The Success of a Retailer's Ethical Policy: Focusing on Local Actions

Growing corporate interest in ethics may be explained by emerging contemporary issues such as bio-ethics, pollution control, and environmental awareness. However, sociological and political or philosophical analyses reveal that religion or the 'city' (in the etymological meaning of the word) no longer meet the "societal demand for meaning," and that a substitute for the "missing supply" (Obrecht 1994, p. 4) is now being sought in the business world, thus mirroring a crisis of individual and collective values. The ethical wave has not bypassed the retailing sector and the number of retailers committed to 'fair trade' is increasing. Convenience retailers are also stepping up agreements with NGOs. Casino is partnered with Amnesty International, Carrefour works with the International Federation for Human Rights, and Auchan cooperates with the French organization "face=+Italic; L'Ethiqueface=-Italic; sur l'tiquette". Champion has signed an agreement with the WWF (World Wildlife Fund) for the design of products compliant with environmental standards, while Tesco has been a member of this association for eight years and is committed to selling furniture manufactured with wood from sustainably-managed forests. Specific ethical actions such as good social conduct codes (Auchan, Go Sport, and Carrefour) or the rollout of the so-called ethical standard, SA 8000 (Carrefour-Promods), are spreading. For example, supermarkets such as Tesco and Sainsbury are developing initiatives to fight against obesity (with instructions on packaging) or are members of an association whose aim is to protect marine wildlife. Retailers have also defined new job positions such as Executive Manager for the Environment, Import and Social Ethics Manager (Auchan), or Sustainable Development Manager (Monoprix).

Of course, retailers' ethical concern is enmeshed with ulterior motives because of the huge stakes involved. Various consumer studies actually show that if a company were to seriously default on its social and environmental obligations, 62.7% of French consumers would be prepared to shun the purchase of its products and 51.2% would support a boycott (2002 CREDOC study). Against the backdrop of increasingly tough competition among retailers, the growing number of scandals and incidents of professional misconduct have also generated deep-seated consumer mistrust. Thus, the retailers the hardest hit by the crisis of confidence erosion have been gradually prompted to revise their business concepts. They now have to forge close ties with consumers to regain their trust (Gatfaoui and Lavorata 2001). From this standpoint, ethics is an integral part of the development of a durable relationship between companies and their customers and is an inescapable approach for retailers as well.

Our paper starts by listing retailers' ethical practices. It then goes on to highlight the key role of the local store as a prerequisite for a retailer's successful ethical marketing, as shown by an empirical study of the retailing sector in France.

face=+Bold; THE STAKES INVOLVED IN RETAILERS' INTEGRATION OF ETHICSface=-Bold;

The analysis of the reasons for the development of ethics shows that industrialists were the first to become aware of the concept, followed more recently by retailers, who have come to realize the ethical stakes involved in their practices.

face=+Bold; The Place of Ethics in Businessface=-Bold; Business' recent interest in the concept of ethics was first triggered by "in-house reasons," i.e., globalization and various corporate takeovers weakened corporate culture, and specifically led to the loss of collective bearings. The outside factor of deregulation forced companies to question their values (Jobard 1992). A company needs to create a common cultural reference and to clarify values, but also to guide or deliberately control employee behaviors (Mercier 1999). A company will justify any acts or decisions according to moral standards and values. This translates into a formalization of ethics through ethical codes or ethics committees.

However, external reasons, such as the pressure of the sociopolitical environment (Mercier 1999), also explain the ethical approach to business. Mass consumer culture has made way for a more demanding, aesthetic and cultural consumerism (Koslowski 1998). Consumers do not only take into account the material aspects of the products they purchase, but also their symbolic and cultural quality. "The new attitude toward consumerism is defined by the search for a social identity" (Thun-Hohenstein 1984, p. 75). Thus, the formalization of ethics fosters relations with shareholders while conveying a serious, quality image to consumers. The rollout of an ethical policy is sometimes a sincere, albeit opportunistic, reaction of businesses to prevent conflicts, or to deploy conflict risk management. As companies operate within a competitive world where trade battles are won in the field of corporate image, their ethical strategies become instruments extending their power and adding value to the brand (Lipovetsky 1992). The ethical discourse enhances the brand with an axiological content (Carr 1998). This is a good way of avoiding the trivialization of the corporate discourse and of building a bulwark against the competition (Weil 1990).

