Working Paper Series vol 5 issue 2 - Bloomsbury Institute

Working Paper SeriesVolume 6, Issue 1, April/May 2021

Editorial Board Members:Dr. Nnamdi O. Madichie (Series Editor)

Dr. Knowledge Mpofu

Dr. Achila Amarasinghe

Arif Zaman

Krystle Lewis

Dr. Nisreen Ameen (Royal Holloway, University of London, UK)

Dr. Paul Agu Igwe (University of Lincoln, UK)

Dr. Fred Yamoah (Birkbeck, University of London, UK)

Dr. Surendranath Jory (University of Southampton, UK)

Professor Robert Hinson (University of Ghana)

Professor Sonny Nwankwo (University of East London, UK)

Disclaimer

The views expressed in the papers are those of the authors alone and do not

necessarily reflect the views of the Bloomsbury Institute London. These Working

Papers have not been subject to formal editorial review. They are distributed in

order to reflect the current research outputs available at Bloomsbury Institute

London, which are shared with a wider academic audience with a view to

encouraging further debate, discussions and suggestions on the topical issues

explored in the areas covered in the Working Papers.

32 | Working Paper Series: Volume 6, Issue1 April/May 2021

Contents

Doing business in a lockdown – An introduction to the IssueNnamdi O. Madichie & Knowledge Mpofu 6

Working from home (WFH) during national lockdown: Perceptions of the Impact of Government interventions on Covid-19 pandemic Katie Gosney 12

Sustainability issues and corporate social responsibility of the cosmetic industry: A perspective from London, UKSara Pasquali 34

Corporate Social-responsibility and the profitability of UK high-street banksAdekunle Sasore 58

The changing face of UK retailBrou Nina Ettien 79


Doing business in a lockdown – An introduction to the Issue

Nnamdi O. Madichie & Knowledge MpofuDoing business as we know it, has not been the same in the last past year. This is primarily due to a health crisis, i.e., the Covid-19 pandemic, which has disrupted both lives and livelihoods since global lockdowns were put in place in March 2020. Since then, working from home has become a “now” or as some would describe it, “new” normal.

Besides this change of lifestyle for employees, and their employers, across diverse sectors, even large corporations have downsized and/ or right sized. It has been worse for the small businesses and those in the gig economy. This has meant that governments have had to intervene using a plethora of measures from the bounce back loans for sole traders, to the furlough schemes to support employers in keeping their employees on – taken from the perspective of the United Kingdom. It is not only businesses of all sizes that have been affected. Universities and education providers more generally have also borne the brunt of the health crisis, which has spiralled into both a social and economic crisis. Both providers of education and students across all levels – from primary to graduate studies – have been impacted. Teaching & learning has had to be adapted to ensure that education is not completely eroded.

In the light of this, it is heart-warming to note that students at the Bloomsbury Institute, have remained resilient in choosing to address matters of concern as part of their final year research projects. Before delving into these student voices, however, it is worth reflecting on what subjects and/ or topics were covered in pre-pandemic times.

In a previous issue of this working paper series, topics on the decline of the British Highstreet was interrogated following the collapse of big retailers such as British Home Stores, and the disruptions to spending patterns orchestrated by bank branch closures prompting the rise of challenger banks with more innovative products and consumer touchpoints.

British High Street (Retail Landscape)In their paper, “digital, innovation and everything in between,” Madichie & Munro (2019) touched upon various aspects innovation – from frugal to high-tech cutting across segments including acupuncture and fashion retailing. In a follow-on article, “the big issues – food, clothing and shelter,” Madichie (2020a) echoes the behavioural changes in the consumption of necessities – again the subject of clothing and/ or fashion comes up. Bloomsbury Institute students have also touched upon the retail landscape – notably fashion (Palumbo, 2018; Luong, 2020; Simeonova, 2020) mostly from a consumer behaviour perspective (Madichie, 2017; Afram, 2020).

In a following on article looking back at the five-year journey of the working paper series, Madichie (2020b), highlighted how educational institutes have responded to this era of self-isolation and lockdown thanks to our unwanted guest, COVID-19. He points out just how learning, teaching and assessment strategies have changed in the light of social distancing and closure of campuses. According to him, operating remotely has arguably become the new normal for most HE providers who have had no other options but to adjust, and pivot to Microsoft Teams and Zoom as a way of ensuring that disruptions remain minimal (Madichie, 2020b).

Looking back to pre-COVID-19 times, Bloomsbury Institute Working Paper Series, from the inaugural issue to the fifth volume, covered past, present and future trends across sectors and as felt by their authors – mostly students or recent graduates. Changing consumption practices and behaviour towards banking services, fashion and retail, have featured prominently (Madichie, 2020b). Obviously, these sectors are all high contact and more challenging under social distancing legislation or advice – especially fashion retailing. As life tentatively begins to return to the “new” normal, the big question in pre-COVID-19 times begins to resurface – Brexit and its legal implications including supply chain disruptions and customs checks at the reinstated border between the UK and Europe.

Talking about fashion, the conversation has revolved around sustainable vis-à-vis fast fashion. As Palumbo (2018; cf. Madichie & Munro, 2018, p. 4) summarised a contribution, “to establish a relationship between celebrity endorsements and the fast-fashion industry in the UK, to identify factors taken into consideration during the decision-making process of a fast-fashion brand, and to assess the effectiveness of a celebrity endorsement in the fast-fashion industry.”

Factors Influencing online shopping behaviour of UK retail customers (Afram, 2020).

social media marketing on consumer decision-making in UK fashion consumption (Simeonova, 2020).

influence of brand image on consumer purchasing decision in the UK clothing industry (Luong, 2020).

consumers, consumption and markets (Madichie, 2017).

impact of celebrity endorsement on consumer choice of UK fast-fashion (Palumbo, 2018).

celebrating the new consumer (Madichie, 2018).

It is evident that students seem more interested in exploring what matters most to them – changing patterns of shopping behaviour, corporate social responsibility in retail, money issues from a banking perspective, and remote working. We look forward to seeing more contributions on the latter two.


BankingTaking the perspective of one student project, which was published in pre-pandemic times (Okeke, 2019, p. 20):

“The 2008 banking and financial crisis was a turning point in retail banking in the UK: from public attitudes towards banks to government reforms within the sector especially which opened up the sector to new competitors, which would come to address the dominance of the leading banks.”

To prevent another likely recurrence and to limit the damage another crash might cause, policy-makers sought to enact large reforms, which changed the way commercial banks operated, and in the UK, this allowed regulation to be established that allowed “challenger banks” such as Monzo and Starling Bank to come to the scene. These new banks tended to appeal more the younger population due to their technology playbooks – a quarter of UK adults under the age of 40 had a challenger bank account, and those under 25 are three times more likely than the wider population to sign-up.

Challenger banks are typically mobile-only, branchless banks that seek, as their label suggest, to challenge the traditional banks in the UK (i.e., Barclays, Lloyds Banking Group, HSBC UK, and Royal Bank of Scotland). Although supermarkets have joined the race with their own non-traditional financial services (including banking, credit cards, and insurance) some industry analysts did not consider the likes of Tesco Bank and Sainsbury’s Bank as challenger banks because even though they are “mobile only,” and do not have physical branches. Furthermore, they were set-up before the 2008 financial crisis. The like of Metro Bank did not also qualify in the category of challenger banks because they had physical branches (see Okeke, 2019). Generally, the coming of new entrants into the banking system who are solely based on technology (with the exception of Metro bank), there has to be a target market, which must be willing to accept a new way of banking.

As challenger banks continue their growth and as they add more services, it will be difficult in the current climate to measure how consumers view them. There has been very little research on challenger banks or how consumer behaviour can be influenced by the and vice versa. There is also a limited amount of information and predictions on how the long-term health of the UK banking system and landscape is in relation of challenger banks and the traditional banks.

Papers in this IssueThese problems have continued unabated as the high street blues have become accentuated by another crisis – i.e., a health crisis prompted by the Covid-19 pandemic and its attendant lockdowns. Consequently, this issue of the Bloomsbury Institute Working Papers touches upon all of these matters – albeit from the perspective of students. The four papers in the issue range from an interrogation of government interventions in the Covid-19 crisis, to the changing face of retail – especially those considered non-essential e.g., cosmetics and to some extent, face-to-face banking and Highstreet retail.

In the first paper on the “Impact of Government interventions During Covid-19 Crisis,” Katie Gosney explores “Government interventions in managing change and perceptions of working from home during national lockdown.” Working from home (WFH) was implemented in the 1980s and became more popular as technology advanced. In 2020 the Office of National Statistics suggested this concept became more popular in the UK and has increased since 2015. According to her, only about 5% of the UK’s total workforce worked remotely – a figure that has increased ten-fold to about 50 percent of the population. Government interventions have ranged from – The Furlough scheme for those earning £2,500 or less per month receive 80%

of pay up to October if required. She argues that these interventions are examples of nudging technique and change management. The study was taken from the purview of the engineering sector. It also sought to highlight the benefits of WFH in a post-pandemic era considering the reduction in carbon emissions from daily commutes and overseas travel, as well as the savings on office space, which could result in a reduction in energy consumption.

In the second paper, “sustainability issues and their influence on corporate social responsibility of London firms in the cosmetic industry” is explored by Sara Pasquali. The main objectives of the study were to explore the sustainability issues and their influence on corporate social responsibility (CSR) of London firms in the cosmetic industry; identify and evaluate sustainable development factors’ impacting on cosmetics firms and their business activities – taken from the perspectives of consumers in London. Pasquali, argues that understanding how sustainability is changing the cosmetic industry provides insights into real threats for the planet and sustainable business approaches with long-term environmental and social impact. The study has implications for the sourcing of raw materials and the future of the beauty industry at large.


Still on the retail sector, Adekunle Sasore, in the third paper, continues the discussion on CSR by interrogating the “drive for profitability by UK high-street banks,” through an empirical examination of stakeholder’s perspectives of corporate social-responsibility – the four stakeholders (consumers, investors, government, high-street banks) possesses the influence to make UK high-street banks behave in a socially-responsible manner. The Lloyds, Barclays, and HSBC Banks were compared in a bid to highlight the impact of job-satisfaction on future organisational values of UK high-street banks.

In the fourth and final paper, Brou Nina Ettien explored the factors or elements, which are changing the face of retail business across the UK. The main research objectives were, among others, to examine the impact of Britain’s exit from Europe and globalization on the UK retail industry. The paper also assesses the changing behaviour, demands and requirements of the present day consumers. Ettien argues that the changes being incorporated within the retail sector in UK are clearly visible – as retailers have pivoted online and embraced e-commerce. The study cites examples of Next, M&S having closed stores due to slowdown in footfall. As the study also points out, “changes in fashion trends like fast fashion, demand of personalized shopping experience [which] also impacting and modifying the business strategies of the fashion retailers in UK.”

Ultimately the articles in this issue have resonated with the discussions from previous issues such as digital, innovation and everything in between (Madichie & Munro, 2019), rise of challenger banks in the UK (Okeke, 2019), the big issues – food, clothing and shelter (Madichie, 2020), Factors Influencing online shopping behaviour of UK retail customers (Afram, 2020), social media marketing on consumer decision-making in UK fashion consumption (Simeonova, 2020), influence of brand image on consumer purchasing decision in the UK clothing industry (Luong, 2020), consumers, consumption and markets (Madichie, 2017), cash versus cashless (Zorzi, 2018), impact of celebrity endorsement on consumer choice of UK fast-fashion (Palumbo, 2018), celebrating the new consumer (Madichie, 2018). It is evident that students seem more interested in exploring what matters most to them – changing patterns of shopping behaviour, corporate social responsibility in retail, money issues from a banking perspective, and remote working. We look forward to seeing more contributions on the latter two.

ReferencesAfram, K. (2020) Factors Influencing Online Shopping

Behaviour of UK Retail Customers, Bloomsbury Institute Working Paper Series, 5(2/3),

Luong, L. (2020) The Influence of Brand Image on Consumer Purchasing Decision in the UK Clothing Industry, Bloomsbury Institute Working Paper Series, 5(2/3)

Madichie, N. (2020a) The Big Issues – Food, Clothing and Shelter: An Introduction, Bloomsbury Institute Working Paper Series, 5(2/3),

Madichie, N. (2020b) Bloomsbury Institute Working Paper Series – Looking back after five years, Research News: Bloomsbury Institute, https://www.bil.ac.uk/teaching-learning-and-research/centre-for-research-enterprise/research-news/bloomsbury-institute-working-paper-series-looking-back-after-five-years/

Madichie, N. (2019), Editorial, Bloomsbury Institute Working Paper Series, 4(2/3), 4-5.

Madichie, N. (2018) Celebrating the New Consumer – An Introduction. Bloomsbury Institute Working Paper Series, 3(2/3), 4-6.

Madichie, N. (2017) Consumers, Consumption and Markets – Introduction to the Issues, Bloomsbury Institute Working Paper Series, Vol. 2, Issue 2/3

Madichie, N. O., & Munro, C. (2019) Drivers Under the Influence (DUI) of Digital, Innovation and Everything in-between, Bloomsbury Institute Working Paper Series, 4(1), 4-11, (January-April).

Madichie, N. O., & Zaman, A. (2020). Brexit, Commonwealth and UK Creative Industries: An introduction, Bloomsbury Institute Working Paper Series, 5(1), 6-19.

Maugeri, C. (2016)The Charm of Pandora – A Brand Audit, Bloomsbury Institute Working Paper Series, 1(2/3) 4-11.

Okeke, E. (2019) Consumer Perception of UK Challenger Banks, Bloomsbury Institute Working Paper Series, 4(2/3), 20-30.

Palumbo, M. (2018) Impact of Celebrity Endorsement on Consumer Choice of UK Fast-fashion. Bloomsbury Institute Working Paper Series, 3(2/3), 7-23.

Simeonova, Z. (2020) Social Media Marketing on Consumer Decision-Making in UK Fashion Consumption, Bloomsbury Institute Working Paper Series, 5(2/3),

Zorzi, S. (2018) Show me the Money! Cash versus Cashless. Bloomsbury Institute Working Paper Series, 3(2/3), 70-74.


Working from home (WFH) during national lockdown: Perceptions of the Impact of Government interventions on Covid-19 pandemic

Katie Gosney

AbstractWorking from home (WFH) was implemented in the 1980s and became more popular as technology advanced. In 2020 the Office of National Statistics suggested this concept became more popular in the UK and has increased since 2015. In 2019, 1.7 million people WFH, which is only 5% of the UKs total workforce. However, due to the current pandemic, just under 50% of the UK are now WFH. Government interventions have helped those who cannot WFH and businesses that cannot operate during the pandemic. The furlough scheme helped people who earnt £2,500 or less per month receive 80% of pay up to October 2021 if required. Additionally, grants can be claimed through HMRC to help pay furloughed employees. Also, loans were allocated to help smaller businesses survive through these unprecedented times. It could be argued these government interventions are examples of nudging technique and change management. Nudging technique is when a scheme is implemented to influence people’s decisions to benefit society. For example, before lockdown, people were encouraged to WFH to control the coronavirus outbreak. Whereas change management is how a company implements change when there is a shift in their goals, to help employees and business adapt.

Keywords:Covid-19 Lockdown; Working from home (WFH); The furlough scheme

AcknowledgementsI would firstly like to thank my academic advisor, Dr. Knowledge Mpofu, who has guided me through this process. Working through the pandemic has not been easy and I am grateful for his advice and support during this time. Secondly, I would like to thank my family who have kept me going during the difficult times, especially my brother who has literally been sat right beside me through it all. And not to forget my best friends Jess, Izzy, Gracie, Sophie and Emily for keeping me motivated and not allowing me to give up, I could not have done it without you all, so thank you!


IntroductionWorking from home (WFH) was implemented in the 1980s and became more popular as technology advanced (Dishman, 2019). Office of National Statistics (2020) suggested this concept became more popular in the UK and has increased since 2015. In 2019, 1.7 million people WFH, which is only 5% of the UKs total workforce (ONS, 2020).

However, due to the current pandemic, just under 50% of the UK are now WFH (Powis, 2020). Government interventions have helped those who cannot WFH and businesses that cannot operate during the pandemic (Thomas, 2020). The furlough scheme helped people who earnt £2,500 or less per month receive 80% of pay up to October if required (BBC, 2020). Additionally, grants can be claimed through HMRC to help pay furloughed employees. Also, loans were allocated to help smaller businesses survive through these unprecedented times (Thomas, 2020). It could be argued these government interventions are examples of nudging technique and change management (Burt, 2019). Nudging technique is when a scheme is implemented to influence people’s decisions to benefit society (Chu, 2017). For example, before lockdown, people were encouraged to WFH to control the coronavirus outbreak (Cole, 2020). Whereas change management is how a company implements change when there is a shift in their goals, to help employees and business adapt (Rouse, 2019).

