Consumers’ reaction towards involvement of large retailers in selling fair-trade coffee: The case of the United Kingdom

Abstract

Since 2002, the year the concept of own label on fair trade products was introduced in the United Kingdom, grievances have started to come out. The Fairtrade Labelling Organisation (FLO) has continued to be criticised in the commercialisation movement for giving large retailers (LRs) licences to use Fairtrade mark to produce and sell on their own brands. Earlier, the products were produced by alternative trading organisations (ATOs). To reach mass markets, fair trade products need LRs distribution channels and not the old system of using speciality shops as distribution channels, any more. However, the challenge has always been on the use of own label and the willingness of the large retailers to implement the fair trade guiding principles for the benefit of small producers in the South. The purpose of this study is to explore UK coffee consumers’ reactions to the involvement of large retailers in selling fair trade coffee. The analytical techniques used to analyse the data collected in June 2010 in the high street of Newcastle through face to face interviews include: (1) Factor analysis conducted with a sample of 219 coffee consumersso as to understand factors influencing purchase decision and, (2) Cluster analysis employed to identify customers’ reaction to large retailers’ involvement in selling fair trade coffee. The study indicates that credence processing attributes such as ‘retailers image’, ‘fair deal’, ‘fair trade promotion’, ‘social responsibility’ and ‘against own label’ are the major factors that influence consumers’ intention to purchase fair trade coffee in the United Kingdom. Two clusters have been identified. Cluster one is the male ‘ethical consumers’ group influenced by retailers’ image and social responsibilities activities. This group was found to be in favour of the idea of having large retailers using their own label. Cluster two is female ‘ethical and well being’ consumers group. This group is not in favour of allowing large retailers to use their own label for fair trade coffee. The interesting finding here is that, this group is not against the involvement of large retailers in selling fair trade coffee. Studies have shown that consumers are not in favour of own brand issued to large retailers, but they are willing fair trade products stocked in supermarkets. This alarmed the Fairtrade Labelling Organisation (FLO) to review its policy of allowing the large retailers (LRs) to use own brand. The findings of the study need to be interpreted with caution because of two major reasons. The first reason has to do with the sample size used: The size of coffee consumers in the UK is very small. The second reason is the fact that the study is based on the evaluation of hypothetical attributes of coffee and any additional factors, and this may affect coffee purchase.

Key words: Large retailers, fairtrade, fair trade, coffee, north, south