face=+Bold; Reasons for Integrating Ethics face=-Bold; While retailers cannot evade the ethical pressures on companies, they are also in a difficult position as brokers between vendors and consumers. Nevertheless, retailers would like to assert themselves as companies in their own right. They are no longer working to convey the image of their suppliers' products but are seeking to forge their own image and establish their position with regard to their competitors (Fady and Pontier 1999). For instance, aside from the banner store supply, a retailer will also offer a product supply to consumers as a means of differentiating itself from rival businesses (Huv-Nabec 2002) and of strengthening consumers' perceived image of the retailer. According to Jrme Gulbert, who is in charge of the Carrefour advertising budget at BETC Euro RSCG, "The notion of responsibility has become an engine that drives in-store attendance in the same way as low prices do. Carrefour had not thought of communicating on this topic; we suggested it." "A business discourse can no longer be called such if it does not include either a societal or environmental scope," adds Sylvie Cole, Advertising Executive at Carrefour (www.novethic.fr 2004). Retailers build their image in much the same way as companies do. This is because the former are often faced with a conflict between satisfying consumers - to whom retailers would like to offer a wider variety of products at competitive prices - and vendors, reputedly being forced into bankruptcy because of retailers' purchasing policies.

Furthermore, consumers' perceived image of the retailer stems from the behavior identified with the store. Consumers satisfied with the quality of the goods and services of the store have a favorable image while dissatisfied consumers form a negative image (Berry 1969). Recent research (Alexander 2002) confirms these, albeit old, study findings and shows that consumers will tolerate non-ethical behavior as long as they believe that their investments and income remain the same. Once consumers think that this is no longer the case, they will react either by complaining or by changing suppliers. That is why a retailer's communication aimed at improving its image may trigger favorable attitudes and spur in-store attendance (Amraoui 2002). This explains why communication campaigns, such as the CAMIF's campaign (2002) focused on "Professional, Yes - Without Ethics, No," are increasing. The promotion of ethics thus becomes a way for retailers to improve a still negative image.

However, the ethical practices of retailers may take different forms. Therefore, a precise definition of the concept is needed.

face=+Bold; Retailers' Ethics and Corporate Social Responsibility face=-Bold; The very concept of a retailer's ethics gives rise to countless interpretations since it may encompass the sales of products endorsing 'just causes,' the development of ethical products manufactured in compliance with ethical rules, or the rollout of ethical sales practices with consumers (Whysall 1998).

Because of the range of diverse interpretations, we will start by defining the term 'ethics.' It comes from the Greek face=+Italic; itos face=-Italic; meaning 'the fibre of the soul' and face=+Italic; ethosface=-Italic; that originally meant 'inhabited place,' and then a place where one lives. The term later took on the abstract meaning of 'habit,' 'usage' and 'tradition' to finally mean 'mores' or 'customs.' The idea of behavior compliant with customs and the idea of norms, tradition and laws originally underlied the meaning of the word 'ethos.' For Socrates, the term face=+Italic; ethosface=-Italic; designates what an individual should do according to his or her thoughts and convictions, and no longer refers to an action conforming with habit (Rich 1994). Littr (2004) defines ethics as "the science determining the distinctive characters of rightness and wrongness in human behavior." However, ethics is also defined as "the theory of a just life, fair actions, ethos, fair behavior and fair habits" (Koslowski 1998, p. 7). Ethics is the practical science of conduct and is assessed on a case by case basis (De la Bruslerie 1992). Ethics is a branch that deals with values relating to human conduct with respect to the rightness or wrongness of certain actions, but that does not address the foundations of Good or Evil. What we are dealing with here is the concrete reality of human choices and not some abstraction mainly pertaining to moral standards.