The rationale behind the study was motivated by the effectiveness of government interventions during the current pandemic. The specific focus is to show how effective these government interventions have been. Also, to show how these interventions may have had a negative effect on businesses in the UKs engineering industry. This study aims to show how workforces across the UK have adapted to the rapidly changing environment. Exploring people’s perception on WFH and the furlough scheme and whether more could have been done. Additionally, businesses could adapt and implement the WFH concept long-term, to help reduce effects of the pandemic to help with the business’s survival in the future. Furthermore, it will show how WFH can benefit a business as this would reduce their carbon emissions from daily commutes and travelling abroad. Also, how this can save on office space, which could result in a reduction in energy consumption as well as operating costs.

This study critically examines how government interventions such as the furlough scheme and lockdown measures, have influenced behavioural change among employees including their perceptions of Working From Home during the COVID-19 crisis in the UK’s engineering industry. The main objectives are three-fold: To identify and examine the different intervention measures taken by the UK Government and companies to encourage people to Work From Home during the COVID-19 crisis and national lockdown; critically analyse how businesses and employees in the UK’s engineering industry have been affected during the COVID-19 pandemic; and to evaluate the impact of the furlough scheme and Working From Home as a behavioural change management technique to influence people’s perceptions during the crisis.

Following this opening section, the literature review is undertaken with a timeline on working remotely – from a UK perspective. In the third section, an outline of the key aspects of the research methodology, which covers the research design, sampling, data collection, data analysis and resource requirements are provided. The findings are discussed in the fourth section, and the fifth and final section concludes the study while also highlighting the limitations and implications.

Literature reviewWorking from Home (WFH) or remote working is when an employee works outside the traditional office environment (Cook, 2020). This has several benefits such as decrease in labour turnover, costs and higher efficiency. When WFH was first introduced, technology company IBM installed automation systems in employees’ homes to monitor and collect data to see how efficient they were. This led to over 40% of their workforce WFH, reducing office space needed, thus resulting in saving US$100 million per year on overheads (Dishman, 2019). The main themes explore trends in WFH and how self-motivation is key, as this can influence job satisfaction and productivity. Also, how a reduction in the use of office space and travel impacts the environment for the better and how communication is affected while WFH.

Trends in working remotely in the UK.

According to ONS (2020), 30% of the UK workforce had WFH at some point in their career but 5% had full time. However, these studies were pre-pandemic and this figure has increased significantly (Powis, 2020).

Previous studies have shown that some believe WFH or working remotely is a negative concept (McCarthy, 2020). A survey conducted in 2018 found some challenges of working remotely (Molla, 2019).

Figure 1. Remote Working Challenges

Biggest struggle working remotely

Source: Molla (2019)

Taking vacation

Finding reliable wifi 3%

4%

7%

8%

8%

22%

19%

17%

10%

Collaborating / communicating

Distractions from home

Staying motivated

Loneliness

Different timezone than team

Other

Unplugging from work

Other research shows ways to keep motivated and productive while WFH and maintain colleague interaction. For example, if you take shorter breaks often, this improves motivation, which can result in higher productivity (Lawrie and Parry, 2020). This may correlate with the fact that the attention span of an adult is 14 minutes on average (Elsworthy, 2017). However, a study suggested that 68% of participants do not take a break as their workload is too large to justify a break. If workers in the UK do take a break, they take 27 minutes (on average), when they are entitled to 40 minutes (Mahdaoui, 2017). It is important to take at least one break, as it can improve productivity, reduce stress and increase employee engagement (Kohll, 2018). Also, keeping in contact with employees can reduce feelings of isolation while WFH (Lawrie and Parry, 2020).

A survey suggested that miscommunication is a drawback of WFH (Davis, 2019). A study by the Institute of Leadership and Management (2020) suggested that 88% of participants believed this was because information was misinterpreted. Both studies suggested that to WFH efficiently, a company needs

to invest in technology and good communication systems (Davis, 2019 and Institute of Leadership and Management, 2020). Good communication leads to less errors, higher productivity and makes companies stronger in uncertain situations, as this increases trust between managers and employees (Sherman, 2019). Also, face-to-face communication is important, as a study argued 95% believed it helped strengthen and maintained business relationships, which reduces the effects of misinterpretation, as you can read body language and gestures (Woods, 2020).

In contrast, there are benefits of WFH as research suggests people who WFH can be more productive than those working in an office. This is because there are less distractions, but employees still have problems with focusing. However, the study also showed 29% found it hard to separate work and personal life as the office and home were the same place (Caramela, 2020). Also, another study found 92% of participants replied to emails out of work hours (Muller-Heyndyk, 2019) which may suggest why employees who WFH work 24 hours more than their colleagues in the office (Caramela, 2020).


Theoretical frameworksOne of the theories that can be applied to this study is Herzberg’s two-factor theory of motivation (Riley, 2016). Herzberg believed that job satisfaction played a big part in staying motivated and hygiene factors improved dissatisfaction in the workplace (Juneja, 2015) as detailed in figure 2 (Riley, 2016). This could show why employees are finding it harder to be motivated at home, as Herzberg argues job satisfaction comes with recognition, responsibility and growth (Riley, 2016). This may be harder to achieve when WFH but not impossible (Breuer, 2020). Also, working conditions are harder to control when WFH as it is not the company that is creating the environment (Juneja, 2015). However, the company should still provide the resources needed when WFH and even in these uncertain times, job security for employees should be provided to improve job satisfaction (Juneja, 2015).

Figure 2. Herzberg Two-factor Theory

Source: Riley (2016)

HERZBERG TWO FACTORY THEORY

MOTIVATORS

• Responsibility at work

• Meaningful, fulfilling work

• Achievement & recognition

• Pay & other financial rewards

• Working conditions

• Appropriate supervision & policies

HYGIENE

However, a disadvantage of this theory is the factors can overlap due to the persons personal interests and goals. For example, job security may be a motivator for an older employee because they may be seen as less employable. However, this may be a hygiene factor for a younger employee, as this is expected (Seidel, 2018). Kurt Lewin’s 3 (Unfreeze, Change, Refreeze) change management model could be applied (Figure 3) as this model refers to human behaviour to change, as this allows businesses to adapt as change can disrupt the status quo (Hussain et al, 2018). For example, the need for change would be the current crisis and businesses need to involve employees in how the business plans to adapt.

Then share knowledge on government interventions to help employees understand how the change process may be achieved. Finally, implement change by furloughing staff, job cuts or initiating WFH (Hussain et al, 2018). Refreeze is when the organisation accepts change and starts operating efficiently again (Gupta, 2020). The limitation is that change can be so drastic it takes employees longer to adapt and this can affect productivity, as change can create uncertainty. Considering the current pandemic, this may result in the refreezing stage taking longer (Gupta, 2020). With any change employees can resist and it is a leader’s job to guide and reassure employees through the change process (Lindsay et al, 2019). However, this model can be applied to any business as it is easy to implement and cost-effective (Gupta, 2020). When this crisis is over, businesses would have to go through the change process again (Hussain et al, 2018). In summary, insights from existing sources presented in this chapter suggest that WFH is flawed. However, some interesting insights on potential benefits of the intervention measures were highlighted. In terms of increased job satisfaction, motivation and environmental factors, most of the previous research was collected pre-pandemic which may impact the results of the study.

MethodologyThere are generally two research approaches – quantitative and qualitative that can be applied to the research design (O’Gorman and MacIntosh, 2014). The research design for this project is based on quantitative methodology and questionnaire survey for primary data collection. Even though quantitative will be the main method used, there will be an aspect of qualitative methodology. This is a way of triangulating the methodologies, to allow more in-depth data to be collected as well as statistical data (Carter et al, 2014). An advantage of quantitative data is that it is more comparable as it is numerical. Also, it can be argued that this kind of data can be more reliable then qualitative as it can be easily understood and inputted into graphs and tables (Devault, 2019). However, the data is not in-depth, and the answers may not fully reflect the participants’ perception. Quantitative data can be flawed because if the sample size is not large enough, it gives a false representation of the area studied (Chetty, 2016).

WFH has helped businesses reduce their effects on the environment. Research suggests that as WFH is becoming more popular and less employees travel to work, there is a reduction in the companies’ carbon footprints (Ogden, 2019). By 2025 it is estimated that if half of the UK WFH, there would be 374,931 fewer cars on the roads, reducing emissions significantly (Ogden, 2019). Also, with fewer employees working in offices, less office space is needed, which saves costs and results in a reduction in energy consumption (Helman, 2020). The Capita study found employees wanted to WFH to save on commuting costs, lower emissions and have a better work life relationship (Davis, 2019). It could be argued that humans have adapted to the COVID-19 crisis and WFH because humans are very adaptable (Brown, 2016). As humans can familiarise to new and unexpected circumstances easily (Heath, 2020). However, as this pandemic is a unique occurrence, some people may have found it hard to adapt (Heath, 2020).

Government interventionsGovernment interventions were introduced during COVID-19 crisis to reduce the effects of the pandemic, while making efforts to save millions of jobs and imminent widespread company closures (Munnery, 2020). The furlough scheme was introduced to ensure people who could not WFH could be paid a wage (BBC, 2020). However, this will have a huge impact on the UK’s economy as 9.3 million people are on furlough, which is over 25% of the UKs workforce (Gov.uk, 2020). The scheme is costing the government £14 million per month (BBC, 2020). Also, the government aims for the number of people on furlough to start reducing from July 1st 2020, as businesses start to reopen (HM Treasury, 2020). Companies will have to start paying a percentage of the cost who are still furloughed by August and the scheme will end by October (Lawrie, 2020). This is their attempt to help the UK’s economy to start recovering from the crisis (HM Treasury, 2020). Also, businesses can choose to temporarily stop paying tax until March 2021 (Gov.uk, 2020). Even though this will help businesses with their cashflow, the economy could lose out on £30 billion worth of taxes in 2020 (Asquith, 2020). It is estimated the effects of COVID-19 will take 3 years to recover from and some effects may be worse than 2008’s financial crisis (Partington, 2020).


As quantitative methodology and questionnaire survey data collection are applied this research project takes a deductive approach, which departs from the review of existing relevant theories. A deductive approach is when a study goes from general to specific (Devault, 2019). The advantage to this is that, because there is a short time to conduct the study, a deductive approach is more appropriate and there is less risk using this approach (Dudovskiy, 2019). Furthermore, qualitative data provides more in-depth answers, so the researcher has a better understanding of the participants’ perceptions (Gaille, 2017) which is a critical aspect in this study, as it is based on understanding employees’ perceptions on lockdown measures (Gaille, 2018). However, it is harder to analyse and input into a graph. Also, a person’s perception may be misunderstood by the researcher which could result in a lack of validity in the data collected. Additionally, the data collected cannot be transformed into statistics as it is a person’s opinion which is subjective.

Sampling

Sampling specifies who will partake in the research and the size of the sample (Dudovskiy, 2018). The sample size will be 500 participants drawn from managers and employees working in engineering industry in the UK. This is with the hope of getting around a 10% response rate. This aims to show a good understanding of people’s perceptions of WFH and the current furlough scheme. The sampling technique was purposive in nature, as the participants are being selected because they have been furloughed or WFH in the engineering industry in the UK (Dudovskiy, 2018). Also, as there are not many secondary resources on people WFH in this industry on this scale, a purposive study can be used to its advantage. Additionally, it is not time consuming which is an advantage as the time frame for this study is short, meaning the full sample can be collected (Dudovskiy, 2019). However, a flaw is that the sample is specific and cannot be applied to the rest of the population (Flom, 2020). Also, this type of sampling can be unreliable which leads to inaccurate results.

Data collection method

The chosen research method is a questionnaire survey. In designing a questionnaire, the questions asked can be both open-ended which provide more in-depth insight and close-ended which are easier to analyse (O’Gorman and MacIntosh, 2014). Questionnaires can be more representative and generalisable as large amounts of data can be collected from this type of method (Zamboni, 2018). Whereas using a method such as interviews, can be very time consuming and harder to collect a large amount of data (Dudovskiy, 2018). Also, a questionnaire can be more effective as the results can be compared if the questionnaire is repeated in the future. However, one of the main flaws of a questionnaire can come from participant misunderstanding of what the question is asking, which would influence the validity of the answers (Debois, 2019). Whereas in an interview, if the researcher felt like the question was misunderstood, they could reword the question or the participant could ask questions if they have misunderstood (Dudovskiy, 2018). On the other hand, the response rate for questionnaires is low which could result in the study being more biased as this would mean it is not representable (Lindemann, 2019). Figure 3 shows the response rates of questionnaire surveys on average, including online surveys, which was conducted in this study. Due to the pandemic, there has been limited resources on how the questionnaires can be sent out, so these questionnaires were sent out electronically on social media platforms such as LinkedIn.

The advantages of using Google Forms is that you can create as many free customized questionnaires needed and get fast responses. Also, it provides a link so you can send electronically which is a huge benefit due to the lockdown measures. Additionally, it shows how many have responded in live time and participants can remain anonymous. To ensure people answer all questions you can put a setting on each question, so each answer is a requirement. Any questions left unanswered will not let the questionnaire be summitted.

However, some of the data automatically gets inputted into graphs and these can be unclear on what they are trying to show. Therefore, when writing the questions, ensure it fits the formatting so this problem can be avoided. Furthermore, you can only submit one response per questionnaire so if this study was repeated with the same questionnaire, participants would not be able to resubmit if they had taken part in the first study (Google Forms, 2020).

Figure 3 Types of Survey Methods (Response Averages)

To ensure the data is being collected in an ethical manner, it must be known that participants can opt out at any point and they remain anonymous throughout. Also, before participants start the questionnaires there is a participant information form that must be read. All participants will have to give consent to participating (Denscombe, 2014). It is important to conduct any type of study in an ethical manner to protect both the participates and researcher (Resnik, 2015).

Findings and Discussion This chapter presents the findings and discussion of the primary data collected from both questionnaire surveys and quantitative research methodology outlined in the previous chapter. The findings are presented, discussed, analysed and interpreted using descriptive statistical tools from Excel, that include graphs and tables. The questionnaire survey was conducted in two stages and all participants gave consent. The first questionnaire, aimed at people who have been WFH during lockdown, was made up of 29 questions. The second questionnaire was aimed at people who had be furloughed during the COVID-19 crisis and this was made up of 11 questions. In both questionnaires there was a mixture of both closed and open-ended questions.

Referring to the literature review, it was suggested that 30% of the UK’s population had WFH at least once in their career (ONS, 2020). According to the independent study 27 participants out of the 60 had WFH at some point in their career and 37% were less than once a week (Figure 5). This may be because the engineering industry needed their workforce onsite. However, as the results show, this had to change due to the COVID-19 crisis.

Figure 4 presents some of the reasons why people in the engineering industry were not WFH pre-pandemic. The study found that 70.6% said it was because it was never an option. This suggests that businesses in the engineering industry may have had to heavily implement change management to ensure operations and the workforce could adapt with little disruption (Rouse, 2019). Contrary to the findings of the ONS, only 5.9% had a negative concept of WFH so this may have been exaggerated in previous studies.

Average survey response rate based on survey method

Source: Lindemann (2019)

In-app survey 13%

18%

29%

50%

57%

33%

30%

Average survey response rate

Email survey

Telephone survey

Mail survey

Online survey

In-person survey

0% 60%50%40%30%20%10%


Figure 4. Percentage of People Who WFH Previously

Figure 6 More or Less Productive

Part Time Not an option

Less than once a week I wasn't given the option

More Productive

Full Time Did not want to

Once a Week Poor perception of working from home

Less Productive

5.9%

2.9%

20.6%

70.6%

37%

33.3%

18.5%

11.1%

Figure 5 Perceptions of WFH Pre-pandemic

If yes, was this full time, part time, once a week or less then once a week?

27 responses 34 responses

60 responses

60 responses

If no, why did you not work from home pre pandemic?

Do you feel like you have been more of less productive while working from home? (eg meeting deadline, response rate etc.)

According to the questionnaire, 95% of the participants found that communication had improved during lockdown. Which contradicts previous research as it was believed that bad communication was one of the main flaws (Davis, 2019). However, communication may have not been affected as previously thought as most companies were WFH and not just a percentage of the workforce. This could mean employees were more likely to respond to emails, as this may have been their only form of communication. The participants mentioned communication was better because of the use of online portals such as Teams and Zoom. However, 5% argued that communication had been poor and ‘face-to-face communication is vital’ and it is harder to train new employees over video calls.

Most participants have felt more productive while WFH, as figure 6 shows 61.7% believed this. This supports previous research as it suggested employees are more productive WFH (Caramela, 2020). The participants mentioned this was because they did not have the interruption from employees approaching their desks like they would in the office. Also, the flexible hours meant employees could adapt their hours to meet their daily routine. However, participants with young family members said they were less productive as balancing childcare and work hours was hard. It must be considered that this would not be the usual set up, as childcare would be available but due to the pandemic the situation was different.

