ETHICAL PURCHASES

Corporate social responsibility credentials could help maintain sales

By our News Team | 2023

Data from 2008 recession indicates that, in another recession, the amount spent on higher-priced Fair Trade goods may actually increase. 

A study by the University of East Anglia in England reveals why some ‘eco goods’ may fare better than others as a recession looms in Britain. 

 

The research, published this week, indicates that when money gets tight, people are more likely to keep up more expensive ethical purchases, such as buying ‘fair trade’ products.

Ethical purchases

Coffee beans being sorted in Ethiopia. Photo credit: Niels Van Iperen via Wikimedia Commons

These goods, typically exported from developing countries, that are certified as having been produced by workers who received a fair price for there work. The charity Fairtrade International oversees the certification process.

 

The latest study is claimed to be one of the first to look at ethical purchases using actual market data from a major supermarket chain.

 

“As a possible UK recession looms closer, we wanted to better understand how people’s spending might change, especially when it comes to purchasing ethical products like fair trade coffee or ‘dolphin-friendly’ tuna,” explains lead researcher, Dr Jibonayan Raychaudhuri.

 

The research team studied the impact of the economic recession of 2008 on consumer expenditure on eco-labelled food products. They used UK supermarket loyalty card data and showed that the recession had widely different effects on the spending share of different types of eco-labelled groceries.

 

Organic sales declined, but fair trade sales increased

 

“We found that the amount shoppers spent on organic products declined, but the amount they spent on fair trade products increased over the same period,” says Raychaudhuri.

 

“It’s interesting that the consumption of … fair trade products held up during the recession. It’s [also] surprising because we expected that consumers would change their spending during an economic downturn, with the sales share of all eco-labelled products falling, as they tend to be more expensive.”

 

He continues: “We think that, in a recession, some consumers become relatively less price sensitive and instead focus more on the public-good qualities of products. These public-good attributes, therefore, become more salient or important for consumers.”

 

Raychaudhuri says that, alternatively, shoppers may be fuelled by moral motivations, and those who regard themselves as socially responsible will want to maintain that identity.

 

“Although we studied data from 2008, we would expect to see similar results today as inflation increases and real wages erode.”

 

“What this means for shop and brand managers is that labelling products clearly for their corporate social responsibility credentials could help maintain sales,” he states.

 

You can read more about the research here.

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