People around the world are waking up to a new economic reality
and asking themselves what impact the economic maelstrom will have
on ethical trade, developing nations and consumer conscience. The
most practical exporters should also be asking what strategies they
should use to survive or even benefit from the crisis.
The first suggestion is, don't panic. In many
respects the crisis is near bottom. We are not entering a 10-year
global recession, and governments have demonstrated that they will
do whatever it takes to get spending moving again. While the global
economy will not recover as quickly as it unwound, the same
interconnectivity that caused the rapid collapse will bring about
its regrowth. Greed will return and to some extent it will be good.
It will replace fear and once economies stabilize, investments will
resurface and consumers will follow.
If you can't find the ethical consumer, it's not because they've
disappeared; they are just shopping elsewhere. Chase
them. Consumers in the largest markets have pulled back on
broad spending, spending instead at discount retailers and in
smaller amounts. They haven't lost their desire for ethical
products, just the means to pay for them. Ethical shoppers may be
flocking to mass discount retailers, but those same retailers want
ways to cost-effectively meet their consumer conscience and this
could effectively help to mainstream ethical trade.
However, to do business with mainstream retailers and get more
favourable terms, you must proactively go to them rather than wait
for them to come to you. If this sounds too expensive, hire someone
on commission or team up with another supplier to co-fund.
It's a good time to invest in capacity building -
consider grants and pro bono contributions. As research by
Ethisphere Institute (http://www.ethisphere.com/)
indicates, once premium prices begin to exceed 3% over comparable
non-ethical products, the ability to capture market share begins to
erode. Naturally this correlation is even stronger in a weak
economic enviroment. However, through building production economies
of scale, migrating up the production value chain and taking
advantage of the strong dollar, a savvy exporter can gain
share.
While respected groups such as ITC are one avenue for
partnerships, an enormous and largely untapped resource is the
philanthropic sector in the developed world, which includes many
organizations that would provide grants to support ethical trade. A
quick search of contractors on a website such as www.elance.com
turns up hundreds of professional grant writers, many of whom will
identity funding organizations and write grants for less than $20
an hour.
Going to lobbyist and public relations firms and asking for pro
bono (free) support is another option. With the economic slowdown,
many such firms have idle time that they might be willing to apply
to your ethical trading cause.
Pick the ethical angle and flaunt it. When
large retailers raise the ethical standards required of suppliers,
companies that have already invested in ethical production will
have a head start. That said, a supplier cannot be all things to
all people, so choose which issues you want to tackle first (e.g.
carbon-neutrality, worker welfare, animal testing) in a method
called 'measured measures'.
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© Giles Kershaw |
Each issue has a separate cost and return on investment; knowing
what those are leads to sensible, sustainable choices. Putting your
message out on the Internet and showing great transparency will
help cut through the clatter. Trying to do all things at once could
easily send a company bankrupt.
Take a fresh look at the United States market.
Many ethical trading initiatives focus on the EU, and the United
Kingdom in particular, while overlooking the $13 trillion market in
the United States. Not only are American consumers interested in
ethical trade but, with the more than 30% drop of many global
currencies against the US dollar, exporters' products are more
attractive.
Safety is a good seller. One of the most
dominant themes to emerge in consumer products is safety (or lack
thereof). Harmful, even fatal, chemicals and contaminants have
turned up in the EU and the United States in products ranging from
pet food to infant formula. Companies are therefore increasingly
looking to partner with ethical suppliers to ensure a less risky
supply chain.
If your company has tight safety standards and a strong safety
record, this is worth bragging about as safety continues to sell
well in a troubled economic environment. What's more, it will be
kept in the consumer conscience post-recovery by the inevitable
continued failures of others.
If you are selling an ethically produced and traded product, you
need to identify your consumer and pitch them your
story. Ethical consumers are self-selecting and want to
emotionally self-identify with the products they're purchasing.
Once they are comfortable with a product's efficacy, the more they
can enjoy the perceived good that comes from their spending power,
and the more likely they are to spend. This is arguably even more
important in a troubled economy. So whatever the story is that
makes your product interesting, unique and ethical yet effective -
use it.
And finally, while pursuing the preceding seven points,
remain merciless on costs. While economic
downturns can be a good time to strategically invest to capture
competitive advantage, don't be foolhardy. Renegotiating contracts
with your sub-suppliers is fair game, and engaging employees in the
importance of keeping costs down can pay dividends.
The end is nigh! Not the end of the world, but the end of this
economic crisis. Smart exporters take steps now to prepare for
it.
How to ride out the storm
- Don't panic
- Chase the ethical customers
- Build capacity - consider grants and pro bono expertise
- Pick your angle and flaunt it
- Take a fresh look at the United States market
- Safety is a good seller
- Know your market and hone your story
- Remain merciless on costs