Motivation was split as 48.3% found it hard to stay motivated (Figure 7). In the literature review, it was suggested there are ways to help stay motivated (Molla, 2019). Figure 8 highlights some sources of how people stayed motivated while WFH. Over 76% believed working in a separate room to where you sleep helped and 62.7% believed that taking regular breaks also helped. However, referring

to the participant comments there were distractions such as working in an informal environment, family members, mobile phone (social media) and TV that affected their motivation. However, it was suggested that people who were more motivated had less distractions as some either lived alone or had at home offices. In total 51.7% of the 60 participants felt more distracted at home.

Figure 7 Sources of Motivation While WFH

38.3%

61.7%

Have any of these helped you stay motivated?

46 - 76.7%

36 - 60%

37 - 61.7%

27 - 45%

16 - 26.7%

32 - 53.3%

Dressing smartly

Daily exercise

Working in a separate room to where you relax

Taking regular breaks

Following a schedule

Waking up early

0 5040302010


Figure 8 shows 20.3% of participants were given more responsibility while WFH. Secondary research suggests this is not usually the case and people are given less responsibility (Breuer, 2020). However due to the current crisis and depending on the role and position of the employee, the amount of responsibility may vary. This could be due to workers being given less responsibility as their job may not be as significant as others. In contrast, 66.1% of employees have felt no change in terms of the amount of responsibility given.

Figure 8 Percentage of Change in Responsibility WFH

Previous research suggested face-to-face communication is still needed and effective in the workplace (Woods, 2020). The research would suggest that employees in the engineering industry agree as 75% missed this (Figure 9). One of the participant comments said this was because you can read a person’s body language, whereas with emails and even video calls you cannot get this. However, 25% of participants argued that they did not miss this as they were satisfied with using video calls.

Figure 9. More or Less Distracted While WFH

Moreover, people find it hard to switch off from work (Molla, 2019). It was found in the questionnaire that 58.3% had be able to switch off whereas 42.7% have found it harder (figure 4.10). The participants who found it hard to switch off said it was because work and home environment became one and it was hard to separate the two.

It could be argued that there may be correlation between the amount of breaks you take during your workday and being able to switch off (Molla, 2019). Figure 10 shows 20% of people never take breaks during their workday which may be the people who are finding it harder to switch off. Previous research suggested an adult’s brain can concentrate for 14 minutes (Elsworthy, 2017).

Figure 10 Percentage of How Often People Take Breaks

More

Every hour

Stayed the Same

More distractedLess

Every 45 minutes

No

Every 25 minutes

Yes

No change

Never

Less distracted

60 responses

60 responses

60 responses

60 responses

48.3% 51.7%

66.7%

20%

13.3%

Have you been given less or more responsibility while working from home?

How often do you take breaks?

Have you been more or less distracted while working from home?

Have your working hours increased during lockdown?

15%

41.7%

43.3%

58.3%

11.7%

10%

20%

Figure 11 Numbers of Working Hours During Lockdown


So, this suggests that taking regular breaks helps employees be more productive and improves motivation. As presented in Figure 11, 20% take the breaks that are suggested to improve motivation. Previous studies argued people who WFH work at least 24 hours more than colleagues in the office (Caramela, 2020). The independent study showed 44.1% of participants have worked more hours during lockdown and some have worked up to 50 additional hours. This could suggest that as the resources to WFH are easily available, it is harder to switch off as the temptation to work more is greater, resulting in hours increasing. The people who have been working longer hours tended to be in higher levels of management. Regarding the pandemic, their workload and hours were likely to increase regardless of where they were working from. However, some participates have worked less hours in lockdown. This may be due to factors such as lack of childcare and other responsibilities or less responsibility given while WFH.

Before the pandemic, 30% of the UK had WFH at some point (ONS, 2020). However, it was asked if participants had the option to WFH post-pandemic would they, and 55% said they would prefer WFH. This could be a factor that businesses may want to consider post-pandemic as this could be a solution to save costs and help the business adapt to the

new environment. Also, 71.8% said they have found it easy adapting to WFH, which supports previous theories that suggests humans can adapt to different environments easily. However, 28.2% found it hard to adapt to WFH, but this could have been due to other factors such as lack of childcare available and not WFH itself.

Also, previous research estimated if more than half of the UK workforce WFH then carbon emissions would reduce significantly (Ogden, 2019). In the questionnaire 91.7% said they would rather WFH if they knew this was the effects it could have on the environment. Suggesting that the population is becoming more aware of the climate crisis and are willing to adapt their habits as a response.

The questionnaire found that during lockdown, 55% of participants said that their job satisfaction had increased, which according to Herzberg’s two-factor theory, job satisfaction, motivation and productivity are intertwined which could be shown in the findings (Riley, 2016). As 51% have found it easier to stay motivated and 61% feel more productive which could have resulted in 55% being more satisfied with their jobs during lockdown. Also, the independent study found 68.3% felt less pressure WFH, which may be because companies are being more understanding of delays and errors, as WFH is a new concept for many.

Figure 12 Job Satisfaction

Also, 80% of participants felt like they were fulfilling their job role while WFH. However, some participants mentioned they are putting pressure on themselves to ensure they feel like they are fulfilling their role, which led to an increase in working hours. It was mentioned in the study that there was more pressure to meet deadlines in some cases. This led employees to worry about job security post-lockdown as they felt like WFH was their opportunity to stand out and feel more secure in their job for when lockdown was lifted as jobs cuts are likely in their industry. One of

the final questions asked was, how likely would it be for participants to WFH post-pandemic. This was to show how likely it would be for companies to allow employees to WFH and 33% suggested that it could be very likely. The reasons were because of the time and money saved. Also, to reduce the amount of carbon emissions, improve productivity and have a better work like relationship. However, some participants believed that they are unlikely to WFH as they are more productive in the office and it is easier to stay motivated.

Figure 13 How Likely to WFH Post-Pandemic (Scale of 1-10)

Decreased

Increased

60 responses

Has working from home increased or decreased job satisfaction?

56%45%

Am

ount

of p

eopl

e

Scale of 1-10 LikelyUnlikely

4 4

21

2

5

8

6

8

20

108642 97531

0

5

10

15

20

25


The final question was for participants to add any other aspects of WFH and it is suggested more people are open to WFH or partly WFH in the future. However, some participants highlighted WFH made them appreciate working in an office and it is harder to solve technical issues and organise team meetings. Overall, WFH has positive and negative aspects and parts of the UK engineering industry can WFH efficiently if needed.

FurloughDuring the pandemic another government intervention, was the furlough scheme which helped businesses pay their staff 80% of their wage through government funding (BBC, 2020). The second questionnaire aimed to show if the furlough scheme was effective. Businesses could apply for furlough up until the 1st of July (HM Treasury, 2020). The study showed 64% applied for furlough in March and 36% in April (figure 4.20). Also, 40% were paid furlough at the end of March and 56% paid in April which shows that this scheme was heavily relied on from the start (figure 4.21). Also, the highest percentage was expected to be in April as the government first paid out in the last week of March and start of April (HM Treasury, 2020).

The study showed that 96% of people believed the government had done enough by implementing this scheme. Some of the participants mentioned that this was an effective scheme as it helped protect their job and provide them with a sense of job security as lockdown eases. Also, it was suggested that businesses felt less pressure and they could focus purely on the business’s survival and not worry about wages. However, one participant highlighted employees still had to be laid off, as in some cases the government grant was not paid for the first 5 weeks of businesses furloughing employees and they could not afford to pay all staff.

Furthermore, 100% of participants believe that this scheme helped their business or the business they work for survive in these uncertain times. Participants have said it helped because it reduced their overheads and resulted in being able to retain employees. Also, without it there would have been a huge number of redundancies made.

However, the participants criticism of this scheme is that it paid some, not all, wages and it was based on last year’s income which may not be accurate for some workers. The questionnaire found that the majority wanted to return to the same job post-lockdown. This suggests as the job market is still uncertain, they may have more job security returning to their job if it is still an option. The data collected suggested some people are taking advantage of the scheme and aim to leave the company they work for or shut down their business once the scheme ends. Furthermore, some participants who have customer-facing jobs are apprehensive to go back due to safety reasons.

Figure 14 Furlough Commencement

April

June

March

May

25 responses

When did you start receiving furlough?

40%

56%

4%

Moreover, 72% of participants believed that without the furlough scheme their company would have not been able to provide a wage for them, which is another reason that shows the furlough scheme was an effective government intervention. Participants felt that their company’s unemployment rate would have been higher without it, which is concerning, and this also highlights how important this scheme was to help businesses and their employees. The economy has been hit hard by this crisis, and it is essential that businesses start to reopen (Parrington, 2020). As, 15 participants believed they would be returning to work in July, but some expect to be made redundant as their job may not be classed as vital to getting the business operating again. As lockdown measures ease, and the furlough scheme will stop in 3 months, businesses need to consider opening sooner rather than later. However, the government will grant businesses £1000 per employee they retain post-lockdown to reduce the number of redundancies and job loses (Stone, 2020). To summarise the participants’ comments, showed they believed the furlough was a good scheme; however, people may abuse the system to ensure they can receive a wage for as long as possible. When in fact the scheme was implemented so the government can help businesses reopen post-lockdown and help the UK economy get back on its feet. This is significant because if the UKs GDP increases it reduces the chance of a recession

(Loveland, 2018). However, this scheme created concerns as participants believed it will have had a detrimental impact on government funding for the future.

ConclusionsThe findings from this research project provide insights that help to address the research objectives. These results have shown that the impact of the government interventions in managing change in the UK engineering industry during national lockdown have varied. Also, WFH and the furlough scheme have both positive and negative aspects. The aim of WFH was to ensure the majority, if not all employees could carry on working through lockdown and this was to benefit both employees and the business. The study showed that the majority of participants had not worked from home pre-pandemic and the reason was because it was not an option. So, when implementing this technique, it may have been difficult initially. However, the study showed that both communication and productivity had both increased during lockdown so this could show that WFH is an effective intervention during a crisis like this. But these results did contradict previous studies.


The study also found that people who took short breaks more regular, helped improve motivation which could be argued that this led to greater job satisfaction. However, to ensure employees felt like they were fulfilling their role their working hours increased. Some employees were working 50 additional hours throughout lockdown which may have also increased productivity but working hours were expected to increase while WFH. Also, previous research suggested people who WFH were less distracted however this study found people were more distracted. Even though WFH had many benefits, people felt that face-to-face communication was one of the flaws. Also, people found it hard to switch off from working, as work and home life had now merged. Also, factors that were out of the businesses and employees’ control such as lack of childcare should have been considered more, as due to the crisis there was a lack of certain amenities. Moreover, the furlough scheme helped many businesses survive during the COVID-19 crisis. As the study showed 100% of participants said this helped their businesses survive through these uncertain times. This shows this scheme was effective and heavily relied especially in March and April as the study highlighted. Most participants said without this scheme the business would not be able to support them financially.

Overall, WFH has been an effective intervention for the UK engineering industry as the majority have worked efficiently. Also, the people who were WFH were critical to keep the businesses operating whereas the people who were furloughed were employees who could only do their job in the factory such as canteen staff and cleaners. Also, most participants are open to WFH or partly WFH post-pandemic. Businesses may want to consider whether they can implement a long-term strategy of having a percentage of their workforce WFH on a more permanent basis. Even though there were some redundancies in the UK engineering industry, the furlough scheme helped saved many jobs and businesses, to ensure UK businesses could help rebuild the economy post-pandemic. However, it was a huge cost to the UK government and some people took advantage of the scheme.

Based on the findings showing over 50% of people wanting to WFH post-pandemic, businesses could restructure their organisation and implement this as a long-term plan. As this could save on costs which is crucial for businesses to survive in these difficult times. However, the effectiveness of Zoom meetings may want to be considered when businesses go back to normal operations. Even though this may have been effective during lockdown it may be harder to implement this due to more people working back in the office. Also, as the furlough scheme is a huge cost to the government, they could consider decreasing the amount paid to 60% instead of 80%. As this could help save costs for the government and may encourage more businesses to reopen. However, it must be considered there could be a risk of a second spike which would result in the UK going into full lockdown again. Also, the UK population should be encouraged to shop with smaller local businesses, not large corporations to increase the amount of GDP as this could reduce the chance of the UK going into recession.

Limitations of the study There are many limitations when conducting research, especially if the study itself is not designed well and the topic is vague (Dudovskiy, 2018). When starting a project, you must ensure the topic is focused from the outset, so you do not lose vison of the research objectives (Dudovskiy, 2019). Also, if the sample size is not large enough to create precise data then the analysis may not be reliable (Dudovskiy, 2018). This can also lead to a bias study as it cannot represent the population (Simmons, 2018).

Also, if there are not many secondary resources that can be referred to in your literature review, this can be a limitation as this is a critical factor in a research project because previous research is the foundation for your study. Furthermore, having little experience in collecting primary data can be a limitation as the way the information is collected and applied can be inaccurate (Dudovskiy, 2018). However, no study is perfect, and all studies can have limitations, but they can be reduced if the research design and methodology are completed to a high standard (Dudovskiy, 2019).

One of the main limitations of the study was there was not many responses so the answers may be biased and may not representable, especially in the furlough questionnaire survey. These results may not give a full understanding on how effective the interventions were. So, to ensure more representative results in the future, a bigger sample would need to be collected. Also, the lack of secondary data on WFH on this scale and the furlough scheme was a limitation, so some of the results could not be compared to previous data. However, it did highlight new findings which could be used in studies in the future. Also, the sample was specific and not generalisable, so the results only applies to the UK engineering industry. Even though there were limitations, the study answered the research question and showed the effectiveness of the government interventions. Also, it clearly showed people’s perceptions on the lockdown measures which was the key focus of the study. Additionally, data collected in this study could be used in future studies.


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32 | Working Paper Series: Volume 6, Issue1 April/May 2021 33

Sustainability issues and corporate social responsibility of the cosmetic industry: A perspective from London, UK

Sara Pasquali

AbstractThis study explores sustainability issues and their influence on corporate social responsibility and business activities of London firms in the cosmetic industry. The main objectives are to explore the sustainability issues and their influence on corporate social responsibility of London firms in the cosmetic industry; identify and evaluate sustainable development factors’ impacting on cosmetics firms and their business activities; and compare and contrast the impact of firms’ corporate social responsibility activities on the success of cosmetic brands, from the perspectives of consumers in London.

Keywords:Corporate social responsibility; cosmetic brands; Consumer Behaviour; London

Acknowledgements This work would not have been possible without the support of my parents, though far apart, and of my grandparents, for whom fixing and reusing is a life philosophy. Thanks to my aunt Barbara, who conveyed to me her passion for cosmetics, and to Marianna, for her encouragement. Thank you to my supervisor, Dr Knowledge, for providing feedback throughout this project. Thanks to all my friends who participate to the survey, for their smart answers and comments. Finally, I am immensely grateful to my partner Giuseppe, to be always there to support me and never let me down.


IntroductionBeauty products and cosmetics have been used since 4000 BC (AFI, 2014).Therefore this business represents one of the oldest and the most successful industries in the world. It is continuously evolving and the industry landscape is very different from the way it used to be ten years ago, when the market was mostly dominated by corporations with established brands (Yau, 2019). Nowadays start-ups are getting ahead in the market and obtaining success. The market is changing because businesses and consumers began to prioritise sustainable development and this shift had a revolutionist impact on the cosmetic industry.

Understanding how sustainability is changing the cosmetic industry in the UK is an interesting topic for research. Sustainability issues represent real threats for the planet and sustainable business approaches may create long-term value considering environmental and social impact as a priority (Environmental Science, 2020). Cosmetics production may represent a great example of innovation for sustainable products delivery, balancing high quality and affordable price. Sustainability awareness helped small enterprises in the UK to establish new brands (Lin et al, 2018) and create niche markets with unique features, demonstrating that sustainable business models are not utopian dreams and showing the opportunities that sustainability can create in the beauty market. A survey will be conducted to assess consumers’ point of view about sustainability issues and this industry. The practical implication of this study relates to the contribution of sustainable development awareness in the cosmetic industry. It also contributes to assisting the effectiveness of firms’ decision making process regarding business activities and strategies complying with Corporate Social Responsibility (CSR). The rationale of this research project is offering fresh perspectives about sustainable development, a crucial topic, applied effectively to the industry in which I aspire to pursue my career path. Research Question – Is sustainability influencing firms’ corporate social responsibility of cosmetic industry in the UK?

This study explores sustainability issues and their influence on corporate social responsibility and business activities of London firms in the cosmetic industry. The objectives are: To explore the sustainability issues and their influence on corporate social responsibility of London firms in the cosmetic industry; To identify and evaluate sustainable development factors’ impacting on cosmetics firms and their business activities; and To compare and contrast the impact of firms’ corporate social responsibility activities on the success of cosmetic brands, from the perspectives of consumers in London.

Literature ReviewSustainability, or sustainable development, is a concept that gained prominence around 1987 with some highlights presented in “Our Common Future” report published by the United Nations (1987). The Brundtland Report emphasised for the first time the importance of studying the impact of human activities on the planet. Understanding environmental, demographic, social and economic aspects that are challenging businesses is essential for sustainable development (Lüdeke-Freund, 2014).

