The Superpower of SupermarketsCorporate Social Responsibility03-11-2014

Lecturer: R. Klep

By: Luuk Vos 2187252CO AC 4 D

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Introduction 4Supermarket branch 5 Ahold 5 Jumbo 6 Purchasing Association Superunie 7 Conclusion 7

Stakeholders 8 Employees 8 Suppliers 8 Customers 8 Internal Management 9 Conclusion 9

Research 10 Employees 10 Suppliers 11 Customers 12 Opponents 12

Conclusion 12

Longlist 14

Index

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Nowadays, everybody goes to the supermarket. Open anyone’s refrigerator and you will fi nd that almost every product is bought in a supermarket. This can be logically explained due to the fact that supermarkets have become the number one resource of fresh food, drinks, meat, bread, fi sh, vegeta-bles, fruit, diary and the list continues.

Another reason the fridge is fi lled with goods bought at supermarkets is that they are so easily available in almost every town. It’s not really a question if a person is going to buy their meal at a supermarket, but rather at which supermarket he is going to buy it from. It is not a coincidence that supermarkets are also referred to as ‘convenience stores’.

Given the rising popularity of the supermarket, it will come as no surprise that the overall image of supermarkets in the Netherlands is extremely high. A research done by ‘de Consumentenbond’ shows that consumers give supermarkets an overall score of 7. With the top 3 supermarkets consisting of Al-bert Heijn, Jumbo and Lidle and scoring last is Spar (still with an overall score of over 5,5) (Roderick Mirande, feb 2014).

This all seems as one happy picture where nobody gets disadvantaged. But as we are all getting used to one big store to buy all our food, we forget what is really driving the companies: money. One com-pany to decide what we eat and what we pay for it. One company to decide from what supplier they buy and therefore, at what price. One supplier of food. Or as J.R.R. Tolkien might say: One company to rule them all.

This raises the question; Are supermarkets really those friendly giants who care for society or are we as a society overrating the image of supermarkets? How super are supermarkets?

Introduction

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The supermarket branch in the Netherlands consists of multiple supermarket chains such as Lidl, Albert Heijn, Aldi, Jumbo, Spar, Nettorama, etc. These supermarkets aren’t individual chains; they all belong to one of three greater companies. The three major players when it comes to procurement are Ahold, Jumbo and Purchasing Association Superunie (Timen van Haaster, feb 2013).

Ahold’s chain of stores consists of the following: - District stores: the smaller stores found in villages and cities throughout - AH XL: larger stores which are less frequent and only located near big cities - AH to go: the smallest store which can be found at train stations etc. - AH Online: the online store, goods can be delivered or stored at a Pick Up Point - AH Pick Up Point: A point where goods bought online are stored and distributed

Interestingly, Ahold is the only major player in the branch which consists of only one brand of supermar-kets: Albert Heijn. It is also the biggest of the three companies. Ahold has a market share of 34% and consists of over 850 stores, 110.000 employees working in the stores and 9 distribution centres to make sure the stores are fi lled. Albert Heijn owns 4 home brands; AH Huismerk, AH puur&eerlijk, AH Excellent and AH BASIC. Besides these brands, Albert Heijn owns its own magazine: Allerhande. This magazine has over 4,5 million readers.

Ahold - CSRAlbert Heijn believes that great results start with small steps. With this philosophy, Albert heijn set up a CSR policy consisting of 5 main elements. These elements are Man, Animal, Environment, Neighbour-hood and Health.

ManAlbert Heijn takes care of both their employees and their customers. They take care of employees by making sure everyone has equal chances and opportunities to develop themselves. Another example of their way of taking care of employees is by providing a learn-work trajectory to MBO students.The way Albert Heijn takes care of customers is by carefully selecting their (foreign) suppliers. Albert Heijn’s products are labelled with certifi ed labels such as Rainforest Alliance and UTZ. On top of this, there is an Albert Heijn Foundation, which provides education in third world countries in Africa.

AnimalThis element is based on animal welfare. The products sold in stores of Albert Heijn are often labelled with the ‘Beter Leven’ label. This label gives an indication of the value of life the animal has had, giving the consumer a choice in how durable they want to be and buy.

