not the victims. In a recession the triple bottom line – people, planet, profits – becomes rebalanced to just profits. Big companies need to feed the shareholders before the mouths of the hungry. Action Aid’s WHO PAYS? campaign has been very successful in challenging supermarkets to reveal where the discounts on many products were coming from. It asked consumers to ask their supermarket “who is paying the price of the discount?” Within weeks of the campaign launching Sainsbury ran an ad for bananas and stated that they were covering the savings. The campaign has already signed up 42,000 shoppers to a Who Pays loyalty card and has not been popular with supermarkets. Sadly, in a recession low prices rule and ethics becomes an accessory rather than a necessity. The middle class shopper who likes the idea of ethical shopping becomes more pragmatic. The trouble is that many ethical products are more expensive, so out goes the organic vegetables alongside the Fairtrade biscuits and in comes budget packs. By contrast to Third World workers, we westerners are still wealthy, but we’ve come to enjoy such a luxury lifestyle that a small recession makes us feel poor. One positive outcome of growing fuel prices and shopping will be a cognitive change in behaviour. People will drive less, waste less electricity, think more about what they buy and consumerism will reduce (along with landfill). By default, the consumer may finally start to live a more ethical lifestyle. There’s no doubt it’s tough on the high street – there’s a number of retailers like Ilva and Dolcis who have gone broke – and many more predicted to come. Another victim are staff. DSG, owner of Currys/Dixon and PC World are planning to make 1000 staff redundant having also announced that due to bad customer service they are sending almost 20,000 staff on training programmes. After my last experience in Curry’s I’m sure their staff haven’t any training at all. ‘Hopeless’ was the word that came to mind trying to buy anything there. Bad service combined with a recession and a growing trend towards online purchasing, you have to question if they are not already a dinosaur awaiting extinction. The BBC’s Panorama damming documentary on Primark (claiming suppliers were using child labour), followed by an Evening Standard cover about Tesco – TESCO ‘SLAVE LABOUR’ ROW - using sweat shops that pay as little as £7 a week, has not been good PR for either retailer. But in a recession the middle class public can be very fickle – news today, gone tomorrow - and ethics can quickly be parked, giving the retailers a get out. Just leaving deep greens and NGOs to protest. There’s little doubt that times are going to be hard for everyone, especially for small ethical businesses who often struggle as it is and have been dependant on large retailers. As we claw back, many ethical goods will either need to promote their value message stronger – especially those at the premium price end - or face cuts too.

Rocking and recycling to save the planet

This year has seen an explosion of music festivals and almost all of them are trying to be greener than the next. But one festival is claiming a new ethical twist – no commercialisation. No ads, no sponsorship. Could anti-marketing be the new form of green music marketing? This year has been a lot of focus on greening up of festivals, partly in response to criticisms and in part to a more planetary aware youth. (There’s even green awards for them now.) Ironically this move is driven more by the music industry than the festival goers. Bands like Cold Play have been very vocal about carbon footprints (though most concert goers probably think it’s music style rather than a grading system). By contrast, the Madonna’s of this world are happily jetting about and burning gas like it was still cheap. Time Out, Smart Planet and Big Issue have both produced guides to ‘how green is my festival’. There’s little doubt greening up is fashionable and sales of eco-tents, hemp t-shirts (more eco than cotton) and organic veggie burgers will be up. And if you could get organic hash, they’d probably advertise it too. Though given recent busts, seems it takes a lot of energy to grow the stuff, so not very eco friendly. Someone has recently pointed out that heroine should get Fairtrade and Organic ratings as the farmers get a fair price and no chemicals are used. Ironically the best selling FMCG product in the States by value is not Coke but Cocaine. But I’m deviating. You certainly can’t knock the festivals for recycling – The Police (Hyde Park), Shakin’ Stevens (Glastonbury) and Neil Young (The Hop Farm) are all back. But on a more serious note, some are even paying for bags of waste! Leeds and Reading are giving away a free can of beer in exchange for three bags of rubbish (seems a bit pricey for a can of Carling). Isle of Wight, Glastonbury, V Festival, Hyde Park, Global Gathering, The Big Chill – there’s over 30 this year - and the rest have all become over commercialised events. Great for advertisers but is it really rock ‘n’ roll? The Hop Farm festival (Sunday, July 6th) is organised by Vince Power (formerly of the Mean Fiddler Group). It boasts ‘no sponsorship, branding or VIP areas, just great music.’ So no Carling then. It certainly delivers on the music with 8 great acts and Neil Young headlining. With deep greens becoming more vocal about consumerism being at the heart of planetary decay, could this be the start of a turn against the over commercialisation of music events? Carling, who have pumped a lot of money into the music scene to sell their limp lager have also come under criticism in the past for reducing choice. Festival goers don’t want to be told they can only drink this brand or eat that brand. A new survey by Buckinghamshire New University (sample of 1400) has revealed that 48% of festival goers would be happy to pay more for a ticket if the festival in question was more environmentally friendly. A third said that a festival’s greeness was a factor when buying a ticket. Almost all (80%) said they believed that noise, waste and traffic have a negative impact on the environment. What is shocking is that 20% didn’t (maybe they were too stoned at the time). 56 % now consider CO2 a negative impact from festivals. Not well known is that 75% of the UK music industry's greenhouse are a results of live events. However, 65% agreed that if their favourite band was playing they’d go even if the festival wasn’t green at all. Seems music rocks over environment. There is also a trend by festival goers to leave the VW Camper at home and use public transport or opt for car sharing – Creamfields are encouraging visitors to share via liftshare.com. While Latitude Festival were claiming to have the world's first fuel-cell powered festival stage, while others are running solar power stages. For green festival goers you can now get eco-tents. The Myhab, is made from recycled cardboard and plastic. Add to that, you can get free biodegradable tent pegs made from potato starch. Not sure what happens if it rains – visions of wet cardboard and mash potato come to mind. And those that dump their tent at the end, because they can’t work out how to put it back in the bag, will find them heading to Africa to help charities over there. Since 2005 “Bin it, bag it, recycle it” has been the message at Glastonbury and the 100 comically dressed ‘Green Police’ will be seen patrolling around trying to spot environmental crimes. They are also pushing a ‘love the farm, leave no trace’ message. Gone are greasy hot dog stands selling dubious meat burgers, in now is good health organic, locally produced veggie burger. Traders can even win their own green trader award – last year it was Ecogagets and Chai Wallahs. Wychwood Festival (several weeks ago) boast some of the greenest credentials. Only local traders can trade and must use local, organic and fair trade goods. And every festival goer gets a recycle bag on entry, handy if it rains and you’ve lost your umbrella. Last year’s winner of ‘A Greener Festival Award’ was The Big Session, who work closely with a community recycling group called The Big Wasters. They do a lot of worthy things, including collecting used oil and turning it into biofuel. Scotland’s T in the Park claims to be the world’s biggest carbon neutral festival. Think I’ll start a band and call it Carbon Neutral, then maybe I can claim a headline listing there. They have a battery recycling exchange in the campsite and are asking campers to use only phosphate-site soap to protect Loch Leven, sited by the festival. However, the one event that attracts me most is not the thought of standing in a muddy field watching some ancient act from the 60’s but Vince Power’s Mighty Boosh comedy festival. Talking of comedy, forget Carling, try a dose of George Carlin and his views on environmentalism (YouTube - George Carlin: Jammin' in New York - 1992 ) - http://www.youtube.com/watch?v=dIXygZJhWU8&feature=related He rocks.

