Table of Contents
Issues in the Market
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- Main issues addressed:
- Key themes:
- Definition
- Retail Sales data
- Abbreviations
Insights and Opportunities
Market in Brief
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- Overview
- Retailers have an important contribution to make to a more sustainable future
- Industry insights
- Pressure for change building and retailers have to respond
- Ethical labelling standards desirable but some way off
- Developing trust not competitive advantage
- Commercial considerations – greater efficiency and less waste enhances profitability
- Retailers accept responsibility for reducing packaging waste
- Conclusion – raising awareness and company response profile through measured communications
- Broader market environment
- Negative factors
- Positive factors
- Internal market environment
- Negative factors
- Positive factors
- Retailers’ targets, disclosure and performance
- Disclosure
- Performance
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- Figure 1: Carbon dioxide emission of leading retail companies, 2005/06
- Figure 2: Total waste produced by leading retail companies, 2005/06
- Targets
- The importance of ethical and environmental issues to consumers
- Majority of consumers attach some importance to these issues so retailers must act
- Retailers with strongest appeal to ethically aware shoppers
- A third of adults do not attach any importance to these issues and can be targeted through enlightened self-interest
- Retailers needing to lead customers to a greener future
- Conclusions – it’s time to act
- Which retailers do consumers trust?
- Absolute levels of trust are low
- Food retailers trusted by more of their customers than non-food retailers
- Sainsbury’s and Marks & Spencer can leverage trust among ABs that Tesco doesn’t have
- Conclusion – retailers likely to have to do more in future to earn and retain trust
- What do people think and how do they behave?
- Consumers not seeing beyond commercial motives
- Proof of ethical standards and labelling required
- Conclusion – greater transparency and more communication required in future
- Focus on food – what do people think and how do they behave?
- Can the strong sentiment in favour of UK and local produce be satisfied?
- Unsatisfied demand for Fairtrade
- Strong requirement for food miles information
- Conclusion – positive sentiment for UK producers provides grounds for change
- What are people’s perceptions of packaging and are they proactive recyclers?
- Strong consumer support for recycling
- Onus on retailers to simplify packaging to aid recycling
- Onus on retailers to reduce packaging – but also to explain why they use the packaging they do
- Conclusion – retailers need to demonstrate they are taking action
Fast Forward Trends
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- The end of the world as we know it
- Market touchpoints/implications
- Science and perfection
- Market touchpoints/implications
- Modern life is rubbish
- Market touchpoints/implications
Industry Insights
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- Key points, implications and conclusions
- Pressure for change building and retailers have to respond
- More affluent consumers are a leading force for change
- Adjusting to the low carbon economy – frantic behind the scenes activity
- Ethical labelling standards desirable but some way off
- Developing trust not competitive advantage
- Commercial considerations – greater efficiency and less waste enhances profitability
- Retailers accept responsibility for reducing waste
- Conclusion – raising awareness and company response profile through measured communications
- Pressures for change
- Consumers receptive to green and ethical initiatives
- People’s views only driving some aspects of change
- Retailers are ahead of government in many aspects of change
- Government needs to set standards to drive change
- But, government does not always set the right agenda
- Who is changing and how quickly?
- Better off consumers are early adopters but everyone else is following
- Adjusting to the low carbon economy
- Setting base lines and measuring performance
- Change can be driven by cost savings
- Analysis of downstream factors becoming important
- The ethical dimension
- Ensuring high ethical standards
- The case for publicising standards to consumers
- Ethical labelling
- Trust and competitive advantage
- Ethical and environmental issues not primarily viewed as a source of competitive advantage
- Developing trust is of paramount importance
- Marks & Spencer – under scrutiny to achieve its targets
- Commercial considerations
- Pursuing the profit principle and reducing environmental impact
- Some companies keeping too low a profile
- Packaging and waste reduction
- Raising recycling levels requires investment in infrastructure
- Consumer acceptance of less wasteful packaging expected to be high
- Transit packaging – a major target for minimisation
- Store collection of waste not practical
- No potential for returnable or refillable containers
Broader Market Environment
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- Negative factors
- Positive factors
- Climate change – what’s it all about?
- Evidence suggests dramatic changes ahead
- The Stern Review – recommendations for action
- What it means for the retail industry
- What it means for consumers
- Consumers and climate change
- Energy intensive lifestyles are a key contributor to climate change
- Household energy consumption – heating
- Household energy consumption – appliances on standby
- Car travel
- Air travel
- Tackling the issues
- Draft Climate Change Bill published in March 2007
- What the Bill didn’t do
- Waste management policy – published in May 2007
- Measuring impact – KPIs and standardised reporting requirements
- Comparative performance
- Going carbon neutral – what’s involved?
- Emissions trading – how does it work?
- Pros
- Cons
- Carbon offsetting – how does it work?