Sustainability approaches

Triple Bottom line

One of the key driving motivations for private firms is to operate for profit. However, organisational strategies should go beyond the motivation of profit and consider the impact of their activities on the people and the environment in which they operate, as the balance expected in the Triple Bottom Line (TBL) outcomes. The TBL extends the companies’ concern about financial impact on social and environmental aspects. TBL focuses on measuring businesses performances that create benefits for people, planet and profit (Slaper, 2011) in order to promote long-term sustainability. Firms should work on their profit, but also taking into account the need to align their strategic activities to TBL practice, which consider the social and environmental concerns and impact

as well. However, Kraaijenbrink (2019) argued that profit is not limited to money that firms earn, but it refers to the economic and societal profit. From his viewpoint, sustainable companies should not only limit harming people and the planet, but also create economic and social benefits such as generating employment and innovation.

Corporate Social Responsibility

CSR is a business model that integrates social and environmental objectives into business operations, helping companies to be socially accountable for its stakeholders and shareholders (Vasquez et al., 2017). Firms are integrated part of society and have obligations to support its welfare. They have to make profit (economic responsibility) while respecting moral rules (ethical responsibility) as well as laws (legal responsibility) to achieve the best for the community. In addition, organisations are responsible to contribute to general community’s benefit through projects and initiatives independently of their particular business and gain (philanthropic responsibility). TBL focuses on long-term sustainability through financial, social, and environmental firms’ responsibilities and (Nazim et al.,2018). CSR instead aims to enhance community and environment by companies operations, activities and initiative, extending the TBL concept of profit to all of society.

Stakeholder theory

Stakeholders theory claims that business priority is creating value for all its stakeholders, from shareholders to the communities in which it operates (Wright, 2016). If CSR focus toward society at large and extends its activities to its maximum, often at global level with initiatives that are not related to companies’ business, stakeholder theory aims to take responsibilities for its stakeholders through a set of activities that benefit the surrounding society, including employees and suppliers, which are not usually considered through CSR (Freeman and Dmytriyev, 2017). According to the theory, a firm would be successful if it produces value for all it stakeholders. Cosmetics’ supply chain takes place across the world and it is not always sustainable due to local regulations. However, firms may help their suppliers to comply with ethical and sustainable standards through technology and innovative processes, that would create value in the supply chain. Likewise creating benefits for employee will lead them to be more productive.

Circular Economy

Circular Economy is a “re-thinking” model to change the linear economy’s production approach of "take, make, dispose” (Ellen MacArthur Foundation, 2019). It aims to seek an alternative business system through reducing waste and pollution, regenerating natural systems and keeping materials and products in use for longer. Waste should be recycled, recovered in by-products or recreate resources for the environment, and businesses should design their products for those purposes. However, this concept may face challenges. Not all waste is recyclable, such as specific hazardous waste, and this can create constraints in determined sectors (Ellen MacArthur Foundation, 2015). Recycling technology limitations (Stanislaus, 2018) may compromise its achievability. Achieving both economic growth and environment impact reduction may not be easy if there is lack of government support of the model through new regulations (Van Ewijk, 2014). The role of government support is crucial for the success of waste management in the context of circular economy model. This has become a megatrend as a global economic shift and good practice with enormous social, economic and environmental benefits around the world.

UN Sustainable Development Goals Sustainable Development Goals (SDGs) agenda is a “call for action” developed by United Nations (2020) in 2015, which addresses 17 critical issues that should be settled though a global partnership by 2030. The goals’ accomplishment would lead to sustainable, fair and equal societies and economies, safeguarding people and environment. Undoubtedly, business organisations play an important role in this agenda and CSR may be a valuable tool to contribute to the goals’ achievement. The industry is changing due to sustainability; cosmetics firms are developing innovative refill packaging (Smithers, 2019) and new production operations to reduce environmental impact (Lush, 2020). Those companies’ decisions may support “Industry, innovation and infrastructure”, “Climate change”, “Sustainability and “Responsible consumption and production” goals, which in turn can facilitate other SDGs accomplishment at social level, such as “Economic growth”, leading the industry to be a pioneer in sustainable development.


Consumer behaviour

Consumer behaviour is influenced by personal, social and psychological factors. It is also motivated to satisfy different human needs. The basic needs are physiological and safety’s: individuals must accomplish those first to satisfy psychological and self-esteem needs (McLeod, 2020). Sustainability issues jeopardise the planet’s safety as well as ours. If consumers perceive that their buying behaviour may influence their safety need, their attitude will change in order to accomplish the need. According to Planned Action’ theory, consumers actions are based on a pre-existing attitude in order to receive a specific outcome (Sun, 2019). Consumers aware about planet’s threats could consider sustainability as a core value for their purchases. In this way, their attitude would lead them towards sustainable products, expecting great performance that does not negatively impact the environment.

Sustainability Issues in the UK Cosmetics Industry

A Sagenta research (2019) shows than 79% of participants think that UK cosmetic industry should be more committed to manufacture products sustainably and ethically, paying attention to products’ formulation, sourcing and packaging.

Products’ formulation

Several companies use synthetic ingredients derived from petrochemicals that generate fossil fuel combustion emissions and also damage the environment once washed away down sinks, resealing chemicals in water systems (Cosmetic Europe, 2019). Green chemistry explores the use of renewable feedstocks, for instance the waste, to create no-polluting products made by new safer chemicals (ACS, 2020), therefore preventing pollution and being a valuable tool for sustainable development. Organic cosmetics seems to reduce environmental hazards, excluding artificial chemicals in the manufacturing process (Soil Association Hazard, 2020). However, organic is often associated to natural, but natural ingredients do not necessarily mean completely sustainable (Arboine, 2019). Palm oil is a natural ingredient widely used in cosmetics and its intensive agriculture is leading to deforestation, endangering wild species and fuelling climate change (Efeca, 2019).

Materials sourcing

According to a study of Lisbon University, the formulation phase deserves the greatest attention for sustainable development (Bom et al., 2019). However, the following stage, the sourcing of raw material, requires the same focus because may involves some ethical issue for effective sustainability (CBI, 2019), such as palm oil and mica supply chain. Mica is a natural mineral used in several beauty products (European Commission, 2016). Mica mining generates child-labour in some of its top export countries. Major cosmetic corporations source mica from some countries including India, where child-labour is common and socially accepted and the government struggles to have a narrow approach to the issue (Bengsten & Paddinson, 2016).

Products packaging

Most of the cosmetic products contribute to plastic pollution, being single use plastic packaging (March, 2018). Hard plastic cases and squeezable bottles are made of different plastic’s types, which are not easy to recycle (Borunda, 2019). However, some UK cosmetic firms argued that it is the negligence of waste recycling companies that increased plastic pollution rather than packing itself (Morgan, 2019), along with the British recycling system (Niven-Phillips, 2019). The Cosmetics, Toiletry and Perfumery Association highlighted the need of new design for recyclable packaging with eco-friendly materials (Dickinson, 2019), such as biodegradable plastics (Cosmetics Europe, 2019); however, those have environmental drawbacks, therefore may increase difficulties for sustainable development (Gibbens, 2018; Krieger, 2019).

Firms’ Corporate Social Responsibility

Several firms see green cosmetics as effective CSR (CSRCosmetic, 2016). Green or sustainable cosmetics are produced from natural ingredients and renewable raw materials through environmentally-friendly processing and packaging methods (Sustainable Jungle, 2019). Sourcing sustainable materials is a mayor challenge for firms. CTPA (2018) is working for Net Positive Cosmetics Industry. The trade association brings together UK suppliers and manufacturing firms to ensure sustainable supply chains of raw materials. Other initiatives look narrowly at specific sourcing issues. Palm oil is widely used in the industry, and several UK companies joined the Roundtable Sustainable Palm oil (2020), an association that guarantee sustainable palm oil supply chain.

However, other companies decided to gradually remove palm oil from their products for a long-term sustainable approach (Turner, 2018).

Regarding mica sourcing, several UK firms are part of the Responsible Mica Initiative (2019), committed to eradicate child labour and improve working conditions in the mica mines. Nonetheless, UK brand Lush decided to use synthetic mica to not contribute to possible child-labour (Shepherd, 2018). However, this could be not a sustainable solution, because it is constructed of natural minerals.

New cosmetics packaging design is essential for this transaction, such as refillable packing (Smithers, 2019). Sustainable Cosmetics Summit of 2019 focused on the importance of circular economy in the industry. To decrease the plastic packaging impact, several firms are working on different projects and joined Ellen MacArthur Foundation’s New Plastics Economy Global Commitment (2020) that aims to create a circle economy where plastics never become waste.

MethodologyThe study uses both primary and secondary sources of data, in order to explore sustainability issues and their influence on corporate social responsibility of firms in the UK cosmetic industry. The research design is based on quantitative research methodology (Dudovskiy, 2019), which employs a questionnaire survey for data collection from participants sampled from consumers in the London beauty and cosmetic market. The questionnaire enable the researcher to collect data from a large sample, thus it is more representative compared to data collected from smaller samples using qualitative method. However, it may be difficult to target accurately the population and consequently gather appropriate data for fact-based research. Secondary qualitative research analysis aids comprehensive exploration of the topic. It investigate different types of data to highlight sustainability’s impact on the industry from different perspectives. It enables the study to improve accuracy of findings and major insight examining multiple aspects. Nevertheless, it required longer time for research and high critical analysis skills. The research adopts the deductive philosophical approach (Dudovskiy, 2019), which departs from of theories and assumptions reviewed and highlighted in the previous Chapter. This will lead to a more credible picture of the topic explaining the relationships

between sustainability matters and firms’ activities. Planet’s threats lead companies to adopt specific actions, which can be explained through sustainability theories. However, this can be limited thinking, therefore the survey will have an inductive approach (Dudovskiy, 2019) to encourage deep evaluation of primary data.

Sampling

The target sample size for this research was 100 participants. The survey will target consumers in the UK cosmetics context in the age group of 18 to 60 years. Although it produces products for both genders, the industry is mostly dominated by female consumers (Mintel, 2018). For this reason the sampling method will be a non-probability (Dudovskiy, 2019), based on the assumption that women have more beauty needs and choices than men. However, the research seeks to understand all customers’ viewpoints regarding sustainability matter. Men will also be included in the sample to participate in the survey. In this way the sampling will follow a purposive method (Dudovskiy, 2019) aligning the survey with the research scope. The sampling technique will ensure data gathering from representative sample of target population, promoting an objective research and exploring appropriately the topic.

Data collection methods

Primary data will be collected using a questionnaire, which will be designed and launched through SurveyMonkey, an online survey development software. The questions will vary with expected responses considering a range of variables and constructs aligned to the main issues of interest to this research as highlighted in the research objectives. SurveyMonkey will generate a link for the questionnaire, which will be distributed by emails to the participants. The platform offers multiple types of question structures for building the survey, which will be useful to collect different types of data. However, choosing the appropriate questions’ structure is essential for outcomes that would not misleading the research. The questionnaire enables to gather fresh information and measure consumers’ sustainability interest (Dudovskiy, 2019). It enables quick data


comparability for objective analysis. However, the survey may not underline the depth of the topic or not provide appropriate information because of participants’ low awareness or response. This could lead to interpretation constraints during data analysis. Moreover, SurveyMonkey’s free plan does not input the data into SPSS.

Data analysis

Microsoft Excel (ME) will be used to analyses primary data from a questionnaire survey. Excel provides useful statistical tools that presents data using charts from table of results, in addition to analytic functions from SurveyMonkey. The statistical tools in Excel help in data organisation, presentation and analysis (Stegeman, 2017). Excel makes it easier to generate charts for data visualisation that aid interpretation and analysis. However, Excel has some limitations in terms of functionalities when compared to Statistical Package for Social Sciences’ (SPSS) that provides more tools such as Analysis of Variance (ANOVA) and statistical tests for more rigorous statistical data analysis. However, SPSS is a more expensive software and requires a paid subscription and more time to learn and familiarise with. Any identifying information will be exclusively available to the research coordinator and only for this research. Participants’ identity will remain anonymous to the research readers. Anonymity and secure data store information

are included in Participant Information Sheet. Survey participants will be informed about research purpose, evaluation being conducted and will give Participant Consent to the research. Participation to the survey is free from coercion and participants can withdraw from the survey at any time of the research.

Findings and DiscussionThe target sample size of the survey was of 100 participants, which would provide a beneficial insight through miscellaneous perspectives to respond to the research question and accomplish research aim. The survey response was of 40%, as is shown in Table 1, namely 40 participants. The response percentage was foreseeable, although the response percentage was lower than expected (50%). However, this smaller samples could still provide great data for a deep analysis of the addressed objectives .

Most of the respondents were female (87.5%) and 12.5% were male. Regarding the age, the majority of respondents were in the ’26 - 35’ (67.5%) category, followed in order by categories of ’36-45’ (20%) and ’18-25’ (10%). The lowest percentage is represented by participants of ’46-55’ age range (2.5%). None of respondents fell into ‘55+’ category. The following figures represent the demographic variables.

Table 1. Demographic profile of participants

Demographic variables Percentage Number of participants

GenderMale 12.5% 5

Female 87.5% 35

Age

18 - 25 10% 4

26 - 35 67.5% 27

36 - 45 20% 8

46 - 55 2.5% 1

55+ 0% 0

Participants’ core criteria to purchase cosmetics products.

Figure 1 shows the main criteria followed by participants when purchasing cosmetics products. The criteria are ranked according to the following order: product’ ingredients (42.5%), brand awareness and reputation (30%), low price (20%) and packaging (2%). 2 respondents (5%) indicated other criteria.

20%

43%

3%

30%

5%

Low price Product's ingredients Packaging Brand awareness and reputation

Others

0%

10%

20%

30%

40%

50%

Figure 1. Participants’ core criteria to purchase cosmetics products.

Participants’ awareness regarding ‘sustainable/green’ cosmetics products’ définition

Figure 2 shows participants’ awareness of sustainable cosmetic product’s definition: 65% of participants (26) know what a sustainable cosmetic product is, 20% (8) are not sure and 15% (6) do not know its definition.

Figure 2. Participants’ awareness regarding ‘sustainable/green’ cosmetics products’ definition

Not aware

Aware

Not sure65%

15%

20%


Core features of sustainable cosmetic products according to participants

The following Figure 3 show the core features that make a product sustainable indicated by respondents who are aware of sustainable cosmetic product’s definition. All 26 think that ingredients must be sustainable; 20 considered the packaging as well; only 2 included ethical resourcing of materials.

Figure 3. Core features of sustainable cosmetic products

26

20

2Ethical resourcing and

sustainable production

Packaging

Sustainable use of resources (materials)

Participants

Participants’ brand choices regarding sustainable cosmetics products

The vast majority of participants, 38 (95%), would choose to purchase relatively unknown brands that offer sustainable and ethical products rather than renowned brands that propose unsustainable products, as shown in Table 2.

Table 2. Participants’ brand choices regarding sustainable cosmetics products

Variable Percentage Number of participants

Renowned brands proposing unsustainable / unethical products 5% 2

Relatively unknown brands proposing sustainable / ethical products 95% 38

Variable Percentage Participants

Purchasing free palm oil products 65% 26

Not purchasing free palm oil products 15% 6

Not sure (not playing attention to labels) 20% 8

Misunderstanding between natural and sustainable products

More than half of respondents, 55% (22 participants), assume that natural ingredients make a product sustainable, as shown in table and figure 8; 25% (10 participants) are not sure about the difference and 20% (8 participants) state that natural and sustainable are different types of ingredients.

Figure 4. Participants’ percentage that assume that natural ingredients make a product sustainable.

Disagreed

Agreed

Not sure

55%

25%

20%

Palm oil and consumers

Table 3 shows the respondents’ choices regarding palm oil products: 65% of participants prefer to purchase products containing sustainable or free-palm oil, 15% do not mind about the presence of the ingredient in cosmetic products and 20% do not pay attention to labels when purchasing.

Table 3. Participants prone to purchase sustainable or free palm oil cosmetics products


Only 4 participants who prefer sustainable or free-palm oil products know that other cosmetic product’ ingredients are derivate from palm oil, as shown in Table 4. The other 22 are not aware of this fact.

Causes of unsustainable economy

Figure 6 shows the reasons for our economy’s untenability according to 24 respondents who think that it is not sustainable: 8 of them indicated pollution as the main reason, followed in order by natural resources’ depleting (6 participants), waters disposal and firms’ business models (both indicated by 4 participants) and the excessive water consumption (2 participants).

Table 4. Preferences and Knowledge of Palm Oil Derivatives

Variable Total of participants Response

Aware about palm oil derivatives 26 4

Not aware about palm oil derivatives 26 22


Sustainable 12.5% 5

Not sustainable 60% 24

Partially 27.5% 11

Sustainability of our economy model

Table 5 show what respondents think of our economy model: for 60% (24 participants) it is not sustainable whilst 12.5% (5 participants) state that it is; 27.5% claim that it is partially sustainable.

