Marketing Gag or Value Creating Strategy: What is the Customer Value of Sustainability in Retail?

These days many companies like retailers pay much attention (and money) to loudly communicate their sustainability activities. Sustainability reports are everywhere and companies like the Swiss Migros and Coop, the German Metro Group or British Marks and Spencer do not only provide detailed information concerning their sustainability strategies on their homepages but also promote their activities expensively in other channels. The British company Tesco announced to spend £25m for a centre of sustainability consumption research (www.tescocorporate.com) and the worlds biggest retailer Wal Mart concentrates it's activities in this direction under the roof of an ambitious program called "Sustainability 360" (Meliton, 2007). The CEO of the German REWE-Group even called for a revolution in retail to overcome associated challenges of environmental and social problems to ensure future competitiveness (LZ, 2008). In this context it is hardly surprising that recently a survey revealed aspects of sustainability claiming high priorities on the agenda of retail managers (CIES, 2007). But although according to theory sustainability strategies could increase firm value (Dyllick, 2003; Hart & Milstein, 2003), there is in a retail context no empirical evidence on that.

Although most scholars report a positive relationship between different sustainability activities and different value measures (Dowell, Hart, & Yeung, 2000; Husted & Allen 2007; Klassen & McLaughlin, 1996; Klassen & Whybark, 1999; Margolis & Walsh, 2003; Orlitzky, Schmidt, & Rynes, 2003) one will also see opposite findings (Walley & Whitehead, 1994). Additionally managers still seem to be sceptic about the value creating potential sustainability has and so sustainability sometimes appears to be more of a marketing gag rather than a value creating strategy. Hence, studying return on sustainability in general is still a research gap for itself. Especially for the retail industry no research applies which would elaborate on whether and how sustainability strategies impact economic value creation. We intend to contribute to that shortcoming and take a customer value perspective (Belz & Bieger, 2006; Parasuraman, 1997; Slater, 1997; Woodruff, 1997). Supported by preliminary research we conducted, we assume that in retail the value creation potential of traditional product market strategies (like price, product or service strategies) and sustainability strategies (like sustainability operations or sustainability value propositions) are best evaluated out of a customer perspective.

We conduct an online choice-based conjoint (CBC) experiment with customers to find out which value they owe sustainability compared to other product market strategy components (Ben-Akiva et al., 1994; Louviere, Hensher, Swait, & Adamowicz, 2003; Louviere, Islam, Wasi, Street, & Burgess, 2008; McFadden, 1986; Sammer & Wüstenhagen, 2006b; Sawtooth, 2007; Train, 2003). We will be led by the following research question: What is the customer value of sustainability driven strategies in retail?

We contribute to strategy research in retail, sustainability research and to research on customer value. Implications for practice and further research apply.