EnvironmentAlbert Heijn takes care of the environment by reducing their waste. They do so by reducing the length of their bills, by advising against the purchase of

Supermarket branch

Ahold

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a plastic bag and by assuring that the packaging of their owned brands is durable.

NeighbourhoodThe way Albert Heijn tends to take care of the neighbourhood is by assuring the area the store is

located in is clean and safe. Besides this, Albert Heijn offers a few extra’s to their local customers. For example, if there is a poor family celebrating a child’s birthday but they can’t pay for the party, Abert Heijn offers the family a free package containing a birthday cake and other party accessories.

HealthBy labelling their products, Albert Heijn hopes to make the customers aware of which products are healthy and which aren’t. Albert Heijn also makes sure all the products ingredients are clearly stated on the packaging. By doing so, incidents regarding allergies are minimized. Besides the own products, Albert Heijn also sponsors sport events and helps schools creating a healthy menu for their cafeterias (Albert Heijn, Z.D.)

Jumbo’s chain of stores consists of the following: - Super de Boer - C1000 - Jumbo Foodstore - Jumbo Online

Jumbo has a market share of 13% and consists of over 400 stores, 30.000 employees working in the stores and one large distribution centre of over 110.000 square metres. Jumbo owns 3 brands; Jumbo Huismerk, Jumbo and Jumbo Bewust.

Jumbo - CSRJumbo stresses that they have once started as a family business. Because of this, Jumbo wants to leave the world for next generations of the family to come. To do so, Jumbo has set up a CSR policy consis-ting of 6 elements: Durability, Health, Effi ciency in use of energy, Waste reduction, Local involvement and Fair employment.

DurabilityJumbo strives to be durable by fi rst of all checking their suppliers. Jumbo checks the living and working conditions and makes sure the suppliers employees get a fair price. Wherever possible, Jumbo tries to improve the living conditions of the animals as well. Jumbo stimulates durable and environmentally friendly production methods and decreases the amount of pesticides and herbicides.

HealthThis element is focused on by providing affordable, healthy products. Jumbo also provides their pro-ducts with an array of labels.

Effi ciency in use of energyJumbo strives to be frugal with the world around them. An important challenge here is the pass and way of using resources. That is why Jumbo strives to use less resources (gas and electricity in stores) or renewable resources (packaging of their home brands) in their operation and products.

Food waste reductionOne way Jumbo reduces food waste is by educating their customers on how to reduce food waste. In

Jumbo

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this way, the customers buy smarter and throw away less garbage. Another way Jumbo reduces food waste is by making sure their products which can’t be sold anymore are handled carefully. These pro-ducts aren’t simply thrown away, they are either given away or processed.

Local involvementJumbo tries to be locally involved in many ways. For example; they create workplaces for people with a small handicap. Jumbo also organises activities regarding healthier food and living, sponsors local sports facilities and cultural initiatives and play an active role in local initiatives regarding social responsibility. Furthermore, Jumbo strives to have as much local produce in their stores.

Fair employmentTo know how the employees think of the working environment at Jumbo, periodical satisfaction inqui-ries are held. With the results of these inquiries, Jumbo can improve the working conditions. Another way Jumbo contributes to this element is by providing healthier food in the cafeteria. Jumbo also provides extra training and education and invest a lot of their time in reducing the absence due to sickness by stimulating employees to exercise (Jumbo, Z.D.).

The chain of stores of Purchasing Association Superunie consists of a number of supermarket brands such as Coop, Jan Linders, Nettorama, Sligro, Spar, Plus and others.

Purchasing Association Superunie - CSRSuperunie lets the individual brands decide what their CSR policy should be. However, they do provide a general set of guidelines. These guidelines are the following:

‘Superunie makes sure consumers are able to make a well informed decision for durable products. Su-perunie stands for transparency and continuous durability of the entire chain without causing this to have a negative effect on the cost of the products.’ (Superunie, Z.D.).

