Blackfriar: The only way is ethics... for some of the nation’s shoppers

If the CBI is to be believed, business is suffering a crisis in public confidence in the wake of the banking scandal and anger over soaring energy bills.

At its annual conference in London this week, the CBI insisted that the belief that business is the enemy could not be further from the truth.

Sir Mike Rake, president of the CBI and the chairman of BT, said that Britain can only thrive if it has strong, productive businesses in all sectors.

Indeed, trust in business was a key theme of the conference with Centrica’s chief executive Sam Laidlaw admitting that faith in the energy sector is at an “all-time low” and there is an urgent need to rebuild trust with consumers.

Speaking at a debate entitled Business Trust Under the Spotlight’, Mr Laidlaw revealed that he has decided to forgo his bonus this year amid anger over ever-rising household bills.

“We’re in the eye of the storm in the energy sector. Trust in the sector is at an all-time low. The solution is action not words,” he told delegates.

“We are listening – we get it, absolutely. We know there is a problem.”

However Sir Philip Hampton, chairman of RBS, and Justin King, chief executive of Sainsbury’s, had very different views on business trust when they both spoke at the same debate.

Sir Philip said there isn’t universal mistrust and he doesn’t believe we are going through a crisis of capitalism.

He cited the BSE and salmonella in eggs scandals as being far worse than “horsegate”.

But Mr King took a much harder view: “I think there is a crisis of trust,” he said. “(The) horsemeat (scandal) was a real shock to the system. It reconfirmed for us we were doing the right thing – DNA tests for the past 10 years.

“Our customers say: ‘What were you doing before this was an issue? It’s about doing the right things before you were forced to do them’.”

This week George Weston, the boss of high fashion discount chain Primark, said retailers must stop using ethical policies as a way to gain sympathy with customers and change the way they work instead – a view which at first sight chimes with Mr King’s.

Primark reported an “outstanding year” after both its autumn/winter and spring/summer ranges sold out and annual profits leapt 44 per cent to £514m.

Fans of the chain, which specialises in sophisticated fast fashion at very cheap prices, refer to it as Primani – a word fabricated from ‘Primark’ and international Italian fashion house ‘Armani’, hinting at the chain’s ability to replicate very cheap versions of fashion designers’ collections.

Primark may have performed strongly throughout the economic downturn thanks to its low prices, but these came under scrutiny in April after 1,129 people died in the collapse of a factory in Bangladesh, where its clothes were made.

Last month the group laid out plans to pay more compensation for the disaster. It will spend £2m on aid and support for survivors and victims’ families.

The retailer has committed to provide long-term financial compensation to victims and said it was the first UK brand to sign an accord aimed at ensuring sustainable improvements to working conditions in the country’s garment industry.

This is all well and good, but how has Primark managed to overcome a high profile campaign to get shoppers to boycott the chain following the Rana Plaza factory collapse?

At the same time, Marks & Spencer, one of the most ethically minded retailers in the UK, saw its clothing and footwear like-for-like sales fall by 1.3 per cent – not a patch on Primark’s five per cent increase.

So who is right? Do shoppers actually care about ethics?

The obvious conclusion is that companies need to gauge their shoppers when it comes to ethics and how important they are.

Primark shoppers want cheap high fashion. Sainsbury’s shoppers want ethical practices.

Mr Weston can afford to make a big gesture with his £2m support for families affected by the Rana Plaza factory collapse because his customers couldn’t really care less.

Mr King, however, has an audience that expects his company to have behaved ethically for the past 10 years.

As he says – it’s about doing the right things before you were forced to do them.

Blackfriar will continue to shop happily at Sainsbury’s and walk past Primark.