Observer Ethical Awards rewards innovation and passion.

I recently spent one of the best night’s of year in the garden of the Hemple Hotel (well the garden's green) watching the awards being given out under a wigwam made of reclaimed materials, drinking organic RDA juice and eating organic, fair trade, non GM snacks, I was left feeling a warm green glow.

Everyone was so passionate and there was a great sense of camaradary. But the best bit was being Hugh Fearnley-Whittingstall for the evening. The green business circle is a very friendly bunch. There’s no sense of competition and no back biting. Having a passion for ethics strongly units them all which makes for one of the friendliest group of businessmen and women you’ll ever meet. And that's something else that’s different, probably half the businesses represented at the event were run by women. It’s not easy being green and many businesses struggle to get distribution and their message to a broad audience. It takes more than the average determination to make green businesses fly. Few have the big budgets of multinational brands and you can’t expect any help from the government.

But the drive all these entrepreneurs have – many gave up top jobs – leaves you with a massive feeling of admiration. There couldn’t be a greater contrast to the likes of Alan Sugar. These people all set out to enrich lives rather than get rich. They really do respect both people and the planet. There were some brilliant ideas and inspiring winners, with a strong bias towards environmentalism. Finisterre, the cool surfer brand of clothes, won the fashion award. Even though Ken Livingstone lost the GLA he did win the award for best politician, beating David Cameron. Hugh beat Jamie for TV campaigner with his Chicken Run campaign.

Best Big Idea went to Ewgeco who produce an energy monitor, though my favourite is the runner up Moixa who make USB rechargeable batteries that last forever – simply brilliant. Divine Chocolates won Ethical Business and Natural Collections won Online Retailer. There were other winners but also many brilliant and worthy entrants. One of the other great pleasures was meeting new and interesting people, including a few celebs (can’t help name dropping) like the stunning Anneka Svenska, Ken Livingstone (somewhat less attractive but what a nice down to earth guy) and Annie Lennox, who I last spoke to 20 years ago in a record shop in Crouch End. This led to a fascinating conversation about how Crouch End (where I also live) has changed, since she lived there in the 70s, to become the eco-ethical centre of North London.

Lennox is a strong supporter of human rights and ethical issues. One person I will reveal got a trophy (made of old wood) was Hugh Fearnley-Whittingstall. Looking at my photo you may be surprised that with my glasses on I’m often told I look a lot like Hugh. This probably was to Hugh’s advantage as he disappeared soon after he got his trophy (some might say chickened out) leaving me to play his part. I was approached by at least a dozen people congratulating me on the award, several of whom wanted me to support their eco projects – sorry Hugh I’ve promised you’d help them all. One took a lot of persuading I wasn’t Hugh as he really wanted to get his point about chickens off his chest. Let’s hope the pictures the paparazzis shot of me in the KFC later don’t get published! It does give you an unpleasant taste of fame - think I’ll stick to being anonymous.

There’s little doubt that the Observer Ethical Awards (sponsored by Ecover) is doing a lot to help ethical businesses, I just wish the government was doing more. The ethical space is full of innovation, inventive business ideas and a passionate pioneering spirit. Being part of that gives you a new perspective on things. And boy do they know how to party. On a lighter side, an eco-ethical joke. “Knock, knock.” “Who’s there?” “Your eco friend trying to avoid wasting battery life and so reducing the amount of batteries your doorbell uses and therefore the number that end up in landfill.”