Each of the three companies basically focuses on the same fi ve targets. The only difference is the way the companies categorize their focus points. The targets each of these companies focuses on are Animal welfare, Healthy products, Reduced waste, Fair employment and Local infl uence. The way the com-panies contribute to these subjects differs. Albert Heijn tends to focus on their target group; convincing customers to contribute to society, Jumbo focuses on what the company itself can do and Superunie lets the individual brands decide what to focus on. In short, all of these companies view themselves as being very socially responsible businesses.

Purchasing Association Superunie

Conclusion

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A stakeholder is a person, group or organization that has interest or concern in an organization. A su-permarket has to deal with a lot of stakeholders. Most of these stakeholders are barely noticed by the regular consumers. Some of the most important stakeholders are listed in this paragraph.

The employees are a fundamental group of stakeholders because, in a sense, they ‘make’ the com-pany. Employees represent the company towards other stakeholders, and they act in the name of the corporation (Crane & Matten, 2004). But this group is also hard to identify, since the employees often consist of people with different ages and backgrounds.

Important factors for employees are the working conditions, the wages, the working environment and the possibilities to grow in the company.

Employees - CSRBoth Albert Heijn and Jumbo stated in their CSR policy that they take care of their employees. The companies both claim to do so by providing an optimal work environment. Both companies also claim that there is room to grow in their companies.

For a supermarket suppliers are very important. If there were no suppliers, the supermarket could only offer their own home brands. A supermarkets suppliers include bakeries, butcheries, farmers and A-brands.

Important factors for suppliers are clear communication lines and fair prices.

Supplier – CSRBoth companies claim they take care of their suppliers by checking the working and living conditions of these suppliers. The supermarkets make sure their suppliers are durable.

Customers are important to a supermarket – and any company – because without customers a busi-ness would not exist. Customers are the stakeholders which most companies put most effort into. The customers idea of the company is crucial.

Important factors for customers are the price-quality ratio, the service, the outlook of the store and the stores assortment.

Employees

Stakeholders

Suppliers

Customers

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Customers – CSRBoth parties claim to take care of their customers by providing information. The information can be about healthier products or about the products ingredients. Both companies even claim to do more than this, they say they also encourage their customers to exercise and stay healthy.

The internal management of a company defi nes the course the company sails. This means this group of stakeholders has a high infl uence in how the company works.

Important factors for the internal management are profi t, reputation and continuity.

Internal management - CSRAlbert Heijn and Jumbo both have a section in their CSR policy which describes what the companies do internally. The companies reduce their energy usage and their waste.

According to both Albert Heijn and Jumbo, they take good care of all of their stakeholders. They fulfi l their demands and sometimes even do a little extra. According to their own policies, the supermarkets really are ‘super’.

Internal Management

Conclusion

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To fi nd out if supermarkets really are ‘super’, it is necessary to look at more than just the companies own CSR policies. Albert Heijn and Jumbo may claim they take good care of their customers, suppliers and so on but that may also not be the case. To fi nd out if supermarkets really are ‘super’, research was done. This research is divided in the same groups of stakeholders, judging if the companies do what they claim in their CSR policies.

The most important claims Albert Heijn and Jumbo make regarding their employees are:- We create a pleasant work environment- We give our employees a chance to grow in the company

A little research however, shows a different story. Member of ‘FNV Bondgenoten’ and one of few full-time employees in a supermarket for over 50 years, Boomaars explains.

A pleasant work environmentAccording to Boomaars, the work environment has gotten less and less pleasant over the last couple of years. Increasingly more people are being hired to do the same job, causing hours to drop dramatically. This is benefi cial for the company, short days of work for employees mean the employees stay sharp. The downside of this is that all those people never really get to know each other. This takes away the inti-macy between the employees.

Even with the days as short as they are, the extra hours employees make aren’t always paid for. The employees have to accurately write their extra hours down, to the last minute. The downside to this is that the time the employees have worked is rounded off in hours. If someone were to work 1 hour and 15 minutes, he would get paid for 1 hour of work. If this is done to 4 people, the management has an hour of free labour. Recently, regulations were sharpened in order to prevent these things from happening. However, the employees are scared to speak due to the fact that they can easily be replaced for someone else. Also, if managers know employees are friends, they often are put together. They do this for a reason; if one of the friends has to work longer, the other friend is more likely to stay as well.