- Pros
- Cons
- Shortage of renewable energy generation capacity
- Switching to biofuels
- Getting rid of waste
- Waste management
- Packaging minimisation
- Post consumer waste
- Alternatives to landfill for non-recyclable waste
- Ethical issues – relatively little government intervention
- Companies can decide
Internal Market Environment
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- Negative factors
- Positive factors
- Major retailers have high profile
- Retailers engaged in sourcing and supplying fmcg are at the top of the supply chain
- But in a competitive market consumer demand shapes what retailers do
- Campaign groups scrutinise retailers closely
- Tackling emissions
- Store-based retailing and product distribution consume energy and generate emissions
- Emissions from store operation and distribution
- Highest and lowest emissions
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- Figure 3: Carbon dioxide emission of leading retail companies, 2005/06
- Tackling waste
- Comparative data show wide variations in waste relative to sales
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- Figure 4: Total waste produced by leading retail companies, 2005/06
- Recycling rates
- Zero landfill targets
- Designing waste out of the business to business loop
- Reducing consumer waste
- The carrier bag issue
- Ethical stance under scrutiny
- Ethical standards cannot be ignored for lower prices
- Social welfare of workers in the supply chain has to be considered
- Context extends to UK workers
- Ethics of animal welfare in food production and product testing under scrutiny
- Greener and ethical products a growing market
- The market for greener and ethical products
- Organic food market growing strongly
- Fairtrade food nearly quadrupled in same period
- New retailing opportunities…
- …but also pitfalls
- Carbon labelling
- Home shopping – a greener alternative?
- Pros
- Cons
Who’s Innovating
Market in Context – Ethical and Green Strategies in Food Retailing
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- Tesco
- Assessment
- Key features of environmental and ethical impact
- CO2 emissions
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- Figure 5: Tesco carbon dioxide emissions, 2003/04-2005/06
- Energy use
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- Figure 6: Tesco energy consumption, 2003/04-2005/06
- Waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- J Sainsbury
- Assessment
- Key features of environmental and ethical impact
- CO2 emissions
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- Figure 7: J Sainsbury carbon dioxide emissions, 2003/04-2005/06
- Energy use
- Waste management
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- Figure 8: J Sainsbury waste, 2003/04-2005/06
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Asda
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions, energy consumption, and waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Morrisons
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions
- Energy consumption
- Waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Somerfield
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions, energy consumption and waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Marks & Spencer
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions (relates to group not just food)
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- Figure 9: Marks & Spencer carbon dioxide emissions, 2003/04-2005/06
- Energy consumption (relates to group not just food)
- Waste (relates to group not just food)
- Plan A – the blueprint for the future
- Key initiatives and performance indicators cover five areas:
- Recent food category specific initiatives
- Ethical sourcing (food category specific)
- Operations and performance
- Waitrose
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions
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- Figure 10: Waitrose carbon dioxide emissions, 2003/04-2005/06
- Energy consumption
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- Figure 11: Waitrose energy consumption, 2003/04-2005/06
- Waste management
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- Figure 12: Waitrose waste, 2003/04-2005/06
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Co-operative Group
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions
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- Figure 13: Co-operative Group carbon dioxide emissions, 2003/04-2005/06
- Energy consumption
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- Figure 14: Co-operative Group energy consumption, 2003/04-2005/06
- Waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Iceland
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions, energy consumption and waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Aldi
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions, energy consumption and waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Thresher
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions, energy consumption and waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Other initiative takers in the category
Market in Context – Ethical and Green Strategies in Non-food Retailing
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- Clothing and department stores
- Marks & Spencer
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions (relates to group not just clothing)
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- Figure 15: Marks & Spencer carbon dioxide emissions, 2003/04-2005/06
- Energy consumption (relates to group not just clothing)
- Waste (relates to group not just clothing)
- Plan A – the blueprint for the future
- Key initiatives and performance indicators cover five areas:
- Recent clothing-specific initiatives
- Ethical sourcing
- Operations and performance
- John Lewis
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions
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- Figure 16: John Lewis co2 emissions, 2003/04-2005/06
- Energy consumption
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- Figure 17: John Lewis energy consumption, 2003/04-2005/06
- Waste management
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- Figure 18: John Lewis waste, 2003/04-2005/06
- Recent initiatives
- Ethical sourcing
- Debenhams
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions, energy consumption and waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Next
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions
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- Figure 19: Next carbon dioxide emissions, 2003/04-2005/06
- Energy consumption
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- Figure 20: Next energy consumption, 2003/04-2005/06
- Waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Primark
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions, energy consumption and waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Matalan
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions, energy consumption and waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Arcadia Group
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions, energy consumption and waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Littlewoods Shop Direct Group
