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