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Bryan Ives / MEDILL

Evidence shows consumers back up talk of transparency with their wallets

by Bryan Ives
May 23, 2013

Amidst all the corporate boasting about transparency, ingredients and going green, do consumers actually care enough to change their buying habits?

Studies and consumers themselves provide some evidence that they do.

Since she joined the workforce following college two years ago, Sydney Minnis, a product designer in Chicago, consciously purchases items based on what she deems an admirable manufacturing process, even if it costs a bit more.
“I have the option now to invest a little more in more honest and quality, meaning morally good quality, so, yes, now I am investing in things rather than doing the fast, cheaper fashion thing a little more,” Minnis said.

Minnis says her boyfriend regularly buys organic milk, yogurt and fruit. She estimates the organic goods, which are grown or raised without synthetic pesticides and fertilizers, cost 25 percent more than traditional items.

“He feels safer with it and there is something about it that is more natural,” she said.

Whole Foods Market Inc. and other grocery retailers have, of course, built successful businesses by appealing to consumers’ organic preference.

According to a 2012 Massachusetts Institute of Technology research paper by MIT professor Jens Hainmueller and Harvard University professor Michael J. Hiscox, "fair labor" labels in clothing had a positive effect on sales.

The clothes were all produced in factories that adhere to Gap’s Code of Vendor Conduct that requires a specific minimum wage, a cap on working hours, health and safety standards, no discrimination and the workers' right to unionize.

Two versions of labels were used in the stores. One promoted the “fashion attributes” of the clothes while the other emphasized that the product was made under fair and safe working conditions.

The study, conducted in association with Gap Inc. across 111 of its Banana Republic stores in 38 states, revealed the labels promoting the good working conditions increased sales 14 percent among expensive women’s items. But there was no statistical impact on sales for lower priced men’s and women’s items with fair trade labels.

“The key finding is that, even in a setting in which customers are focused on prices and so are far less likely to respond to information about ethical product attributes than those in other (retail) contexts, we can identify a segment of shoppers willing to support fair labor standards by voting with their shopping dollar,” the authors stated.

For some consumers, even tragedies such as the Bangladesh factory building collapse on April 24 that killed over 1,100 garment workers are not persuasive enough to change their buying habits.

“Unfortunately sweatshops are what they are and they're not here in the U.S. for the most part,” Chicago consumer Jared Poertner said. “Sweatshops mean I get to purchase at a cheaper price.”

Others talk about altering their buying habits, but have yet to do so.

“Honestly, checking tags for clothing origin is not something I look for,” Chicago-consumer Georgia Cherry said. “If situations like this in Bangladesh continue to happen I'm sure by natural influence, I'd start checking more.”

The demand for transparency within the food industry is focused on what exactly makes up the foods people consume as well as the actual cooking process in the kitchen.

According to a 2012 consumer study conducted by Regeneration Roadmap, an initiative sponsored by S.C. Johnson & Son Inc. and BMW Group designed to engage the private sector in advancing sustainable development, ingredient transparency is a “very important” or “important” factor for 82 percent of consumers when buying food and beverage.

“It’s not always possible, but if I can find a café or somewhere that offers organic food or ingredient transparency, then I’m willing to pay that extra price,” Chicago consumer Polly Gaza said.

If a questionable ingredient is disclosed, it can lead to public backlash and louder calls for ingredient transparency.

“I read about new discoveries in food products a lot and depending on how gross it is, like McDonald's using that pink gum stuff in burgers, stop eating that product,” Cherry said.

It was revealed in 2011 that McDonald’s Corp. used “pink slime,” rear-end beef cuttings cleaned in ammonium hydroxide, which is also an ingredient in fertilizer and explosives, in its hamburgers. The fast-food giant removed the ingredient shortly after it was revealed.

“Food is so personal,” said Jennifer Herrick, marketing communications manager at Pacific Foods of Oregon Inc. “People really want to know where their ingredients come from, how they’re raised, how animals are treated because they’re making value purchases.

“I think people are becoming much more educated about their food and wanting to really know more,” Herrick said. “I think transparency from an ingredient perspective is really important to consumers.”

In 1997 Pacific Foods introduced its “Certified to the Source” program, an internal process that identifies the origin of each ingredient in its food. The company says the popularity of the program is evident in the growth of Pacific Foods. It has doubled its work force from 200 to a little over 400 in the past few years.

“We’ve been growing pretty consistently in the double digits since we started,” Herrick said.

Domino’s Pizza Inc. is giving consumers increased access to its kitchens. The Michigan-based delivery pizza giant introduced an online tracker feature five years ago, which allows a customer to see where in the cooking process that particular pizza is, as well as who, by name, is handling it.
The feature has proven beneficial for the company, according to spokesman Chris Brandon. He said online orders surpassed $1 billion in 2012 and now comprise nearly one-third of Domino’s total orders, 

Taking it a step further, beginning May 1 customers of a Utah Domino's can watch their pizza come together via five cameras located in the store and “Domino’s Live” online.

“Consumers want to be welcomed and they want to see what is taking place and have a look in the kitchen and have a look at how their food is being prepared, and we just wanted to respond to that,” Brandon said.

With the project less than a month old, the response from customers isn't clear at this point. But Chicago consumer Maggie Behrens said the feature would attract her business, as it would reassure her that the food is prepared properly.

The question moving forward is whether consumer action will match perceived consumer desire. The Regeneration Roadmap study found that 57 percent of consumers actually look at the ingredients before they buy, much lower than the percentage of consumers saying that ingredient transparency is important.