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions, energy consumption and waste management
- Recent initiatives
- Ethical sourcing
- Other initiative takers in the category
- Mixed goods and variety stores
- Home Retail Group – Argos and Homebase
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions and energy consumption
- Waste management
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- Figure 21: Home Retail Group waste, 2003/04-2005/06
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Woolworths
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions, energy consumption
- Waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Wilkinsons
- Assessment
- CO2 emissions, energy consumption and waste
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Other initiative takers in the category
- Household goods retailers
- DSG International
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions and energy consumption
- Waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance – UK & Ireland Electricals Division
- Operations and performance – PC World
- Operations and performance – New business division
- Comet – Kesa Electricals
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions, energy consumption and waste
- Recent initiatives
- Ethical sourcing
- Operations and performance
- B&Q – Kingfisher
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions and energy consumption
- Waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- IKEA
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions and energy consumption
- Waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Other initiative takers in the category
- Other non-food retailers
- Alliance Boots
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions
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- Figure 22: Boots carbon dioxide emissions, 2003/04-2005/06
- Energy consumption
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- Figure 23: Boots energy consumption, 2003/04-2005/06
- Waste management
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- Figure 24: Boots waste disposed of, 2003/04-2005/06
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Superdrug/Savers and The Perfume Shop – AS Watson
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions, energy consumption and waste
- Recent initiatives
- Ethical sourcing
- Operations and performance – Superdrug
- Operations and performance – Savers
- Operations and performance – The Perfume Shop
- WH Smith
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions and energy consumption
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- Figure 25: WH Smith energy consumption, 2004-06
- Waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Sports Direct
- Assessment
- Key features of its environmental and ethical impact
- CO2 emissions, energy consumption and waste management
- Recent initiatives
- Ethical sourcing
- Operations and performance
- Other initiative takers in the category
The Importance of Ethical and Environmental Issues to Consumers
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- Key findings
- Majority of consumers attach some importance to these issues so retailers must act
- A fifth of adults see these issues as being very important and will be very receptive to initiatives
- A third of adults do not attach any importance to these issues and can be targeted through enlightened self-interest
- Middle ground encompasses a broad range of people and requires a general approach
- Self-interest versus social conscience
- Conclusions – it’s time to act
- Ethical and green issues important to a majority of respondents
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- Figure 26: Importance attached to ethical and environmental issues when shopping, March 2007
- Bias towards women and older people among those giving a Very Important rating
- Some less affluent consumers rate these issues as Very Important
- Guardian most favoured reading by those in the Very Important group
- Tesco leading customers rather than being driven by them
- Waitrose and Marks & Spencer attract those in Very Important group
- Least interested need motivating
- “Do I look bovvered?”
- Less affluent have other priorities
- Popular tabloid readers need awakening
- Iceland and Morrisons shoppers need motivating
The Importance of Ethical and Environmental Issues to Consumers – Detailed Consumer Demographics
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- Figure 27: Those attaching importance to ethical and environmental issues when shopping, by socio-demographic group, March 2007
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- Figure 28: Those not attaching importance to ethical and environmental issues when shopping, by socio-demographic groups, March 2007
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Which Retailers Do Consumers Trust?
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- Key findings:
- Absolute levels of trust are low
- Tesco lagging behind on trust
- Food retailers trusted by more of their customers than non-food retailers
- Sainsbury’s and Marks & Spencer can leverage trust among ABs that Tesco doesn’t have
- Tesco’s position based on appeal to less affluent, less concerned shoppers
- Asda and Morrisons also reliant on less affluent, less concerned shoppers
- Consumers may want to transfer responsibility to retailers
- Conclusion – retailers likely to have to do more in future to earn and retain trust
- Who do consumers trust?
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- Figure 29: Consumer trust in retailers, March 2007
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- Figure 30: Consumer trust in retailers compared to usage, March 2007
- Tesco winning hearts and minds of younger consumers
- Marks & Spencer and Sainsbury’s doing best among ABs
- Asda and Morrisons achieve much lower levels of trust
- Is Boots doing enough to get its message across?
- John Lewis not reaching as many ABs as it should
- IKEA also struggling to be heard
- Sceptics strongly in evidence
- A fifth of adults have doubts about retailers
- Increased pressure to come clean
Which Retailers Do Consumers Trust? – Detailed Consumer Demographics
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- Figure 31: Most trusted retailers, by demographic sub-group, March 2007
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- Figure 32: Other trusted retailers, by demographic sub-group, March 2007
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What Do People Think and How Do They Behave?
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- Key findings:
- Consumers not seeing beyond commercial motives
- Shifting responsibility from consumers to retailers
- Proof of ethical standards and labelling required
- Use of higher cost production broadly acceptable if it reduces emissions
- Consumers very receptive to media coverage
- Pace of change likely to gather momentum in future
- Low prices before principles
- Conclusion – greater transparency and more communication required in future
- Consumers have high expectations of retailers on these issues
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- Figure 33: Consumer attitudes to ethical and environmental issues, March 2007
- Profits first, planet second
- Hopes and expectations
- Wear it with pride!