Table 5. Participants’ opinion about the sustainability of our economy model

Figure 5. Participants’ opinion about the sustainability of our economy model

No

Yes

Partially

12.5%

60%

27.5%

Figure 6. Reasons why our economy model is not sustainable (suggested by participants)

33.3%

25.0%

16.7%

16.7%

8.3%

Waste's disposal

Businesses' models

Excessive water consumption

Natural resources' depleting

Pollution (CO2 emission, plastic, water)


Discussion of findingsNowadays, private firms’ activities are not limited to their own interests (profit), but are also extended to benefit communities, environment and society (Vasquez et al., 2017). In the cosmetic industry sustainable development can be the organizations’ key driver to consider all these aspects and deliver products that satisfy customers’ needs as well as helping communities and protecting the environment (Lüdeke-Freund, 2014).

Cosmetics consumers and sustainability

Consumers’ buying behaviour is becoming more conscious regarding sustainable development thanks to the raising of public awareness by the media, authorities and organisations (Bow, 2018). This is helping to shape consumers’ attitude regarding sustainability’s issues and drive them towards sustainable products. Sustainability’s awareness is a valuable tool for consumers decision-making that would choose to act in their best interests (Theory of Planned Action) (Sun, 2019), which are the planet’s as well. In these last years the public discussion, global sustainable initiatives and governments laws helped to ensure that planet’s safeguarding is a priority for consumers: if the Earth is not safe, neither are we. Safety needs are the basic human needs, together with physiological needs, and their fulfilment is what motivates consumers buyer behaviour (McLeod, 2020). This means that consumers should purchase seeking to satisfy not only physiological needs but also their own safety need, thus protecting the planet.

Cosmetics’ consumers may choose their products by multiple criteria. Research’s results show that product’ ingredients are the main criteria to purchase for 42.5% of participants, demonstrating that consumers pay attention to labels and look for the right ingredients that may satisfy their needs; 30% are influenced by brands reputation, whereas 20% look for low price. This data shows the companies’ role for sustainability awareness of consumers: established brands may educate consumers to sustainable products’ choices by their business and marketing activities, although considering affordable prices as well. Only 2.5% of participants choose products based on their packaging; another 2.5% are influenced by friends’ recommendations. Unexpectedly, 1 participant looks at sustainable packaging as their main criteria, showing that sustainability may wbe a priority for buying decision-making.

Sustainable cosmetics

Sustainable/green cosmetic products do not contain petrochemicals but only natural ingredients. They are obtained through sustainable and ethical processes and have an eco-friendly packaging (Sustainable Jungle, 2019). There is high awareness of sustainable cosmetic product’s definition, but it is not good enough, according to the survey, 65% of participants know what it is, 20% are not sure and 15% are not aware of the sustainable cosmetic product’s definition. All 26 participants who are aware of the definition indicated the materials’ sustainable use as core feature of sustainable products (see fig. 6), 20 included the packaging as well, but only 2 referred to ethical resourcing as an important feature. This last data demonstrates that sustainability knowledge is broad, even though the resourcing processes are not usually considered. Cosmetic supply chains may be challenging, because it takes place across the world. It must take into account environmental issues such as CO2 emissions as well as ethical practices, especially in impoverished regions (Cosmetics Europe, 2019).

Sustainable products’ formulations

Green Chemistry

The cosmetics products’ formulation phase is extremely important to build effective sustainable development in the industry (Bom et al., 2019). No synthetic ingredients into cosmetics’ formula reduces carbon footprint and the environmental hazard of resealing chemicals in water systems (Cosmetic Europe, 2019). Nevertheless, using exclusively natural resources is not feasible in the long run. Green chemistry (ACS, 2020) aims to design new safer chemicals using renewable feedstocks rather than nonrenewable in order to create non-polluting products. It seeks to prevent pollution, reduce waste and energy consumption through eco-friendly chemical process, addressing thus several SDGs (UN, 2020).

Estée Lauder (2020) rated its products’ ingredients by a ‘green’ score following the principles of green chemistry and decided to use only raw materials with the highest score. Nonetheless, it did not effectively implement green chemistry into its formulations, because it did not develop new green ingredients. For major corporations, this new chemistry may be challenging because its involves the total review of their ingredients portfolio.

Low-waste packaging

The majority of participants, 30 (75%), are willing to pay a slightly higher price for products using sustainable packages whilst 25% (10 participants) are not willing to do so, as shown in table 6.

Table 6. Willingness to pay a slightly higher price for products using low-waste packages


Willing to pay a higher price for products using low-waste packages 75% 30

Not willing to pay a higher price for products using low-waste packages 25% 10

Circular Economy awareness of consumers

Most of the Survey’s participants (85% that are 34 respondents) are not aware of “Circular Economy’ model and ‘New Plastic Economy’ initiative. Only 15%, that are 4 participants, are aware of those global initiatives.

Effectiveness of CSR

Table and figure 7 shows to what extent companies’ initiatives may be effective to enhance sustainability (CSRs) and impact positively societies according to respondents. For 42.5% of the sample (i.e., 17 participants), CSR are somewhat effective, for 25% are very effective and for another 25% are extremely effective. However, 5% believe that CSR are not so effective (2 participants) and 2.5% that correspond to 1 participant think that are not at all effective.

Figure 7. Participants’ perception of CSR effectiveness on the society

25.0% 25.0%

42.5%

5.0%2.5%

Extremely effective Somewhat effectiveVery effective Not so effective Not at all effective


potentially misleading consumers during purchase. It is therefore essential a law that clearly regulates palm oil and its derivatives’ labelling requirements of the cosmetic industry, in order to enable consumers to choose transparently and mindfully their products. It may be complex avoiding palm oil derivatives in formulations. Lush UK (2018) produces free-palm oil soaps since 2006. However, soaps’ formulation requires using of palm oil derivatives. The company decided to set its own laboratories to create a soap base free from palm oil derivatives, producing a new formulation. This shows that sustainable development is deep-rooted in Lush UK’s activities as a proper business mind-set and it is not limited to CSR. The firm’s decision is an excellent example of stakeholders theory, in which sustainability is considered as a core business principle to deliver value to its stakeholders, from green suppliers to consumers.

Ethical sourcing

Sustainable development in the cosmetics industry should focus likewise on products’ formulation, packaging and material sourcing, which involves ethical aspects, highlighted as a core feature of sustainable products from some participants (see fig. 6 above). Formulation and sourcing phases are strictly linked. An ingredient can be sustainable but its sourcing can be challenging, especially when raw materials are coming from developing countries where work conditions are poor and environmental laws are faint (CBI, 2019).

The UK cosmetics trade association CTPA (2018) launched The Net Positive Cosmetics Industry, a deep

collaboration between manufacturers and suppliers that ensure sustainable feedstock and ethical processes, such as fair working conditions. Besides to address multiple SDGs, this initiative focuses on suppliers as key stakeholders to promote sustainable sourcing at both environmental and social level. Moreover, it supports the Responsible Mica Initiative (2019), which operates to eradicate child labour in India and improve mica mining programs and the surrounding villages by 2022. The initiative aims to develop Indian regional economies that are reliant on mica mining thanks to cosmetics companies’ support, such as L’Oréal and Merck. However, the traceability of legal Indian mica mining is difficult due to governmental processes. Merck was sourcing from three mines that resulted illegal for The Indian Bureau of Mines, which is the authority that released the approval documentation for sourcing to Merck (Bengsten and Paddinson, 2016). This controversial regulations jeopardise the initiatives’ operation, therefore endangering all India’s mica supply chain. The Responsible Mica Initiative should focuses on cooperation with Indian government, because it regulations hinder the achievement of SDGs such as eradicating poverty, good health, equality, sustainability and partnership. The SDGs agenda aims “to leave no one behind” (UN, 2020), and India needs to improve its approach to do so. Lush UK uses green synthetic mica for its formulation, supplying from companies that produces mineral by green chemistry (Shepherd, 2018). The firm is very committed to create a sustainable cosmetics supply chain that can be a serious support to develop a green industry through a responsible production, as suggested by UN Sustainable Development program.

On the other hand, it can be an opportunity for startups that may base their products on green chemistry, which is still a niche feature in a broad market. For instance, London’s haircare brand Windle & Moodie produced a green-chemical line, which is designed and made in the UK, reducing its environment impact even more (Whitehouse, 2017). According to the research, 95% of participants would choose to buy products of relatively unknown brands that use sustainable/ethical ingredients, procedures, material sourcing instead of renowned brands’ products, if they were equal in price (see fig. 7). This data demonstrates that free cosmetics may be an advantage rather than a barrier for both emerging and established companies and their CSR. Consumers seems to be more aware and conscious regarding sustainability and the great potential that their actions have to contribute to it.

Misunderstanding between natural and sustainable formulation

The word ‘green’ is often associated to sustainable products made by natural raw materials. However, the use of natural ingredients is not necessarily sustainable, because they can be sourced through not sustainable processes or their massive use may harm the planet (Arboine, 2019). It is a sadly misunderstood that natural ingredients define a green product. The survey’s data showed that more than half of the participants (55%) assume that natural ingredients make a product sustainable and that only 25% know for certain that the two characteristics refer to two different products (see fig.8). This misunderstanding may lead consumers to purchase no sustainable products, such as those with high percentage of water.

Companies commitment to Sustainable Palm oil

Palm oil is a natural oil that has many beneficial properties for the skin. However, its massive use in cosmetics products and other industries led to an intensive agriculture that is increasing deforestation, climate change and endangering wildlife (Efeca, 2019). The Roundtable on Sustainable Palm Oil (RSPO) (2020) initiative brings palm oil’s producers and buyers together to guarantee a sustainable supply chain through environmental and social global standards. Agricultural and production plants must comply with this criteria to obtain Certified Sustainable Palm Oil (CSPO). This is extremely important because it takes into account several SDGs, such as Life on land, Sustainability and Climate action goals.

L’Oréal and Estée Lauder, owners of several cosmetics brands, joined RSPO (2020). However, L’Oréal group demonstrated a deeper commitment to sustainable palm oil, participating to other initiatives such as India Sustainable Palm Oil Coalition (2020), which collaborates with RSPO (2018) but also operates with local authorities to increase sustainable palm oil’s awareness within Indian industries. The group implemented palm oil initiatives to all its CSR’s subsidiaries and its effort has been awarded by CPD (2020) with A rating for fighting against deforestation. CPD (2020) supports companies and institutions to disclosure and manage their environmental impact. The organisation evaluates and the companies’ commitment towards climate change, deforestation and water management. L’Oréal group (2020) gained a triple A rating since 2016, the highest feasible achievement, proving to be a pioneer of effective sustainable development and to play a leader role for SDGs.

Palm oil use has been widely discussed in the last few years, and consumers are starting to be concerned about its sustainable use in cosmetics’ formulations (Turner, 2018). According to the study, 55% of participants are prone to purchase sustainable or free-palm oil products, whereas 15% do not consider the matter when purchasing and 20% do not pay enough attention to the labels (see fig. 9). This data shows that awareness about sustainability issues of palm oil is concrete, although some people are still not enough concerned about the environmental impact of its use. Institutions, authorities and companies should cooperate for palm oil’s transparency in the cosmetic industry. In 2014 the EU introduced the ‘Food Information to Consumers’ law, which ensures that any food product containing palm oil must be labelled as such, and not generically as vegetable oil. A similar law for cosmetic items could engage other organisations to source only sustainable palm oil and assist the achievement of SDGs agenda.

Palm Oil’s derivatives

In the cosmetic industry, one of the palm oil’s controversies is that many other ingredients derive from it (Hunt, 2019). Being derived from palm oil mixed with other ingredients, it may be hard to certificate those derivatives as sustainable (Hunt, 2019). Furthermore, people are not very aware of palm-oil derivatives and their use: of 26 participants who purchase sustainable or free-palm oil products, only 4 know that other cosmetic ingredients derivate from it. Those derivatives are listed on products’ labels but do not refer to palm oil (Turner, 2018),


Circular Economy Sustainability issues are related to our economy production model

The current linear economy production represents an ‘obstacle’ for effective sustainable development. According to 60% of research’ participants our economy model is not sustainable, and 28% think it is partially sustainable. Participants argued different reasons for their negative answers pollution related to Co2 emission, plastic and water, natural resources’ depleting, waste disposal, excessive water consumption and businesses’ models. This last reason is very interesting; some participants considerer business activities not aligned to sustainable needs. This factor may influence negatively consumers attitude, because firms should look at sustainability as a priority in order to raise consumers’ awareness towards sustainable businesses/products. Nevertheless, the wide range of participants’ reasons show consumers’ interest and consciousness regarding the sustainability’s factors that threaten the planet’s wellness, highlighting also several goals of SDGs agenda. It is clear for consumers that the net effects of our linear economy production is to deplete the planet's resources, to generate too much waste and to pollute the environment; it is not sustainable in the long-term.

Sustainable packaging and New Plastic Economy as CSR

Eco-friendly packaging is another key element for CSR’s firms of UK cosmetic industry.

Three quarter of survey’s participants are willing to pay a slightly higher price for products using low-waste packages, confirming the data of Ipsos MORI’s study (2019) (50% of participants willing to pay more for eco-friendly packaging). This data shows plastic pollution’s high concern of British consumers, which has not been overlooked by cosmetics companies. The European Sustainable Cosmetics Summit (2019) claimed the Circular Economy’ value as an alternative to our economy model. It aims to lead to a new economy system with zero waste, due to reusing, reducing and recycled. Cosmetics companies such as Burberry, L’Oréal and Estée Lauder decided to enforce CE in their CSR joining the New Plastic Economy, a global commitment focused on a regenerative approach of plastic (Ellen MacArthur Foundation, 2018). It aims to eliminate unnecessary and problematic plastic, deliver 100% reusable, recyclable, or compostable plastic packaging and

to reuse and recycle all plastic packaging produced by 2025 (Jory et al., 2019).This commitment brings several organisations and governments together, representing a feasible long term solution for cosmetics’ sustainable single-use packaging.

Burberry’s (2019) cosmetic packaging are made from recycled coffee cups (40% of total packaging material); L’Oréal (2020) reduced the weight of its bottles and cups and develop the first carton-based cosmetic tube partnered with Albéa. Moreover, L’Oréal founded the Sustainable Packaging Initiative for Cosmetics (SPICE) (2020), which bring together cosmetic organisations in order to develop sustainable packaging innovation. This initiative can be seen as a Triple Bottom Line’s example, because it aligns profit-people-planet’s needs (Kraaijenbrink, 2019): it looks for sustainable solutions and enhances communication with customers to increase environmental awareness and products’ transparency. SPICE may be cosmetic firms’ means to achieve the New Plastic Economy commitment, that could lead to a drastic beneficial change of our society’s philosophy.

Lack of awareness amongst consumers

The firms’ commitment is not enough if the consumers awareness of the initiative is low. Only 15% of the survey’s participants know what CE and New Plastic economy are (see fig.14). This data may be worrying, because low awareness about those initiatives could refrain their success. CE models could be effective only due to cooperation among firms, governments and consumers. The UK government should promote CE through relevant regulations and improving recycling system (Niven-Phillips, 2019), and organisations’ must design new eco-friendly packaging (Cosmetics Europe, 2019) and participate effectively to sustainable initiatives. Together, they must raise consumers’ awareness about this model, and facilitate its implementation for a lasting outcome. Dickinson (2019) stated that biodegradable plastics could be helpful for cosmetic products’ packaging; however those require specific processes to not be environmentally harmful (Krieger, 2019). Morgan (2019) argued that British recycling system allows waste recycling companies to be negligent regarding plastics difficult to recycle, increasing plastic pollution. This may annihilate firms’ effort to deliver a sustainable packaging as well as consumers engagement to sustainability challenges, delaying an effective sustainable development of cosmetic industry.

Refillable products

Different companies decided to implement direct and innovative sustainable packaging, launching refillable beauty products. Olay is selling a moisturizer in a pod made of recycled paper that can be placed into a ‘old’ container (Smithers, 2019), Lush (2020) produced a make-up line as “naked” as possible, offering cases that can be refilled, including lipsticks. The success of refillable products depends on the consumers behaviour. For items with higher purchase rate, such as hand soap and shampoo, the challenge is harder, because it requires a deep consumer attitude towards eco-products. Body shop launched a shower gel’s refill station in one of its London’s shops, and it motivates customers to use bottles from any brands. It also adopted a packaging return scheme: for five empty containers (any brands’), customer receive a £5 voucher (Smithers, 2019). Those types of initiatives can seriously switch consumers attitude regarding products’ sustainable alternatives.

Consumers’ perception of CSR’s effectiveness

Sustainability is the key driver of several companies CSR, not only in the cosmetic industry, but also consumers recognise the results of organisations’ commitments. The research shows that companies have a positive impact on society through their CSR for more than 90% of participants. Specifically, CSR are somewhat effective for 42.5%, very effective for 25% and extremely effective for 25% of participants. Conversely, 7.5% think that CSR do not positively impact the society. Overall, it is possible to assume that consumers are aware of companies’ engagement regarding societies’ welfare. Sustainability is about safeguarding the planet by protecting the environment and wildlife but also enhancing and supporting communities to develop a greener society.


