Managing CR in a changing retail landscape

The retail industry is a dynamic place to operate; it is impacted by an ever shifting landscape of technological development, social and cultural trends and changes in fashion. We must therefore concentrate on understanding the drivers of change so we can follow and understand their effect on the market. In this way we can prepare for change and develop successful business strategies, while protecting our brands and reputation, and the high level of trust we have worked hard to build with our customers.

We see three trends driving change that are particularly relevant for corporate responsibility:

Increasing consumer awareness:  We know that our customers are increasingly interested in our Corporate Responsibility, often influenced by the media and Non Governmental Organisations. They want to know we operate in a way that respects the environment, and that the products we sell are sourced from ethical suppliers. For example, a survey from Mintel on ethical consumerism published in January 2007 suggested that 40% of consumers thought of themselves as ‘green shoppers’ while a further 23% were said to be ‘confused but willing’, pointing to a real market for green products provided they are accompanied by clear customer communication.

Changing policy:  The Government frequently introduces new forms of legislation and levies that have an affect on the retail market and the way we operate. A range of recent government initiatives have focused on the environment e.g.

• the doubling of landfill tax by 2010
• the recovery and re-use of electrical waste under the new Waste Electrical and Electronic Equipment (WEEE) regulations
• current consultations for the Energy Performance Commitment proposal which may result in a mandatory CO2 cap for large, non-energy intensive businesses
• the development of new energy efficient standards and a product labelling scheme for energy using products

We have a responsibility to comply will the relevant laws and regulations that apply to us and these often have an impact on the way we operate. Therefore we are focused as a business on ensuring that we operate within the regulatory environment and also manage the cost and profit impact on our business.

More competition:  Retailing is highly competitive, which results in pressure from within the industry as our peers launch new initiatives and services which ‘raise the bar’ and lift customers’ expectations. As retailers make moves to stay ahead of legislation and capitalise on consumer demand for green products, more and more environmental initiatives are being launched onto the market and voluntary commitments signed. Recent examples for non food markets include carbon labelling; new product launches of wind turbines and solar panels for home use; and business commitments to be carbon neutral.

All three of these driving factors have the potential to affect the value of our business, through changing sales patterns, increasing costs or by impacting on our brand image. We therefore need clear and effective strategies to meet these changes. This report gives you an idea of how Home Retail Group is responding.

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