News & Observer | newsobserver.com | It's not all about the price

Published: Nov 19, 2005 12:00 AM
Modified: Nov 19, 2005 05:18 AM

It's not all about the price

Stores more attentive to shoppers' social values

The Rainforest Action Network has called on companies such as Home Depot and Georgia-Pacific to stop buying wood products from Indonesia until endangered forests and human rights there are protected.

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Beth LeGrande doesn't seek out politically correct retailers, but she was pleased to learn that Home Depot, her paint supplier, is eliminating products that contain wood from endangered forests.

"That would make me want to go there," the Raleigh legislative assistant said. "Every little thing helps."

After spending decades competing on price, a growing number of retailers are now focusing new marketing efforts on people such as LeGrande who care just enough about social values to be selective in how they shop.

Terms such as "recycling," "organic," "animal welfare" and even "labor rights" have been introduced, albeit selectively, in the marketing material of companies such as Staples, McDonald's, Wal-Mart, and Target, suggesting that it takes more than just low price to survive in today's competitive market.

This marketing push coincides with an effort by some discount retailers to diversify and reach out to a new and often more affluent segment of shoppers who can bolster their sales and revenue.

Consider, for example, that Wal-Mart -- the retail giant that conquered the world with the slogan "Always Low Prices" -- now stocks Horizon organic milk at nearly $3 a half-gallon, alongside containers that cost 30 percent less.

Or that OfficeMax would find a good market for 100 percent recycled computer paper when consumers can pay 20 cents less for a package of regular paper.

"Price is becoming secondary for most retailers," said Nicholas Didow, an associate professor of marketing at the University of North Carolina at Chapel Hill. "Their tradition in the market place is to serve a consumer segment that is very price sensitive, but that doesn't mean they cannot also carry other lines of merchandise that is appealing for other reasons. And when the elephant walks, the jungle trembles.

"When Wal-Mart heads in this direction, you can fully expect other low-price retailers to move quickly as well."

Companies also have to worry more today about their role in the global economy, and how their reputation can be affected by events thousands of miles away.

Eddie Bauer, the global apparel chain, recently went through a rigorous, three-year monitoring process to gain certification from the Fair Labor Association. The nonprofit organization seeks to improve working conditions in Third-world factories that produce goods for American retailers, and having a Fair Labor letter of approval can improve a company's public appearance.

Many companies, including Eddie Bauer and Gap, have been stung by conditions at their vendors' manufacturing plants in recent years.

News of infractions can travel fast, especially in a country sensitized to layoffs and plant closings that occur when businesses move operations overseas, and that can hurt sales. Corporations are learning how to respond.

Last year, Gap issued a report detailing conditions at factories that produce its clothes and accessories, disclosing a number of infractions and problems -- and getting praise from labor activists about its candor.

"Consumers are asking more questions about how and where apparel is made and about the impact of the food that they eat, and like any smart business, companies are gearing up to address those concerns," said Matt Hirschland, a spokesman for San Francisco-based Business for Social Responsibility, an industry trade group that consults with businesses on social and ethical issues.

Since its inception in 1992, Business for Social Responsibility has gradually added global Fortune 500 companies to its membership roll. Large retailers such as Toys "R" Us, OfficeMax, Gap and Sears are now among them.


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Staff writer Karin Rives can be reached at 829-4521 or krives@newsobserver.com.
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