When studying the ethics of retailers, concepts such as the corporate social responsibility (CSR) or sustainable development arise. Both concepts are ambiguous because they are often interchangeable (Gendron 2004). On the one hand, the Brundtland Report on the Environment and Sustainable Development (submitted to the General Assembly of the United Nations in 1987) defines it as a "development that meets the needs of the present without compromising the ability of future generations to meet their own needs." Therefore, it appears that the operationalization of the concept is blurry and hard to roll out in a company; it may rather be a project for society (Gendron 2004). However, some retailers (e.g., Monoprix) have opted to base corporate communication on their societal intentions concerning this concept.

Actually, the concept of corporate social responsibility (CSR) is often associated with the concept of corporate ethics, and according to many definitions, CSR appears to be the ethical expression of the business. For instance, the World Business Council for Sustainable Development (http://www.wbcsd.org/projects/pr-csr.htm)) defines CSR as "business' commitment to acting in an ethically responsible manner, and to contributing to sustainable economic development, working with employees, their families, the local community, and society at large to improve their quality of life." However, CSR also includes a legal aspect. Chardel (2004) defines CSR as "a meeting place between legal liability and ethical responsibility." Carroll's model (1996) broadens the definition by including four types of responsibilities within the CSR concept, which he identifies as economic, legal, ethical and philanthropic responsibilities. Hence, although a part of CSR, retailer ethics are but one aspect of it.

Consequently, we will analyze retailer ethics by focusing on the notion of ethical responsibility. We will not take into account the legal, economic or philanthropic scopes within the CSR concept. We will then study retailer ethics from the standpoint of the ethical practices they roll out, practices seen as 'good actions' as defined by Aristote. According to Sorell (2001), the Aristotelian view emphasizes the idea of ethical selfishness, i.e., by developing practices that promote personal fulfilment, the entrepreneur, hence the retailer, behaves ethically. Within this framework, economic stakeholders may work for others if doing so forestalls any detriment to their own interests or if the benefit from others generates a net advantage for them.

face=+Bold; RETAILERS' ETHICAL PRACTICESface=-Bold;

In the course of studying retailers' ethical practices, the researcher is confronted with various types of actions. Therefore, it is advisable to differentiate the actions according to type of retailer. An earlier study classified retailers into two categories according to their ethical positioning (Gatfaoui and Lavorata, 2001). The first category comprises retailers such as Human Inside or Alter Eco, that only engage in fair trade business, or retailers such as The Body Shop or Natures et Dcouvertes that have adopted an ethical strategy. The second category includes conventional retailers (Auchan, Carrefour, Leclerc, and so on) that deploy ethical actions. For this paper, we opted to focus our study on the latter category. The stakes of ethical marketing are greater for conventional retailers than for those that have already committed to a 100% ethical policy.

face=+Bold; Assessment Criteria of Retailers' Ethical Practices face=-Bold; As for any other business, retailers are not only judged on their financial performance but also on their ethical performance. For instance, some shareholders will not invest in a business that does not meet certain ethical criteria. This has prompted different companies worldwide, such as CEP (Council for Economic Priorities) in the USA, Viego (formerly Arse) in France, or Ethibel in Belgium, to set up assessment criteria for corporate ethical practices. The six main criteria for ethical assessment are listed in following table:

face=+Bold; Table 1Ethical Assessment Criteria (Ronai, 1999)face=-Bold;

face=+Bold; Analysis of the Ethical Actions of Traditional Retailers face=-Bold; In order to analyze traditional retailers' ethical actions, we used Ronai's six criteria, defined above. We carried out a documentary study based on press releases supplemented with assessments by Novethic (a subsidiary of face=+Italic; Caisse des Dpts, www.novethic.frface=-Italic; ). Through this documentary study, we notice that retailers neglect two out of the six assessment criteria such as relations with shareholders and with employees. The 2002 FCD (face=+Italic; Fdration du Commerce et de la Distribution, face=-Italic; the French federation of trade and retailing) audits highlighted problems with retailers regarding work schedules and non compliance with minimum wage requirements (Leclerc or Systme U) and safety (Auchan, Casino and Cora, Systme U and Leclerc), confirming our observation. However, Novethic assessments indicate that some retailers are making efforts in the area of training programs (Carrefour and Casino). Novethic concludes the chapter on relations with shareholders by underscoring the lack of communication on the part of retailers such as Casino and Carrefour, despite the latter's efforts (for example, the creation of a free hot line).