Conclusions Cosmetics firms operating in the UK consider sustainability as a core value for their CSRs, addressing multiple sustainable matters and facilitating the achievement of SDGs. Companies play a key role in sustainable development: through their business operations and CSR they can have a sustainable impact on all stakeholders’ activities and also educate consumers regarding sustainability issues and further actions to mitigate them. Partnerships and collaborations are key drivers for an effective sustainable development in the industry; firms, institutions and consumers must cooperate because a negligence of one may obliterate the effort and commitment of others. The multiple global and UK initiatives to improve cosmetics’ formulation, packaging and ethical sourcing demonstrate that cooperation is important for the success of CSR, as highlighted by UN.

Sustainability is not simply a goal to achieve, but a manner to set-up efficient activities and actions to improve global welfare. Firms developed their CSR on sustainability challenges, although through different approaches. The common thread that binds CSR is developing sourcing, manufacturing and business processes that produce real sustainable outcomes, and not only sustainable products.

Firms and consumers have the same relevance for effective sustainability, as well as for achieving SDGs. Again, ‘collaboration’ between consumers and firms is important to implement sustainability from sourcing and manufacturing to final products. Consumers’ sustainability awareness creates demand for sustainable products and firms have to adapt to keep their businesses growing. On the other hand, companies have to raise awareness regarding their sustainable CSR in order to lead consumers to choose sustainable products. They both contribute to increase each other’s engagement.

The research demonstrates that consumers are widely aware about sustainability challenges, taking those into account when purchasing. However, their knowledge seems limited to the issues and their consequences overall, and not on feasible solutions such as the New Plastic Economy. Explaining and evaluate firms’ CSR on their annual reports is not enough. Companies should be more committed to promote a Circular Economy that can be successful only if consumers are willing to change their attitude. Nevertheless, institutions should facilitate CSR implementation because a call for action to consumers is appropriate only when authorities collaborate and provide suitable tools. Specifically, the UK government should review recycling regulations that allow recycling companies to discard difficult plastics in order to facilitate innovative packaging, and implement new standards that would regulate the use of palm-oil derivatives and their sustainability.

Limitations and further researchBeing the first experience of collecting primary data, the chosen research method could be flawed and therefore could not provide the right data for research. Also, the sample size could be another limitation. It could be challenging gathering data if the participation to the survey is low, therefore it may not highlight the relationships between sustainability trends and the cosmetic industry. Moreover, the Covid19 pandemic could ulteriorly threaten the survey response because people may not consider it relevant to the global situation. The non-probability sampling technique could not represent the real trends of the UK population regarding sustainability. However, a larger sample size using probability sampling technique (Dudovskiy, 2019) would require greater demand and time.

Data collection was the main limitation of the research. The data collection method could have some shortcomings because of the very limited experience in collecting quantitative data. Furthermore, the sample size (40 participants) is relatively small and could not be a truthful representation of consumers attitude and awareness. Further research could expand the sample size and also could include more male consumers, to analyse deeply their attitude toward cosmetics products. Sustainability in the cosmetic industry is a broad area to discuss, because is not restricted to firms’ CSR. There are several aspects to consider, such as business model, infrastructure energy consumption and employees working conditions. Further study could evaluate sustainability aspects of cosmetics industry analysing firms operations and their effective sustainable development. However, this type of research would benefit only though qualitative method of collecting data, which require interviews that could evaluate firms from an internal viewpoints. Products’ formulation, sourcing and packaging are strictly linked to CSR because they can be very effective thanks to consumers support (purchasing). Further research could broaden those aspects separately, in order to investigate thoroughly and engage consumers in regards to sustainable development solutions and not only raise awareness regarding sustainability issues.


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Keywords:Consumer Perception; Corporate Social Responsibility; UK high-street banks

Corporate Social-responsibility and the profitability of UK High-street Banks

Adekunle Sasore

AbstractThe study consists of six sections: Section one contains the definition of CSR; explains who stakeholders are; what constitute a high-street bank; research question; aim and objectives; and why it is important for UK high-street banks to be Socially-responsible. Section two covered literature-review and used applicable theories to support four presented hypothesis. Section three explained the method and methodology of study. Section four evaluated the research findings after analysis in order to argue whether any of the four hypotheses become theoretical contribution(s) and what the implications are. Fifth section is recommendations and conclusion. And final section is a reflection of the study. The research question was which one of the four stakeholders (consumers, investors, government, or UK high-street banks) possesses the influence to make UK high-street banks behave in a Socially-responsible manner. The study aim investigated which one of the four stakeholder groups in research question possesses the influence to make UK high-street banks behave in a Socially-responsible manner. The objectives of the study are to: analyse consumers’ perceptions of CSR within UK high-street banks; Identify and examine CSR trends that lead to trust in brand within UK high-street banks looking at Lloyds, Barclays, and HSBC Banks. To evaluate the most significant CSR measurable within UK high-street banks looking at the impact of job-satisfaction on future organisational values. To identify and examine government laws, policies, and regulations to establish if they are effective. To analyse all data collected to establish which particular characteristics are connected with the study factors; so as to settle on study aim.


IntroductionMalik and Kanwal (2018) described CSR as management of business performance and social activities to attain positive societal impacts. Concurring, Esmaeilpour and Barjoei (2016) defined CSR as a process where organisations aspire towards aligning organisational values and culture with that of its stakeholders. However, CSR is constantly changing owing to continuous relationship-shifts between organisations and the society they serve (Carroll, 1999).

Relating CSR to banking, KadlubeNa (2015) explained that the concept of CSR suggests organisations voluntarily focus on relationships with environment and human resources when conducting business. And although CSR is costly, it can improve banks’ credibility considering consumers now expect more than just competitive prices by demanding responsible societal behaviour being echoed in goods and services; and having concerns that current CSR issues can develop into future financial issues (Cheung and Mak, 2010). Subsequently, Shareholders look for financial performance that augments CSR considerations making knowledge of this topic priceless to management and stakeholders (ibid). CSR largely proposes organisations should acknowledge their responsibilities past shareholders and focus on advancing stakeholders welfare (Kapsis, 2019).

Stakeholders include: shareholders, community, consumers, government, employees, organisations, non government organisations, suppliers, and more (Sener et al. 2016). The study focuses on investors, government, consumers, and UK high-street banks. Banks are challengeable but could be countered based on defined as: anyone who has an influencing-impact on or can be impacted by an organisation’s services or services outcome (Bourne, 2011); (Van Niekerk and Getz, 2016); (Sener et al., 2016). Smartsheet.com (2020) citation of Edward Freeman strengthened this counter-argument by saying that an organisation’s stakeholders are groups an organisation needs their support to survive; which includes the organisation itself. Using only four groups for the study could be referred to by some as a limitation but the scope of the study did play a factor in this restriction.

What makes CSR an interesting topic is that governments agree that standards are not universal and set laws are not always clear measurable ones (Kapsis, 2019). Also, Literature-review on topic exposed gaps in existing knowledge (Freda, 2017) one being on stakeholders’ perceptions of CSR in banking sector and another is accountability (Kapsis, 2019).

The study makes a constructive-contribution using both quantitative analysis (survey questionnaire) and qualitative analysis (literature-review of case studies, reports, articles, and journals) to derive four hypothesis. These four hypothesis were then further analyzed to see if new theories where produced and or if theory was in-line with existing theories.

Relatively this study like most is construed in relation to limitations like: measuring of stakeholders’ perceptions accurately through survey and data collected from literature-reviews. Use of only UK high-street banks in study excluded challenger banks albeit in 2015 they had 31.5% increase in total-volume of lending while biggest five high-street banks dropped 4.9% same year (Lu, 2017). Another is due to restricting study to only three banks and using only participants with UK high-street banks-accounts; which was not a sufficient interpretation of the entire UK high-street banking mix. This may or may not affect the outcome of the study; if for example respondent(s) lied about having a UK high-street bank account when they didn’t.

Also is respondent’s biased potential due to social appeals or tendency to exaggerate ones evaluation too positively (Jakobsen and Jensen, 2015). Roles personal experiences and emotions plays in shaping study outcomes is another limitation and care was taken to minimize any personal biased-opinions preventing threats to study quality (Dupuis, 1999). Another limitation is risk that survey respondents may not have represented true population since links to survey were placed on online survey forum groups generally used by a younger population. Notwithstanding, efforts was inaugurated while making decisions to ensure limitations had minimal effects on overall study outcome.

The research question was which one of the four stakeholders (consumers, investors, government, or UK high-street banks) possesses the influence to make UK high-street banks behave in a Socially-responsible manner. The study aim investigated which one of the four stakeholder groups in research question possesses the influence to make UK high-street banks behave in a Socially-responsible manner. The objectives of the study are to:

Analyse consumers’ perceptions of CSR within UK high-street banks.

Identify and examine CSR trends that lead to trust in brand within UK high-street banks looking at Lloyds, Barclays, and HSBC Banks.

To evaluate the most significant CSR measurable within UK high-street banks looking at the impact of job-satisfaction on future organisational values.

To identify and examine government laws, policies, and regulations to establish if they are effective.

To analyse all data collected to establish which particular characteristics are connected with the study factors; so as to settle on study aim.

The aftermath of the 2008 crisis was regulation that allowed new entrants into the UK banking sector; more so made possible by financial technology (Fintech) a financial application (apps) used for online payment and lending (Lu, L, 2017).This challenger banks’ operational objective to encourage competition in consumers’ interest challenges the blue ocean market enjoyed by mainstream century old banks (ibid). They don’t have existing corporate-reputations to contend with and offer niche products in a market saturated with same products; helping make banking easier by offering their services online through apps integrated onto consumers’ Smartphones (Mogaji & Danbury, 2017). Examples include OneSavings, Tandem, Aldermore, Monzo, Atom, Starling, and Shawbrook (Lu, 2018), while largest UK high-street banks include Lloyds Group, Royal Bank of Scotland, HSBC, and Barclays. Although there are four main distinctions between high-street and challenger banks most noticeable is that most challenger banks don’t have high-street presence.


Literature ReviewBorrowing from Freda (2017) construct, this section aimed at empirically analyzing existing literatures and theories in-order to develop theoretical frameworks needed to facilitate the study and produce findings that progresses present knowledge. The Economist cited the IMF as saying that uncertainty (society’s inability to forecast probability of events occurrence) was responsible for the dramatic implosion in demand after 2008 crisis as firms postpone spending on projects and waited until things picked-up (Bloom, 2014). However, today’s high-uncertainty is caused by simultaneous global events some of which have been in progress over long periods. Events include: America versus China trade-wars which might lead into De-globalization as nation-states might focus less on international-trade (Freund et al. 2018); climate change; slowdown in global-growth traceable to unpredictable changes in current VUCA economies (Bennett & Lemoine, 2014); and slow-recovery from a stagnated UK economy amidst Brexit chaos, currently been devastated by Covid-19 epidemic which started in China and now spread all over the entire-globe; leading to entire societies worldwide been placed under lock-downs (The Irish Times, 2020).

Vickers (2016) alluding that UK’s financial stability relies on UK banking capital-equity does suggest that there has to be mutualism between government, society, and the banks; for the UK to come out of these trying times unshaken. And a chance for banks to show how Socially-responsible they are. Banks like: Barclays, Natwest, and Santander are said to be doing so, scrapping shareholders dividend payments and retaining moneys needed during the crisis (The BBC, 2020). To relieve effect of financial repayments, many banks are refurbishing customer lending by waiving interest (Jones, 2020). And some have also pledged billions of pounds of their own money to helping vulnerable SMEs (Newman, 2020).

These should boost customer-confidence, however, Nuttall (2013) and Mogaji & Danbury (2017) both argued that traditional CSR has failed UK banks due to eroded credibility and confidence after 2008 crisis. Examples of causes of eroding include: putting customers’ money at risk; PPI miss-selling scandal; loan prices fixing; extensive market manipulation like the LIBOR scandal; bad internal cultures; and violation of regulations like serial money-laundering by Barclays (Kapsis, 2019). Mogaji & Danbury (2017) went on further that these failures were embedded in the cultures of individual banks; meaning regulators can’t treat this with a sector approach. And although regulators have worked very hard for years, the banking sector still holds a reputation as the least trusted in the UK and abroad because past events has made banks questionable (ibid). Freda (2017) argued that influences from society can force organisations to use CSR as symbol of compliance yet theories showed important understanding pressure plays on organisations to carryout CSR practices. And albeit that increasing concerns by corporate-stakeholders regarding what contributions organisation can and should make to the society (Skarmeas and Leonidou, 2013) are not helping matters. Request worldwide for better accountability, responsibility, and transparency has led to better standards diversity, codes of conduct, norms, and governance structures that molds and constrains organisations (Levy and Kaplan, 2008).

Four theories were preferred for the study aim: Diffusion of self-regulation, Attribution Theory, Stakeholder Theory, and Human Resource Management (HRM) Theory. Justification being literature-review did not reveal a one-fits-all theory robust enough (presenting enough arguments) to reflect the scope of the study (four hypotheses offered by study). Also, use of one theory will lead to a bottle-neck as all hypotheses try to create conceptual-frameworks by drawing insights from real-world CSR implementation practices (Freda, 2017).

Attribution Theory:

Today’s consumers’ are asking what societal contributions organisations make and why they embrace CSR and still act irresponsibly because it is difficult to differentiate irresponsible organisation s from socially conscious ones (Skarmeas and Leonidou, 2013). Also, CSR complexity may make consumers assume many conceivable outcomes for corporate social engagement through motives like: Strategic-driven motive (being cause focused while still accomplishing business objects); egoistic-driven motive (exploiting rather than supportive); values-driven motive (employing CSR activities solely for principled societal ideology and moral standards); and stakeholder-driven motive (using CSR to please different stakeholders expectations) (Skarmeas and Leonidou, 2013).

Epitomizing this, Perez and Del Bosque (2015) said that consumers have a direct relationship between perceived organisation-motivations and organisation-credibility; giving more credibility and positive CSR image to their bank when they believe that bank is practicing selfless CSR initiatives motivated towards being extrinsic or ethical. The opposite occurs when they perceive their bank as egoist with societal activities motivated intrinsically and not beneficial to stakeholders; showing that bank activities are simultaneously related to their consumers’ perceptions (ibid).

In addition, consumers now demand best practices and pay detailed attention to their bank’s activities (Perez and Del Bosque, 2015). Consequently, one could explicitly posit that:

H1 Consumers can shape their bank’s CSR behaviour through demanding for brand credibility and accountability.

The theory of Diffusion of self-regulation:

Self-regulation theory is used to examine conditions vital for protecting successful operations of CSR practices (Freda, 2017). However, the potential of CSR tools (like self-regulating tools used to efficiently control profit-organisations) are being disputed by some because it is believed that organisations will place own interest first when taking-up these measures since they are unsure if harsher operational rules gives them any advantages over rivals; a reason why organisation try reducing obligations derived from adopting CSR self-regulatory tools; conforming only to necessities forced on them (ibid).

Other scholars are in synergy with Freda and others but through a different approach; concentrating on the implementation and auditing mechanisms (ibid). They believe weak auditing may lead to organisations becoming opportunistic; cunningly serving their own interest cause audit failure. Example of such breaches are Nike and Dole, two companies that obtained ICMS certification in labour rights even though they both had very bad labour practice histories (Iatridis, 2011). Nevertheless, Informal mechanisms are said to control this organisational behaviours; even when there is no proper laws, CSR self-regulatory tools are forcefully obeyed due to certain conditions (Freda, 2017). This shows that sanctions are not needed for self-regulatory measures to be practiced and it makes it easy to reveal organisations that refuse to self-regulate to stakeholders (ibid). This then shows that:

H2 UK high-street banks can be trusted to self-regulate so as to be accountable for their own social responsibilities.


Human Resource Management (HRM) Theory:

HRM researchers have focused on bettering organisational-performance through improved people management (Truss et al., 2013). HRM systems is perceived to lead to better engagement by elevating job-satisfaction and commitment levels leading to fewer off-days, lesser intention to quit, enhanced job-performance, and improved citizenship behaviours.

However, main confront has been finding mechanism(s) through which HRM attains better engagement (positive HRM) on both organisational and individual levels (ibid) since traditionally employees were seen as raw-material rather than as value increasing assets Oni (2014). And HRM is perceived as expensive causing lower profitability which eventually depreciates stocks coupled with stock-market’s short-term earnings focus punishes the heavy investors in human capital resource (Vithana et al., 2018). Nevertheless, job-satisfaction (intangible) a result of positive HRM generates improved productivity which leads to higher earnings announcement (tangible) (Faleye and Trahan, 2011); (Edmans, 2012). In agreement, the question if investors knowing about this link between good HRM practices leading to higher future share returns (Oni, 2014) could then be used to hypothesize that:

H3 CSR measurable like job-satisfaction leads to better company performance (profit) which can help investors pick only banks that invest in being Socially- responsible; which in-turn forces other banks to become Socially-responsible.

