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Growth

Will big business giving back become a retail trend?

Michael Baker
Smarter Writer

Michael Baker is a retail consultant and vice-chair of the ICSC's Asia-Pacific Research Council

Michael Baker
Smarter Writer

Michael Baker is a retail consultant and vice-chair of the ICSC's Asia-Pacific Research Council

Is it good business to give stuff away? Some Retailers think so. Find out why.

A handful of high-profile retailers are taking so-called ‘cause marketing’ to the next level, with upscale US department store Nordstrom positioning itself as a leading do-good company.

 

shwop retailers surrounded by clothes

Support and connect your market

Nordstrom's private-label brand Treasure&Bond launched in August in more than 80 of its stores across the US. Nothing unusual about a private-label launch, except that five per cent of the net profits from this one will be given directly to non-profit organisations that promote the empowerment of girls and women.The first beneficiary of Nordstrom’s largesse is Girls Inc., an organisation where, in its own words, "girls learn to set and achieve goals, boldly confront challenges, resist peer pressure, see college as attainable, and explore non-traditional fields".Considering that most of Nordstrom's customers are women, and that most of the target group for the Treasure&Bond merchandise itself are millennial women (those born between 1982 and 2002), this would appear to be a really smart move on Nordstrom’s part. The common perception among marketers is that the 'give back' model is a particularly good way to connect with millennials, who are enamoured of brands that represent values rather than just function and style.Nordstrom is not the first retailer to do this kind of thing.

Design a do-good business

Right around the time that Treasure&Bond debuted in August, private equity firm Bain Capital paid US$625 million for a 50 per cent stake in another US retail brand, Toms. What's special about Toms is that it gives away 50 per cent of its merchandise − literally. Its key product line is footwear and for every pair it sells the company gives away a pair to a child in need. So far it is believed to have donated 25 million pairs.

The company founder and CEO, Blake Mycoskie, launched Toms eight years ago after a visit to South America where he observed many of the rural kids were unshod.

There has been a certain amount of unease about a company like Toms hooking up with one like Bain Capital, which has more of a reputation for scything the fat out of inefficient companies than do-gooding. But according to Blake, the transaction gives Toms the opportunity to grow more rapidly and give more to more people.

In a rather nice example of me-too-ism, another shoe retailer, Skechers, now has its own giveaway shoe brand called BOBS (Benefiting Others By Shoes). The model is similar to that of Toms: buy one and we give one free to a needy child.

It’s way too soon to be calling this kind of thing a trend, but it is certainly making other retailers take notice and even to seek know-how from within the ranks of the do-good companies. Lululemon Athletica, the technical apparel retailer with more than 250 stores in North America, Australia and New Zealand, hired Toms’ president Laurent Potdevin as its new CEO earlier this year.

Invite customers to do the giving

Sometimes, giving back, cause marketing or whichever term you prefer is not just about the retailer doing the giving. A couple of years ago British retailer Marks & Spencer came up with the idea of ‘Shwopping’, in which consumers drop off an unwanted garment at the store when they come in to buy a new one. In the UK, Oxfam collects and recycles the discards. Actress-turned-activist Joanna Lumley is the marketing face for Shwopping.

According to SOFII, an online resource for fundraisers, 3.8 million items have been donated as a result of the Marks & Spencer/Oxfam Shwopping program. SOFII says the average UK household had about £4,000 (A$6,550) worth of clothing sitting around, of which 30 per cent hadn’t been worn in a year. Most was headed to the landfill.

Verdict

While direct giveaways in the spirit of Nordstrom and Toms are not the norm, different forms of giving back to the community are set to keep gaining traction. If it raises a company’s profile, is not unprofitable, and keeps stuff out of landfills, then surely it’s something more mainstream Australian retailers should be looking at.

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