CSR: What's the true price of a bargain?

The madness of globalisation means a bargain shop in York in the North of England is shipping in sweets from Indonesia even though the same ones are made in its own city. The reason for this environmentally disastrous and CSR-unfriendly decision is cost. The shop in question, Poundworld, sells 8 rolls of Polo mint sweets for £1, when they usually cost around 50p for each roll.

A local politician from the Green Party pointed out that the low cost takes no account of environmental impact - which in this case is sky high. Nestle, the manufacturer of the Polo Mint, has said that these mints were not intended for the UK market. They are made for local Asian markets.

'Pound shops' are increasing in popularity in the UK, the top 3 brands, Poundstretcher, Poundworld and Poundland, boast 670 stores between them. Perhaps not surprisingly, these firms' commitment to CSR seems to be non-existent. None of their websites refer to any environmental policies, and although many refer to 'sourcing half of their goods from the UK'; there is no detail on this. All invite new suppliers to contact them, but are opaque about existing suppliers.

Poundworld has been quoted as saying it seeks 'exceptional value for money' which products made in Britain apparently don't offer. It doesn't take a rocket scientist to realise why that might be. If you pay people a decent wage to produce a product then you're going to have to charge more than £1 for it. There is an urgent need for CSR initiatives to be adopted in these firms. It is not as if they can't afford it. Poundland was recently sold for £200m and in the 12 months to March 2009, sales rose from £330m to nearly £400m. Poundland, along with other pound shops, has benefited from the demise of Woolworth's.

Maybe these stores do offer a bargain, particularly during a recession, but at what cost to the people who produce them and to the environment? It is not just deprived groups in the UK who frequent these stores, 11% of the store's 2.5 million customers a week are from the wealthy A and B social groups. CSR consultants need to target pound shops because their manner of business is not sustainable. The planet only has a finite number of resources. What is more, as a long-term business proposition, these companies are not building brand loyalty. Customers are not shopping there out of any sense of affinity - they are shopping there because it's cheap. If somewhere else becomes cheaper then they'll switch.

This was made starkly clear to a branch of Poundworld in Poole in Dorset last year, which was forced to close after a 99p shop opened across the road. If you base your business model solely on cost and give no thought to the wider corporate responsibility implications, you do so at your peril.

Photo credit: Stuart Caie