|
A few factors are
making retailers more charity-focused:
•Retail charitable
giving and cause marketing is increasingly resonating with
consumers. Even as they cut back on their own spending,
consumers increasingly say they are more inclined to buy
cause-related products or support retailers who help the needy.
When asked if they had to choose between two gifts priced the
same and of similar quality, 77% of 1,070 people polled said
they'd pick the one supporting a cause, according to a November
2007 survey by Opinion Research for Cone.
The gifts sold at
Things Remembered that include a $2 donation to the Make-A-Wish
Foundation are among the stores' top sellers. Boosting the
sales: the story of Elysia Bryan, who in 1997 made a wish before
she died of cancer that she could give her family and friends
personalized gifts saying, "Thank you, I love you, and always
remember me." That led to a program that has raised more than
$5.5 million since 1998 and helped 750 kids.
•Big-box retailers
still have the most work to do when it comes to creating
goodwill in their communities. While many welcome the arrival of
a deep discounter or other type of megastore in their area,
others lament that they drive out smaller local businesses.
That's led companies including Wal-Mart and Target to home in on
the issues and charities that matter most in the communities
they do business in.
"People don't love
big-box retailers. They're so impersonal and disconnected," says
Ken Nisch, chairman of retail brand and design firm JGA. But
their community efforts help soften the image.
•With the consumer
spending slowdown, retailers are using charitable ways to draw
customers into stores. Macy's promised to donate $1 (up to $1
million) to the Make-A-Wish Foundation for every child who
dropped off a letter to Santa. Tuesday, Macy's presented the
foundation with a $1 million check. Kohl's displayed stuffed
Curious George dolls by the doors that sold for $5, and the net
profit went to charity. Target donated part of the purchase
price of items in a cause-related holiday collection to charity.
Target has given 5%
of its income each year since 1942 to charitable causes, mostly
education. Since early November, Wal-Mart has announced eight
initiatives funding hunger and projects including international
disaster relief.
But it is Kroger, a
retailer in the low-profit-margin grocery business, that gave
the highest percentage of its pretax profit to charity of any
major retailer on The Chronicle of Philanthropy's list.
The 6.9% of 2006 pretax profits Kroger gave to charity in 2007
is more than three times that of Wal-Mart. Target donated the
second-largest percentage of its pretax profit, or 3.8%. The
Chronicle's list combines foundation and corporate
charitable giving of cash and products but does not include
donations encouraged by the retailer but made by employees or
customers.
Kroger focuses most
of its charitable giving on hunger relief and local issues that
customers say are important to them — and believes it pays off.
"Our customers have
told us that it's one of the reasons they go to us over one of
our competitors," says spokeswoman Meghan Glynn. "What we do to
support communities is very relevant to them."
Laysha Ward,
president of community relations at Target, says education is
one of its customers' top priorities, which has made it one of
the discounter's. Target lets customers who use its store credit
cards designate one or more schools they would like 1% of their
purchases to go to.
Much of that money
and Target's other educational giving has gone toward renovating
and upgrading elementary school libraries. Target employees help
select the schools, typically those where up to 75% of students
are below the poverty level, then design and do library
renovations.
Target has also
donated millions to the arts, social services and the United
Way. Target's giving, says Cone Executive Vice President Alison
DaSilva, is "the gold standard."
"Almost all of our
clients ask us to benchmark them against Target," she says.
Mixing charity with
shopping may be the ultimate win-win-win. Stores sell more
products and improve their images, charities get donations and
free publicity, and people get a charitable nudge many
appreciate.
"People want to do
good, but they don't always know how to do good, and they don't
always want to spend the time to figure it out on their own,"
says Michael Stone, CEO of The Beanstalk Group, which
specializes in brand licensing for corporate and non-profit
clients.
The millions who
walk through stores every day are a charity fundraiser's dream
come true. Wal-Mart stores alone have 120 million visitors a
week. "To get those eyeballs on a worthy cause would just be
incredible," says Stone.
The percentage of
people who think it's acceptable for companies to involve a
cause in their marketing has increased from 66% in 1993 to 85%
last year, Cone says. Almost 80% of people say they'd switch
from one brand to another if the other brand is associated with
a good cause, and the price and quality are about the same, up
from 66% in 1993.
Cone tested such
responses in actual shopping this year, when it split 182
consumers into two groups and showed some a magazine with
generic retail advertising and the other cause-related retail
ads. When they went shopping after viewing the ads, all of the
brands associated with a cause sold better than the others. One
brand of shampoo linked to a cause saw 74% higher sales, and a
toothpaste brand was up 28% with a cause-related ad.
Macy's hopes cause
marketing makes people like the company better, too.
"Our corporation is
truly extremely supportive of cause-marketing initiatives. It
supports the DNA of what this brand is all about," says Martine
Reardon, executive vice president of marketing at Macy's.
She compares it
with the way kind people win friends: "If you see someone out
there doing something nice, you think that's what they're like,
so you want to get to know that person."
John King of
Southport, N.C., says he feels better about a retailer that
supports charities and is more inclined to shop there. And he
feels even more strongly if they stop. He and his family no
longer shop at Target because the company banned Salvation Army
bell ringers from the front of their stores four years ago. At
the time, several Christian groups called for a boycott of
Target.
Target says it
doesn't allow any solicitors and highlights the $2 million it is
donating to Salvation Army this year for its libraries, and
other efforts, including toy drives.
Still, some find
requests for donations outside stores or from cashiers wearying,
while others are skeptical.
"I give to
charities of my choosing that I have investigated, and I know
that all the money I send goes to the charity," says Ray Tyc of
Montgomery, Ala. "I'm not so sure about that with the
retailers."
DaSilva says Cone's
research has shown that "consumers are not all created equal
regarding receptivity," but the millions raised from consumers
show it's worth a try.
"Consumers are
struggling to pay their own bills, but their friends and
families are getting laid off, and they almost can't help but
feel a sense of compassion," says DaSilva.
"Companies who
recognize this mind-set of consumers will gain a competitive
advantage."
Copyright © 2008 -
USA Today |