On the other hand, retailers' ethical actions are more visible in customer and supplier relations. For instance, actual certification or quality approaches between retailers and their suppliers are translated into products available to consumers. Retail management at Monoprix, for instance, is committed to backing its consumer communications with consistent actions. Monoprix CEO, Philippe Houz, explains that "at the consumer-vendor interface, our mission is to accompany the emergence of responsible consumerism. For Monoprix, fair trade is a modern form of solidarity, i.e., paying a fair wage for labor is the only way of helping developing countries move toward sustainable development." (face=+Italic; Entreprendreface=-Italic; , 2003). Other retailers (Casino, Cora) organize actions to promote children's awareness of food safety or have instructions in Braille embossed on their products (Auchan). The store manager's written commitment to recycling and battery recovery is clearly posted at the entrance to some Auchan stores, indicated environmental concern.

Different ethical levers deployed by retailers have been identified through this overview of ethical actions. However, further analysis is needed.

face=+Bold; THE PREREQUISITES FOR RETAILERS' SUCCESSFUL ETHICAL APPROACHface=-Bold;

Although the previous section highlighted some of the main ethical practices rolled out by retailers, these practices provide but a partial view. Therefore, we decided to conduct a qualitative study to determine what retailers thought of the said ethical practices, and what practices they deemed relevant for retailing business strategy.

face=+Bold; Methodology of the Studyface=-Bold; From December 2001 to April 2002, interviews were conducted with three types of stakeholders at French consumer research organization, Dia-Mart:

The management of major retailers (Leclerc, Cora, Casino, Pinault Printemps Redoute, and FNAC);

A firm specializing in consumer behavior;

Environmental specialists and specifically WWF members.

The purpose of the study was to identify and understand the ethical practices of major convenience retailers, but mainly to assess the ultimate relevance of ethical marketing for a retailer. The following questions were asked: face=+Italic; What do customers think of the retailers' ethical actions? At what level should the ethical approach be placed within retailers' strategy? What are the criteria for making the right decisions? What control methods are used to make these decisions within the company?face=-Italic;

Since retailer ethics is a highly exploratory field, we decided to conduct a thematic content analysis that would highlight the main themes of the interviews. Although content analysis often serves to quantify the recurrence of a theme, researchers may also look into the presence or absence of a given characteristic, the principle of qualitative content analysis as pointed out by Grawitz (2001). It is for this reason that we opted for a qualitative approach to content analysis. Indeed, the richness of the approach could help us better identify all the themes and sub-themes that came up during the interviews.

face=+Bold; Study Resultsface=-Bold; The interviews revealed two main prerequisites for the successful rollout of an ethical approach: first, ethics must really be integrated into the marketing strategies of the retailer, and second, it must be present in the store to be efficient.

Ethics, an Extension of the Retailer's Mission

The analysis of ethical actions according to retailer type shows that the greater the retailer's national clout (sales figures, network size, and media coverage), the greater the expectations of the retailer's ethical outlook. The demand for community involvement, likewise, depends on the perceived power of the stores within the community (number of employees, length of time in the town, and store area). Finally, the smaller the store is, the less realistic any active involvement in an ethical approach becomes. Consequently, if a retailer wants to include ethics in its practices, it can no longer make do with a mere business promise. A retailer must state what purpose it serves and what it believes in; it must have a plan or a mission in order to create 'social' legitimacy.

The following table shows examples of ethical extensions revealed in the results of surveys carried out by the consumer research organization, Dia-Mart:

face=+Bold; Table 2Examples of Ethical Extensions (face=+Italic; sourceface=-Italic; : Dia-Mart)face=-Bold;

face=+Bold; Ethics Have to be Embodied in the Storeface=-Bold; In 1988, and long before the emergence of ethics in retailing, some researchers underscored the role of the store, and specifically the role of staff, in asserting the retailer's positioning (Pontier 1988). Consumers are in direct physical contact with the company; the store is not to the retailer what the product is to the brand - the store is a 'little piece of the company.' The store is what gives life to the retailer. Retail marketing has to be hard evidence marketing, ongoing proof marketing. Anything that is not visible in the store is not clearly perceived by customers and is not very credible. This postulate is even more meaningful for ethics: consumers are quick to become wary of a virtuous discourse if the store is devoid of any hard evidence of the discourse, especially when the companies have been criticized as much as major retailers have (Fady and Pontier 1999).