- Carbon labelling needed before judgements on local sourcing can be made
- Media a positive force for change
- Sleepers
- Low prices matter more
- Enlightened self-interest – will make changes to save money
What Do People Think and How Do They Behave? – Detailed Consumer Demographics
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- Figure 34: Most widely held views about ethical and environmental issues, by demographic sub-group, March 2007
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- Figure 35: Other views about ethical and environmental issues, by demographic sub-group, March 2007
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- Figure 36: Consumer attitudes to ethical and environmental issues, by retailer shopped, March 2007
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- Figure 37: Consumer attitudes to ethical and environmental issues, by retailer shopped, March 2007
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- Figure 38: Consumer attitudes to ethical and environmental issues, by retailer shopped, March 2007
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- Figure 39: Consumer attitudes to ethical and environmental issues, by retailer shopped, March 2007
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- Figure 40: Consumer attitudes to ethical and environmental issues, by retailer shopped, March 2007
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Focus on Food – What Do People Think and How Do They Behave?
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- Key findings
- Can the strong sentiment in favour of UK and local produce be satisfied?
- Unsatisfied demand for Fairtrade
- Strong requirement for food miles information
- Modest levels of support for independent food stores
- Conclusion – positive sentiment for UK producers provides grounds for change
- Local issues at the forefront of consumer thinking
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- Figure 41: Consumer attitudes to ethical and environmental issues when shopping for food, March 2007
- Widespread unfulfilled demand for local food
- Broad based consumer support for UK production
- Fairtrade products attract widespread support
- Food miles information widely sought after
- Independent local food stores
- A fifth of people actively avoid products that are perceived as having high food miles
- Convenience does not always count for everything
Focus on Food – What Do People Think and How Do They Behave? – Detailed Consumer Demographics
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- Figure 42: Most widely held views about ethical and environmental issues when shopping for food, by demographic sub-group, March 2007
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- Figure 43: Other views about ethical and environmental issues, when shopping for food, by demographic sub-group, March 2007
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- Figure 44: Consumer attitudes to ethical and environmental issues when shopping for food, by rretailer shopped, March 2007
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What Are People’s Perceptions of Packaging and Are They Proactive Recyclers?
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- Key findings
- Strong consumer support for recycling
- Onus on retailers to simplify packaging to aid recycling
- Onus on retailers to reduce packaging – but also to explain why they use the packaging they do
- Limited amount of direct action likely
- Conclusion – retailers need to demonstrate they are taking action
- Consumers expecting more help and action from retailers
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- Figure 45: Consumer attitudes to packaging and recycling, March 2007
- Onus on retailers to reduce packaging used
- Onus on retailers to think of recycling when specifying packaging materials
- Packaging sceptics influencing attitudes
- Biodegradability has widespread support
- Modest enthusiasm for returning packaging to stores
- Returnables and refillables unlikely to be viable
What Are People’s Perceptions of Packaging and Are They Proactive Recyclers? – Detailed Consumer Demographics
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- Figure 46: Most widely held views about packaging and recycling, by demographic sub-group, March 2007
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- Figure 47: Other views about packaging and recycling, by demographic sub-group, March 2007
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- Figure 48: Consumer attitudes to packaging and recycling, by store shopped, March 2007
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- Figure 49: Consumer attitudes to packaging and recycling, by store shopped, March 2007
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- Figure 50: Consumer attitudes to Packaging and recycling, by store shopped, March 2007
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- Figure 51: Consumer attitudes to Packaging and recycling, by store shopped, March 2007
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- Figure 52: Consumer attitudes to Packaging and recycling, by store shopped, March 2007
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Consumer Insight – Typology Analysis Identifies the Most and Least Aware and Active Consumers
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- Key findings
- A third of people are ethically aware
- Over four in ten people are apathetic to these issues
- Conclusion – customer communication is key
- Consumer typologies
- Group 1: Ethically aware and motivated (idealistic) – 35% of respondents
- What do they think?
- Who are they?
- Why are they important?
- Group 2: Unconcerned – 41% of respondents
- What do they think?
- Who are they?
- Why are they important?
- Group 3: Ethically aware but realistic (practical) – 24% of respondents
- What do they think?
- Who are they?
- Why are they important?
- Which retailers have the greenest and most ethical shoppers?
Consumer Insight – Typology Analysis Identifies the Most and Least Aware and Active Consumers – Detailed Consumer Demographics
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- Figure 53: Consumer typologies, by attitudinal statements, March 2007
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- Figure 54: Consumer typologies, by demographic sub-group, March 2007
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- Figure 55: Consumer typologies, by stores used, March 2007
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