Stakeholder Theory:

Parmar et al. (2010) cited Freeman (1984) as suggesting executives’ responsibility are creating value, allocations to stakeholders, managing. And grasping an organisation is to know how all stakeholders mutually cooperate to create and trade this value. Also quoting Freeman (1984), Perez and Del Bosque (2015) suggested stakeholder theory as a bisection of key target groups (stakeholders) who generally benefit from organisation’s CSR activities. Stakeholder theory assumes that organisational survival is dependent on proper management of relationship with key stakeholders; focusing on which groups is paramount in-order to get management attention (Sener et al., 2016). Formerly, banks only remembered stakeholders’ interest when in trouble but there have been improvements in recent years by carrying stakeholders along in an attempt to fulfill their Social-responsibility (Perez and Del Bosque, 2015). The government is a critical stakeholder that sets policies, regulations, and law and one of key players that has the power to mount pressure on an organisation to meet demands like corporate action accountability and transparency (Seow et al., 2006). Hence, government having the power to engage UK high-street banks on aforementioned capacities can be used to deduce a hypothesis that:

H4 Government can holistically use regulatory powers to make sure that UK high-street banks are Socially-responsible.

MethodologyA deductive-approach was used to develop hypothesis using existing theories and tested to add or disagree with existing knowledge (Soiferman, 2010); (Gale et al., 2013). Two research methods were used: quantitative survey (online questionnaire) of UK high-street bank customers to gather valuable data and use of grounded theory to analyse existing literature on three UK high-street banks, government policies, and investor processes; in-order to derive four hypotheses.

Google Forms was used to conduct a 23 questions questionnaire survey. An initial sampling was carried out depending on probability theory to reduce sampling error by using close contacts ‘to study a portion of the sample population and results applied to sample population (Thompson, 1999). However, there was a limitation because no true sample is able to fully represent the population represented (ibid). Random participants over 18 years old with UK high-street bank accounts were able to access questionnaire via links to Google forms placed on a few social media forum groups on Facebook and via Watsap and email. Response validation rules were set on Google forms for participants to follow so as to make sure that all questions were answered. Also, to stop respondents participating in survey multiple times, the option to ‘limit to one response’ was clicked while creating the survey on Google forms.

To protect participants’ identity, no respondent personal information was requested and ‘survey was carried out with true anonymity meaning that data verification is not possible and so research could not be linked back to respondents (Rumbold and Pierscionek, 2017)’. Collected data was stored in a single computer with constantly updated security. And respondents consent was requested before being allowed to take-part in survey by clicking on the agreed to consent button. Albeit that ‘one of the limitations of online surveys is low response rate due to time limitations (Fan and Yan, 2010)’, a total of 101 respondents successfully participated in the 2 weeks survey. Data was exported onto Microsoft Excel to see if Google form’s analysis in the form of charts could be improved upon. The findings of the survey were then examined to build on the evidence presented to see whether there was any supporting evidence to confirm hypothesis H1 and H4.

For easy and simplicity, convenience sampling was planned for H2toH4. Nonetheless, its many limitations (Etikan et al., 2016) meant that theoretical sampling was selected; which stays a key component of grounded theory which is preferred when no predetermined theory is selected to allow for theory formation to sprout from data collected (McCrae and Purssell, 2016). Sampling was done, testing the grounds for data to collect and where to find data and although theoretical sampling was used for the initial analytic assembly, it continued to be used all through research process (ibid). One limitation of ground theory is that new theories are developed from data analyzed; setting a fixed outcome that emerged explanations are knowledge used to create new theories (Astalin, 2013). Nevertheless, data for H2toH4 was obtained from literature-reviews, case studies, reports, articles, and journals and a concept known as constant comparative analysis was used to examine and transliterate for content immediately after data collection (ibid).


Findings

Research Analysis and Findings for H1:

As service providers, banks’ success hinges on consumers perceived-quality of service which has increased since 2008 crisis (Mbama and Ezepue, 2018). Question raised in this section is whether consumers can shape their bank’s CSR behaviour.

Figure 1. Respondents reply when asked if high cost means that banks are greenwashing

Maybe

No

Maybe

Yes

No

14.9%

42.6%42.6%

42.6% of respondents said yes when asked if banks were saying yes to CSR but not doing so (greenwashing) (Wu and Shen, 2013). With minimum A Levels education for respondents, 49.5% still did not know what CSR was. This was thought to be because 70.3% of respondents were female or because more than half (58.4%) of respondents were aged 18-24,

However, figure 1 below tells otherwise when age was plotted against awareness of CSR and gender; graph shows that all age groups of respondents had a high level of not being aware of CSR; confirming that about half of consumers are not aware of their strength in influencing banks to be Socially-responsible by only banking with banks that are.

Figure 2. Respondent age profiles against their none-awareness of the term CSR

Male

0%

40%

20%

60%

10%

50%

30%

70%

80%

Male Male Male

25-40

Female Female Female Female

18-24 41-64 65+

About 56.4% said no to banking with banks with proven poor CSR record construed as consumers caring about their banks being CSR responsible. A point strongly supported when 42.6% of respondents said yes to banking with same banks if they gave large sums of money back to society to correct the CSR issues; showing that consumers wanting banks to take responsibility of their actions in the form a compensations. Conversely, 43.6% of respondents agreed that CSR reputation was important to where they purchased product from but not important when actually buying since 67.3% said price came first and 78.2% said customer service and only 19.8% clicked on CSR. This could be perceived as consumers

knowing what to do but having to go for what is beneficial to them.

However, 52.5% choosing banks are most Socially-responsible and should have CSR programs, 90.1% saying banks should give back to society; and 64.4% trusting their banks enough to say positive things and recommending to friends and family; could be said to suggest that consumers want a CSR responsible bank and only banking with those that are.


of 2012 (LIBOR manipulation scandal) (Rayburn and Cowden, 2013) and was the biggest seller of the PPI scandal of the late 90s that weren’t needed but promised to protect consumer loans and were often worthless since they failed to payout (Farrell, 2019).

Lloyd’s reply to the negative comments is the establishment of a responsible Business Committee to supports the supervision of the Board on Lloyd’s performance as a responsible organisation (Lloyds Banking Group, 2018). It also embedded responsible-business into its trainings, policies, and processes; and made sure that values-based culture is used to support employees at making the right decisions (ibid). This has activities impacting the organisation’s behaviour with claims on its website of: dealing with social-disadvantage, supporting vulnerable consumer, lending sensibly, business support, safe data keeping, inclusion, sustainability, capability building, and diversity (ibid). However with more scandals constantly surfacing, like that at their Reading branch that bankrupted over 200 small businesses (Business Matters, 2020); it is easy to conclude that Lloyds still has a long way to go.

Barclays Bank Plc

In an uncertain-world where taking risks has become rewarding for banks, Barclays bank’s three centuries experience becomes its greatest asset (McCauley, 2018) using value innovation (technology) as foundation for its Blue ocean, (Lui, A, 2015). Like most major banks, Barclays was affected by the 2008 crisis; followed by a whirlpool of allegations like: the billions dollars fined for its involvement in the LIBOR scandal of 2012 and the condemnation it got in 2014 after paying out £2.4bn in bonuses in spite of huge profit losses and thousands of job cuts (Lui, A, 2015 and Treanor, 2014). The FSA investigation showed that Barclay employees were deceitful, scheming, and dishonest to the extent of also influencing the EURIBOR rates (EU equivalent of LIBOR) of other banks as a result of greed (Lui, 2015). Barclays rotten culture was unsuccessful exposed by social auditors showing the reality of the limitations of self-regulating guarantees (Confino, 2012) and albeit that Barclays misconduct was severe over many years, the question raised was why wasn’t alarms raised by anyone at Barclays (Lui, 2015). Most concerning is that John McFarlane (Group Chairman) and Jes Staley (Group CEO) in their 2018 Annual report suggested business as usual at Barclays with little mention of how they tackled their past CSR issues but instead mentioned

by John McFarlane was the cost to fix this (over £17 billion) (Barclays, 2018). This could be seen as Barclays paying its way out of the entire affairs which might further suggest that no lessons were learnt and a possibility for recur.

HSBC

HSBC founded in Hong Kong in 1865 (HSBC, 2020) eroded the crisis better than the four other UK banks involved in the crisis (Lui, 2015). Its winning formula concentrated on new markets in China, Latin America, Asia-Pacific countries, and Hong Kong and protected itself from externalities by using diversity split of equity and a loyal investor-base (ibid). HSBC was not criticized by its loyal investors due to its strong policy, performance, and governance and instead of government bail-outs like the others; it was able to raise the £12.5 billion needed to improve its capital position (ibid). Stakeholders are offered high-priority and its annual report is more informative than other Lui (2015); declaring that their CSR has a correct balance between their organisation, society and the environment (Wu and Shen, 2013).

HSBC could then be proposed as proof that UK high-street banks can self-regulate. Affirmation of this is the case between HSBC and USA department of justice (DOJ) in 2012 for failing to stop $881 million in drug proceeds being laundered by Mexican drug cartels in 2008 (White, 2017). HSBC agreed settlement of $1.9 billion in 2012 and pledged five years sanction deal to allow it improve its anti-money laundering controls which it completed in 2017 allowing DOJ file motion for dismissal of charges; showing that HSBC allowed the deferred prosecution agreement to work in the planned manner (ibid).

HSBC’s case has shown that high-street banks in the UK can be trusted to self-regulate and be accountable for their social responsibilities. HSBC case also revealed that the right management, culture, and willingness to take responsibility are solution to succeeding. HSBC was cooperative when mistakes were realized, acknowledged failures and was quick to execute changes to improve (Lui, 2015). This in alignment with Self-regulation theory does answer H2 by demonstrating that self-regulating could be used by UK high-street banks to assist in becoming social responsible.

Figure 3 Responses to the perception of bank CSR obligations to its fullest ability

I am not sure / I don't know

They seem to be using CSR as a marketing strategy (i.e., greenwashing)

They do so only when there is no conflict with profitability

I believe they are not trying to the best of their ability

I believe my bank performs its CSR obligations to the best they can

They say they are but in reality their profit will always come first

53.6%

13.9%

15.8%

9.9%

Also when asked about banks supporting companies that gave backhander to and polluted third world country (Gilblom, 2018); 80.2% saying no might be seen as the majority of respondents not been able to associate their banks with such wrong doings. Nevertheless, this question could also be seen as miss-leading or more of a negative opinion.

This question addressed H1 because few respondents, who said yes, also said this was why they only banked with banks with track records of being CSR responsible. This shows that consumers possess purchasing powers that may serve as a form of Social-responsibility control over banks by implementing buying votes on Social-responsibility matters (Smith, 2007). And boycotting those banks that are not Socially-responsible, forces all other banks to raise their standards or lose customers. This suggests that consumers of UK high-street banks have the power of choice to force banks to be CSR responsible.

Smith (2007) cited that six determinants are responsible in boycott participation: participants’ values, consumers’ awareness, social pressure, boycott steward credibility, participation cost, and outlook towards the consistency of boycott-goals. Expectancy theory is used to elucidate why consumers are motivated to take-part in a boycott (Barakat and Moussa, 2017).


Although the 2008 crisis wake led to an overhaul of banking sector by governments through stringent regulations and laws like ‘self-regulation initiative anticipated to encourage banks to self-monitor without enforcement (De Jong et al., 2005)’; today banks are still seen by some as insatiable, unethical, self-serving, and dangerous (Mogaji and Danbury, 2017). This section raises the question whether UK high-street banks can be trusted to self-regulate so as to be accountable for their own social responsibilities? To answer this question, data concerning three main key UK high-street banks (Lloyds Bank, HSBC, and Barclays) was gathered from literature-reviews of case studies, reports, articles, and journals.

Lloyds Bank

With about 26 million customers, Lloyds Banking Group is UK’s biggest financial services retail provider (Lloyds Banking Group, 2018) with fingers said to be in lots of pies and paying literally nothing for its large numbers of current accounts money that it borrow out (Moore, 2019). However, Lloyds is tinted with scandals as far as 1974 when they suffered the biggest ever loss in British history to-date (Schenk, 2017). And a more resent involvement in: the premeditated manipulation of the London interbank offered rate



Social-responsibility doesn’t cost profit but supports it; meaning that there is implication for not just management but also for investors (Edmans, 2015). And although Social-responsibility is hard to quantify as investors (ibid), evidence suggest that staff are happier leading to better organisational performance (profit); making it vital to find the primary relations between company performance and wellbeing (Proto, 2016). This section looks at whether CSR measurable like job-satisfaction leads to better company performance (profit); to help investors chose banks that invest in being Socially-responsible.

Although treating workers well is costly (ibid) and more money goes to shareholders by paying employees an equivalent of their outside pay-options or less (Edmans, 2012), 4 years of study showed that top 100 USA organisations for 26 years outperformed rivals on stock returns by 2% to 3% yearly (Edmans, 2012); (Edmans, 2015). This insinuates that organisational value (profits) from job-satisfaction may be improved by CSR (Edmans, 2012). Also, paying employees more reduces turnover rates and job-satisfaction (Sarfraz et al., 2018). Costco (with employee-wellbeing core to its values and mission) is a good example of such an organisation, offering: 85% of employees’ dental and health insurance, wages almost twice the national average of the USA, allows employees to join unions, and 9% of workers’ salary is contributed to 401(k) plans (Bauman and Skitka, 2012). This sends a clear message to both current and future employees that they will not exploit them; and so Costco enjoys one-tenth levels of employees’ theft and turnover in the industry (ibid).

However, market dictates that employees should be paid as little as possible and worked to the ground to squeeze maximum production out of them; so as to make more money for shareholders (Edmans, 2015). And although performance is improved in some cases by job-satisfaction, cost of value-net can still be lowered (Edmans, 2012). Nevertheless, Costco and others suggest that good employee-wellbeing truly returns value from attracting better people who are more productive and won’t leave in a hurry; since job-satisfaction makes it hard for employees to walk out the door or be stolen by competition (Edmans, 2012). This can be used to explain why although Costco is closed during public holidays instead of driving on sales, Costco’s profit for years are over $2 billion yearly (ibid).

Hitherto investors ignore these information since stock market’s returns is short-lived (few days) around an evidently dated occurrence (Fama, 1998) and focuses on tangibles (profit) while employee-wellbeing and job-satisfaction are intangibles with results taking even up to 4 to 5 years before being felt in stock prices (profit) (Edmans, 2015).This orientation towards short-term results was a major challenge for Unilever when engaging its board regarding sustainability initiatives because most multinational organisations are mainly focused on shareholder value, quarterly profits, and are aware of the fact that sustainability and financial performance are not jointly related (Bhattacharya and Polman, 2017). This was reason why Paul Polman former CEO stopped using quarterly earnings report at Unilever and why they are very successful in sustainability with initiatives like finding ways to reduces usage of water for manufacturing of cosmetic products and customer usage (ibid).

Although the study scope limits this section of the study from going many further, investors can use this knowledge to gain a competitive advantage over competition; clearly confirmed H3 that investing in UK high-street banks which are Socially-responsible for long-term (4 – 5 years) and not dumping stocks at the first sign of trouble (Edmans, 2015) will yield returns. And investors only investing in such returns will also force other bank to be socially responsible. This way of trading already existed in the form of Socially-responsible investing (SRI) where investments allow investors to merge societal values with financial objectives (Hill et al., 2007) and also has an associated theory called theory of Responsible Investing. This states that the sole purpose of corporate-governance is to guarantee that the organisation is making the most of long-term shareholder value (Henderson, 2012).


The goals of financial regulations (regulate banks’ operations to protect the stability of the industry) are different from CSR (focused on banks and society’s relationship) (Kapsis, 2019). However, enforced standards in form of regulations are often encouraged to stimulate and guide banks voluntary CSR activities (ibid). The question raised here is whether government can holistically use regulatory powers to make sure that UK high-street banks are Socially-

responsible. 50.5% of survey respondents agreed to government regulations being sufficient ensure for banks to act Socially-responsible; suggesting that consumers are looking up to government to take control of banks’ Social-responsibility obligations.

Figure 4 shows 39.6% of respondent agreeing and 10.9% of respondent strongly agreeing that government regulations alone were enough to keep banks socially-responsible.

52.5% of respondents also agree that banks are highly Socially-responsible and should have CSR programs proposing that consumers expect banks already have program in place; supporting the argument that ‘Banks should voluntary be Socially-responsible through enforced schemes managed by government (Kapsis, 2019)’.Yet trust and satisfaction in banks remains sensitive to the point where consumers believed that more bank bad practices will continue (Gond et al., 2014); confirmed by Standard Chartered fine of $1.1bn by DOJ and Financial Conduct Authority (FCA) in 2019 for sanctions violations and money-laundering (Makortoff, 2019). This keeps happening because new government set policies addresses constitutional matters but still leaves banks to manage their change in culture (Gond et al., 2014). And widespread aggressive sales culture was a main

contributor to the 2008 crisis; and although all banks are undergoing cultural changes, it is slow due to lack of proper implementations and other demands taking precedence (like challenger banks doing better than the major banks) (ibid).