Therefore, as tempting as it might be to focus primarily on burning, media-touted issues such as the environment or humanitarian causes, the most efficient issues for fostering consumer awareness are actually community focused, i.e., the defense of the local environment, a policy to employ the disabled, the recruitment of underprivileged young people, and so on. It is through these interviews with retailers that four types of stores, each with a different ethical approach (see table below), can be defined. The French hypermarket, Cora, for example, organizes an annual event to raise funds for the West African project, "Les coles du Dsert". Each Cora store organizes an art competition in which the local schools take part, and the paintings are exhibited at the sales outlets. The winning pupil makes the trip to Africa to help with the distribution of school books, stationery and other equipment donated by Cora.

Consequently, a retailer's ethical approach will have a marketing impact on consumers commensurate with the store's involvement. This is the case of the hypermarket, Auchan, in the North of France, which has signed an outline agreement with the Direction de la Protection Judiciaire de la Jeunesse (DPJJ) to involve delinquent minors in the everyday activities of their stores. Similarly, on the opening of each new store in disadvantaged neighborhoods, Casino has committed to hiring between 20% and 30% of its staff from these districts. Thus, the store has to be the vector conveying the company's ethical approach.

face=+Bold; Table 3Store Typology According to a Retailer's Ethical Approach (face=+Italic; sourceface=-Italic; : Dia-Mart)face=-Bold;

face=+Bold; CONCLUSIONface=-Bold;

The increase in the number of ethical actions by retailers reflects the fact that the issue is a critical component of their current concerns. However, although ethics has become a priority for retailers, we note that there are few actual studies on the issue. Thus, our overview of retailers' ethical practices may serve as a basis for recommendations on how a retailer may roll out an ethical approach.

Although the ethical approach must necessarily be a strategic issue for retailers, it must translate mainly into community focused initiatives, i.e., the sales outlets have to be the movers conveying the ethics. This also supposes the retailer's management's strong commitment, so that two serious risks, instrumentalization and trend effects, can be avoided. Instrumentalization for companies means using ethics as a simple management tool and not as an integral part of company philosophy: the trend effect would be to consider ethics as a passing phenomenon to apply in order to be competitive without integrating it into genuine company strategy.

Consequently, the ethical approach must be both sincere and well staged, both internally and externally. For a retailer that does not really believe in the need for an ethical commitment, it would be preferable for it to abstain from even considering it. Its business performance will not be adversely affected directly. On the other hand, a factitious, instrumentalized ethical commitment, lacking any real relation with the company's deep-seated values, would not only be inefficient but dangerous as well. The problem with any communication of ethics is establishing the credibility of the discourse, and thus overcoming general skepticism toward 'good intentions,' especially when it comes from companies seen as untrustworthy as major retailers have been seen in recent years. NGOs are extremely watchful and critical of retailers (Besse 2004). Ethics should not be window dressing. Retail communication has to focus on deeds rather than on intentions. It should show rather than tell, through actual demonstrations, and spotlight actual results.

The ethical approach should be an integral part of a durable commitment. Although ethics is not a 'marketing object,' it is not artless philanthropy either. Retailers must demonstrate their business purpose. An 'ethical return on investment' is measured by its contribution to a fairer and more humane world, but also by its contribution to company growth. In this case, there is no contradiction between the sincerity of the approach and its necessary focus on highly sensitive issues.

However, our study has limitations. First, in terms of internal validity, the analysis actually relies in part on the discourse of the retailers, which means that we can only formulate conjectures about what a retailer might consider as a conceivable ethical approach. Also, as the field is still at an early, exploratory stage, researchers need to conduct further studies on the findings. Last, the external validity of the study could be challenged, since it was conducted in a French context, which may not generalize.

Nevertheless, our paper, with its purpose to develop an inventory of ethical practices in retailing, clears the way for much future research on:

Measuring consumers' actual perceptions of ethical or responsible consumerism and determining whether the assertion of an ethical position is feasible for a traditional retailer;