Another complaint Boomaars makes is the changing of the occupation itself. The occupation used to be artisanal, baking bread and cutting meat ourselves. Now everything has to go fast, which means more and more products are prepacked.

A chance to grow in the companyWith the new employees streaming in, a lot of older employees are fi red. One employee of 35 years old is simply more expensive than two employees of only 15 years old. This is also the reason that peo-ple over the age of 19 are rarely hired.

Employees

Research

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Besides this, there is a maximum of 3 contracts. After these 3 temporary contracts, employees are fi red. After 3 months, they can come back to do the exact same job. The hours you had in your fi rst contract are then cut into pieces and divided between all the employees. With the new contract, only a couple of hours will remain (FNV, Z.D.).In conclusion, it is hard to call this ‘a chance to grow in the company’.

The claims Albert Heijn and Jumbo make about the suppliers are the following: - We increase the working and living conditions of our suppliers - We make sure our suppliers products are durable

Again, it didn’t take much to fi nd that these claims are highly overrated. Not only Dutch farmers but even A-brands are being pressured by the supermarkets.

FarmersAccording to Berenschot from LTO Nederland, 4 out of 10 farmers in the Netherlands face unfair busi-ness practices. Supermarkets know they are the farmer’s biggest market, and that is why they drive down the prices to a point that farmers have to sell their goods under their cost-price. It has even come to a point that the Dutch government has put up a notifi cation centre. Although no complaints have been made at this centre, the government believes this is not due to a lack of reasons to complain but because the farmers fear the consequences. It is questionable how anonymous an anonymous complaint is. So although the conditions the farmers work in might be alright, the price they sell their products for certainly isn’t. And although the products might be durable, the way they have been acquired certainly is not (Retailnieuws, Apr 2014) (FoodLog, Oct 2014).

A-BrandsEven A-brands prove to be disadvantaged by the power of supermarkets. Whenever an A-brand such as Coca Cola comes up with a new type of their brand, it takes time for them to be able to put them in the stores. At this moment the home brand producers start working in overdrive to be able to bring the same fl avour of soft drink at the same time as Coca Cola. Sometimes, by using this technique, the home brands even introduce the new fl avour earlier than the A-brand (LTO, Apr 2014).

Another form of disadvantaging the A-brands is driving up the price. For an A-brand to be sold in a supermarket, they have to pay extra money for the space on the shelves. This drives up the price for the A-brand product even further, while the home brands become relatively cheaper (Roderick Mirande, aug 2009).

Plofkip A well known example of how the supermarkets in the Netherlands are not socially responsible at all is the Plofkip; a chicken which is fed until they collapse under their own weight, only to be slaughtered at the age of 6 weeks. After a lot of protests and negative attention in the media, the supermarkets fi nally decided they would stop selling the Plofkip.

According to an article from the Reclame Code Commissie, the improvements for the chicken are minimal. For example; a Plofkip was held with 21 chicken per square meter, whereas a chicken with improved circumstances now lives with just 19 chicken per square meter. The overall extra space a chicken has to live in is about as much as an iPhone. The ‘new’ chicken still doesn’t see

Suppliers

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the sun in its entire lifetime and only gets to live a couple days more than the formerPlofkip. These minor differences mean the chicken can’t be called Plofkippen anymore,

for this reason animal rights organisation Wakker Dier calls this ‘new’ chicken a Flopkip. Cal-ling these chicken durable is like calling ice liquid; it’s not true (Marketing tribune, jul 2014).

The most important statement both companies make is that the products they sell are fi tted with correct information and labels. A quick search on google quickly comes up with a number of articles stating that products sold in supermarkets are misleading and deceptive. Labels are added wherever that is convenient, statements like ‘reduces your cholesterol’ are made without any proof and ques-tionable ingredients are added only so that the label can say the product contains less sugar (Paul, Salusi, Oct 2013) (Corinna Gunneman, apr 2012).

Of course all these researches and articles are counteracted by other researches stating that the su-permarkets are indeed socially responsible. However, these researches are often executed by CBL (Centraal Bureau Levensmiddelenhandel) which clearly has an interest in the right outcome of the research (CBL, 2010).

To fi nally come back to the fi rst question: Are supermarkets really as ‘super’? The least that can be said is that the ‘super’-part should be taken with a little grain of salt. For every element in the super-markets CSR policies there are researches and articles stating otherwise. To end this rapport, it should be said that this is not a statement saying everybody should shop elsewhere but as Louis van Gaal would say: ‘I sink we can much better’ (Ik denk dat we veel beter kunnen).

Opponents

Conclusion

Customers

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Introduction- “Albert Heijn favoriete supermarkt”, by Roderick Mirande, Adformatie, http://www.adformatie.nl/nieuws/albert-heijn-favoriete-supermarkt, 28th January, 2014

Supermarket branch- “Betere relatie tussen supermarkten en voedingsproducenten – een Europese oplossing?”, by Timen van Haaster, MSL Group, http://blog.msl.nl/betere-relaties-tussen-supermarkten-en-voedingsprodu-centen-een-europese-oplossing/, 19th February, 2013

Ahold- Albert Heijn (Z.D.). Albert Heijn Meer Doen. http://www.ah.nl/meerdoen, Z.D.

Jumbo- Jumbo (Z.D.). Jaarverslagen Jumbo Supermarkten. http://www.jaarverslagenjumbosupermarkten.nl/onze-themas/lokaal-betrokken-ondernemen/, 2013

Purchasing Association Superunie- Superunie (Z.D.). Superunie. http://www.superunie.nl/index.php?id=53

Stakeholders- “Classifying Employees as Stakeholders”, by Michelle Greenwood, MONASH University, http://www.buseco.monash.edu.au/mgt/research/working-papers/2008/wp4-08.pdf, February, 2008 - Sheets

Employees- “Supermarktmedewerker: Elke week zie je nieuwe gezichten”, FNV, http://www.fnv.nl/artikelen/Su-permarktmedewerker/, Z.D.

Suppliers- “Eurocommissaris belooft ‘oneerlijke praktijken’ supermarkten aan te pakken”, FoodLog, http://www.foodlog.nl/short-news/detail/eurocommissaris-wil-oneerlijke-praktijken-supermarken-aanpak-ken/, 6th October, 2014 - “Nog geen klachten bij meldpunt oneerlijke handel”, Retailnews, http://www.retailnews.nl/nieuws/Vc57xNimTSuCdvEUOQT3OQ-0/nog-geen-klachten-bij-meldpunt-oneerlijke-handel-.html, 24th July, 2014 - “Ondernemers: we hebben last van oneerlijke handel”, LTO, http://www.lto.nl/actueel/nieuws/10844247/, 10th April, 2014 - “EC bekijkt oneerlijke mededinging supermarkten”, by Roderick Mirande, Adformatie, http://www.adformatie.nl/nieuws/bericht/oneerlijke-mededinging-supermarkten-door-ec-bekeken, 19th August, 2009- “Reclame Code Commissie: AH misleidt klant”, Marketing tribune, http://www.marketingtribune.nl/bureaus/nieuws/2014/07/reclame-code-commissie-ah-misleidt-klant/, 16th July, 2014

Longlist

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Customers- “Bedrog en vergiftiging door de voedingsmiddelenindustrie”, by Paul, Salusi, https://www.salusi.nl/bedrog-vergiftiging-voedingsmiddelenindustrie/, 4th October, 2013 - “Misleidend Verpakken”, ‘Slimme marketing of brutale misleiding?’, by Corinna Gunneman, Food-watch, http://www.nltekst.nl/wp-content/uploads/2012/11/Artikel-verpakken-magazine-Foodwatch.pdf, April, 2012

Opponents- “Film Zichtboek Duurzaamheid”, by Centraal Bureau Levensmiddelenhandel (CBL), http://www.orientation.nl/bagage/duurzaamheid/cbl.html, 2010- “Over tevreden consumenten”, by Centraal Bureau Levensmiddelenhandel (CBL), http://www.marketingresearchbase.nl/Uploads/Files/over-tevreden-consumenten.141.lynkx?RapportPoint-er=9-495195-495197-516550&FilterValue=cec63096-7945-46f5-99eb-8d22faffd547&FilterType=Ru-briek&PageStart=141, May 2010

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