The 2008 financial crisis, rate rigging, and LIBOR scandals were evidence for the need for effective supervision of UK banks (Ojo, 2012) which is the sole responsibility of the Bank of England (BOE) through set-polices which they also police to make sure banks are complying (Bank of England, 2020). The Financial Services Authority (FSA) formally regulated banks on-behalf of BOE but was cancelled by the UK government in 2013 due to regulatory failures that led to 2008 crisis (Parker and Masters, 2010). The Bank of England now issues guidelines to banks through

Figure 4 Support for Government Regulations

Neutral

Agree

Strongly Disagree

Strongly Agree

Disagree

4%10.9%

39.6%

26.7%

18.8%


FCA to protect financial markets and consumers and promote competition (Financial Conduct Authority, 2016) and Prudential Regulation Authority (PRA) which regulates to mediate if banks are being managed in a secure and sound manner (Bank of England, 2020). Two years after launching FCA, the BOE reinforced its own powers by centralizing financial regulation more to improve on the 2013 shakeup; ensuring that banks are not taking on much risk by holding on to much capital (Jones, 2015). What the 2013 shakeup showed was the length to which government and the BOE are prepared to go so as to stop banks past bad behaviour reoccurring (ibid) which can be explained using the social contract theory. This section could then be concluded by agreeing that the UK government through set regimes by the BOE have shown that they are able to implement that UK high-street banks behave in a Socially-responsible manner.

ConclusionsThere is sufficient evidence to suggest that all four hypotheses presented in the study are valid and supported existing theories. This imposes that all four will contribute to current understanding by suggests that all stakeholders are responsible for UK high-street banks’ CSR accountability. Be it through influencing of banks’ behaviour when consumers and investors boycott banks that have bad track record of being Socially-responsible or by government enforcements through regulations, polices, and laws or by banks themselves self-regulating. Evidence did suggest that banks and government are working extra hard to bring banks to a position of being trustworthy. However, as long as bankers themselves are not being held accountable by the treats of fines or imprisonments for their actions; the fingers will always be pointed at banks and senior management who are sometimes not informed quick enough of such offenses until critical. This coupled with the fact that bad old cultures sometimes takes precedence over penalties which could be a strong force that pushes bankers to do what they do; like in cases where better detections and tougher fines being implemented did not deter bankers from violations (Kapsis, 2019).

In addition, since regulator and policy makers have said that not all misconduct can be prevented by them, it is submitted that moving forward will require the culture rewarding profits at any cost be readdressed further as this was also shown by Kapsis (2019) to be a prerequisite to the 2008 crisis. Good broad banking culture should then enable banks to improve internally and relieve pressure on government policy supervisions and rules policing. This will also elevate the risk of bankers becoming more focused on rules at the expense of ethical considerations. Gathering of resources was time consuming but worked-out well.

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Keywords:UK retail industry; Brexit; Globalisation

The changing face of retail: Case Study of UK retail sector

Brou Nina Ettien

AbstractThe primary aim of this research has been to analyse and evaluate the factors or elements which are changing the face of retail business across UK. The main research objectives have been taken under consideration for the continuation of the research are: To identify the factors or aspects which have impacted the business of UK retail for the past few decades. To analyse how new entrants like discounters are affecting the operations of the existing retailers. To examine the impact of BREXIT and globalization on the UK retail industry. To assess the changing behaviour, demands and requirements of the present day consumers.


IntroductionThe research study has been carried out for understanding how the business environment has been changing across UK and what factors are impacting the environment. The UK retail sector has undergone several changes over the years. All these changes which have taken place in the UK retail sector have varied impact on the business of the food as well as clothing retailers (Kunc and Križan, 2018). The changes within the retail sector in UK are clearly visible – retailers have, increasingly, inclined towards e-commerce and online retailing platforms. Many renowned UK retailers such as Next, Marks and Spencers (M&S), as well as John Lewis among others have embarked on the decision of closing their highstreet stores due to falling footfalls. High street fashion retailers are finding it challenging to maintain their business because of customers inclining more towards online purchase (Archer and Willcox, 2018).

Different new trends are developing among the customers which in turn are impacting the business of the retailers. Taking the example of German supermarket discounters like ALDI and LIDL has significantly affected the business of the existing UK retailers. Different scandals like the horse meat scandal have also contributed in impacting the business of the retailers. Changes in fashion trends like fast fashion, demand of personalized shopping experience and so on are also impacting and modifying the business strategies of the fashion retailers in UK (Warnaby & Shi, 2019; Madichie & Yamoah, 2017; Madichie, 2015). The increasing concern of people towards the impact of the businesses on environment is also an aspect which is affecting the business operations and strategies of the retailer. Therefore, it can be stated that there are several elements which have resulted in changing UK retail business and are still modifying the operations and initiatives.

The primary aim of this study has been to analyse and evaluate the factors or elements which are changing the face of retail business across UK. The following objectives have been taken under consideration for the continuation of the research: To identify the factors or aspects which have impacted the business of UK retail for the past few decades; To analyse how new entrants like discounters are affecting the operations of the existing retailers; To examine the impact of BREXIT and globalization on the UK retail industry; and To assess the changing behaviour, demands and requirements of the present day consumers. Overall, this study undertakes a detailed literature review pulling out themes that were useful in formulating the research design – i.e., survey of customers across the UK retail sector. From these are range of implications for UK retailers are highlighted.

Literature ReviewThis particular section has focused on some points or themes for getting a vivid picture of the elements which are changing the business environment of UK retail sector. Over the years the retail industry across UK has changed drastically and is constantly undergoing several modifications. All these shifts and changes have created both positive and negative impact on the UK retailers. Effective information have been collected from different sources for evaluating the below points or themes.

Impact of Globalization on UK retail

The advent of globalization has not only impacted the business of retailers but also has greatly influenced the business operations across other industries too. Globalization has dissolved the geographical boundaries and thereby has simplified trade between different countries across the globe (Wood et al., 2017). The UK retailers have taken this opportunity to spread their business into new potential markets. For example, UK retailer like M&S, Tesco, etc. have taken advantage of globalization and expanded its business to other countries like Ireland, India, Hungary, Japan and so on. Globalization has not only helped to bring down the trade barriers but also has enabled different innovations in the field of technology (Wrigley and Wood, 2018). The rise of technology and the inventions have taken the businesses to the next level. One such example of incorporation of technology within retail industry is the birth of e-commerce retailing.

According to Coe & Wrigley, (2017), advent of globalization has led to advent of technology which in turn has increased the level of competition within the market. Besides increasing competition globalization has also modified the perspectives and buying process of the customers. Globalization with time has changed the outlook of the retailers

and has contributed towards the modification of the retail market regulations as well. As per the views of Wood et al., (2017), the influence of globalization has provided the retailers with real-time information and has equipped the retailers to carry out strategic and holistic decisions. However, Wrigley & Wood, (2018) is of the opinion that globalization has increased complexities and challenges for the retailer. For example, the dissolving of the geographical and trade barriers has created an opportunity for discounters like ALDI and LIDL to enter UK market. This has definitely increased the competition for conventional retailers like Sainsbury, ASDA, Tesco, M&S, etc.

The rise of e-commerce

Ecommerce as discussed earlier has been the result of globalization and its influence on the business world. With innovations and experiments in the field of technology platforms like Facebook, Twitter, Instagram, Google, etc, have emerged (Nash, 2019). With time people have realised the wide range of application of such platforms and also has established the idea about utmost utilization of internet. Currently ecommerce has gained great importance across the UK retail sector. Shopping on various internet platforms has increased over the past decade and it is being expected that the statistics will continue to rise up.

Figure 1. UK Internet Retail Sales Figures 2008-2018

ONS, Series MS6Y, monthly data, seasonally adjusted

201320092008 2015 20172011 20142010 2016 201820120%

8%

4%

12%

2%

10%

6%

14%

14%

14%

20%

Internet sales as a % of all retail sales (excluding fuel), UK

Source: Rhodes (2018)


From the above graph it is being observable that internet sales with respect to retailing have significantly increased from 5% in 2008 to 18% in 2018 (Rhodes, 2018). This shows that the popularity of purchasing products from different internet activated platforms is getting strong among the customers.

Some of the biggest online retailers across UK market are Amazon, eBay and Tesco. Other famous retailers who have been able to make a strong appearance on e-commerce platform are Asos, John Lewis, Argos, Next, etc (Fildes et al., 2019).

The online shares of retail trade have increased over the past decade in fact it has been predicted that percentage of retails will increase for the coming years. Though, the percentage of change can get declined but it will never go down in negative (Chaffey, 2019).

Changing purchasing behaviour of Generation Z

Over the past decade the purchasing behaviour of the customers has changed a lot. People are inclining more towards online shopping instead of visiting stores and picking up the orders. According to Warnaby & Shi, (2019), presently people have become too busy in their daily lives that they prefer most of their orders delivered at the doorsteps. The online purchasing platforms are allowing the customers to go through wide range of products just by sitting at the comfort of their homes. In fact, the payment policies, transactions and the return policies are simple to be followed and do not create any hassle for the consumers.

Figure 2. Ecommerce in the United Kingdom (2015-2019)

It is seen from the above chart that the ecommerce sales in UK is continuously increasing starting from 2015 to 2019. It is being expected by the analysts that this sales figure will not decrease but will continue to grow up rapidly. Many conventional retailers have inclined towards investing in their e-commerce

operations due to satisfactory increase in online sales. Mike Coupe, CEO of Sainsbury, is certainly pleased with their online sales growth. In 2018, online sales for this retailer have jumped to 7.3% in the first quarter. Merchandise sales increased by 1.7 percent while clothing sales increased by 0.8% (Sillitoe, 2018).

Figure 3. Online share of Total Retail Trade

2015

133,077139,028

154,608

174,856

200,493

0%

0%

2017

10%

2019 (f)

20%

2016

5%

2018

15%

Ecommerce in the United Kingdom (2015-2019) Online Share of Total Retail Trade

B2C Ecommerce Turnover B2C Ecommerce sales (billions of euro) & growth rate, 2015-2019 (f)

Changes in Online Shares of Retail Trade (2012-2018)

Source: Ecommerce in UK to reach €200 billion in 2019, 2019 Source: Chaffey (2019)

+4.47%+11.2%

+13.1%

+14.6%

2018

16.6%9.7%

17.8%10.6%

15.1%5.9%

10.1%5.4%

9.7%6.0%

9.1%5.7%

8.8%4.8%

7.3%4.4%

7.4%4.3%

7.3%4.0%

4.8%2.0%

4.3%2.0%

3.4%1.5%

Italy

Sweden

Europe (av)

Germany

Switzerland

Austria

Belgium

Spain

Poland

France

Netherlands

UK

U.S.


Figure 5. Most preferred delivery methods in the United KingdomFigure 4. Most popular online payment methods in the UK

PayPalCollect it myself from the online

store's physical store

Discount coupon/coupon

Collect it myself from a distribution point

Credit cards

Bank transfer

Delivered to my mailbox / multi-occupancy mailbox by the mail carrier

Prepaid cards

Prepaid card on delivery

Delivery to my workplace

Cash/check on delivery

Unsure, don't know

Credit card on delivery

Home delivery in evening

Other payment methodsHome delivery in daytime

Most popular online payment methods in the UK. Most preferred delivery methods in the United Kingdom.

Consumer Behaviour: Payment Methods Share of buyers who have used each payment method at least once, 2017 & 2018

Consumer Preference: Delivery Methods When you order a product online, how do you prefer to have it delivered? 2018

Source: Ecommerce in UK to reach €200 billion in 2019 Source: Ecommerce in UK to reach €200 billion in 2019, 2019

1.2%

61%

14%

13%

5%

4%

2%

2%

0.8%

1.6%4.0%

1.5%3.3%

2.7%2.2%

6.6%2.3%

4.0%1.4%

23.7%28.7%

17.2%24.7%

40.8%32.2%

To ease out the payment process for the consumers several e-commerce payment partners are available, PayPal being one of them. From the graph it is visible that customer these days prefer more to use and pay through online payment methods instead of dealing with cash or post-paid processes. As one can see that majority of the consumers want their orders to be delivered to them instead of going by themselves to pick the orders. So, in these few years number of customers visiting offline retail stores has significantly reduced. According to Brignall, (2019), percentage of shoppers at the high street retail stores has fallen by 3.1%. This reduction in the percentage of

footfalls has led to shop closures. For example, M&S is currently in the process of closing down 100 of their stores by 2022. Due to the rise in e-commerce the foot fall with respect to UK shopping centres reduced by 2.2% in August, 2019 (Brignall, 2019).

Besides inclining towards online ordering and purchase some other trends have been noticed in case shoppers or consumers. 90 percent of present day consumers prefer personalization that is shoppers want the retailers to provide them with personalized experiences before they make any purchase (Archer & Willcox, 2018).

In this case some fashion retailers like Louis Vuitton, Zara, etc. have taken up the initiative of personalizing the experiences of their customers. Another emerging perspective has been observed among the customers, that is concern about the growing impact of the businesses on the environment. A significant part of consumer decision depends on the outlook of the CSR and sustainable activities of the retailers (Kunc & Križan, 2018). With respect to this several retailers have started reviewing their strategies and adopting sustainable merasures like reducing wastes, considering sustainable packaging, maintaining supply chain waste generation, donating to social charities and so on. Other factors like fast fashion, discounts, offers, etc. have tremendously impacted the behaviour, demands and requirements of the retail customers.

Entry of discounters within the industry and increasing competition.

The UK retail sector did see a massive modification in the purchasing and business trends when the discounters like ALDI and LIDL entered the market. A significant portion of the market share has been

taken up ALDI and LIDL through their strategy of providing quality products at high discounted prices. This kind of initiative by the two discounters get a huge blow to the business of UK retail giants like Tesco, ASDA, Sainsbury, etc. According to Jim Jefcoate, Director of Hurdletree Associates and former senior director of Walmart, besides the pricing strategy the discounters have been able to get a good hold of the UK retail market beacuse of other factors too (Prevor, 2019). The scandal of horse meat in 2013 greatly impacted the image of the four big retailers (ASDA, Tesco, Morrisons and Sainsbury) and at this point the two discounters were able to gain the trust of the consumers. Also, it has been commented by Jefcoate that discounters have been able to continuously push the link between price and quality of the products they are offering which is positively affecting their value perception (Prevor, 2019). However, the conventional retailers of UK have not been that active in pushing the link between the two above stated aspects and also advertising their services (Fildes et al., 2019). Therefore, at one point it can be said that the entry of discounters have changed the outlook and viewpoints of the existing retailers within the UK market. Now the big retailers have to find out strategies in order cope with the new entrants.


The Impact of BREXITA significant impact has been created on the UK retail sector after the announcement of BREXIT. The uncertainties prevailing with BREXIT have to a great extent negatively impacted the business operations across various sectors in UK. The uncertainties reflected that several changes are going to take place in the trade, labour, immigration as well as market regulations (Fildes et al., 2019). It has been expected by analysts that high impacts would be observed on availability of labours, employment, economic growth and so on. Already impacts of BREXIT are visible in different aspects of UK retail sector. Retailers have started preparing for no-deal BREXIT and for the aftermath of the event. According to McKevitt (2019), food purchase is going to get disrupted as 62% of fresh food gets imported from EU. 50% of food products sold by the retailers is imported. Announcement of BREXIT has resulted in lowering of the value of pound. Therefore, this can significantly impact the prices of the retail commodities. Labour costs will arise and this in turn will increase the operational expenses of the retailers (McKevitt, 2019). On an overall basis it can be inferred BREXIT has and is going to heavily impact and change the business trends of the UK retail sector.

From the information obtained from various sources inferences can be drawn that over the past two decades retail sector across UK has undergone several changes. Globalization has been a primary factor influencing the business processes of the retailers. Following globalizations other factors have impacted the retailing business in UK. Growth of technology, changing consumer behaviour, rise of e-commerce, entry of the discounters and BREXIT has greatly changed the scenario of retail. Some of the modifications have proven to be beneficial while others have created degrading impact on the business. The UK retail sector is continuously going through different challenges and will soon enter another phase due to the BREXIT outcomes.

MethodologyPositivism research philosophy has been undertaken by the researcher for this particular study. This kind of research philosophy has assisted in obtaining suitable quantitative data which has been used for tallying with the secondary data obtained during literature review. Such research philosophy has greatly assisted in attaining logical facts from the finding which ultimately led to the summarization of all the factors leading to the changing of the business scenario in UK retail sector (Willmott, 2020).

Generally, two kinds of research designs are taken by the researchers to carry on with their study. They are – inductive research and deductive research approach. Inductive is taken when any new theory or ideology is to be created from existing assumptions and finding (Flick, 2020). But in case of this study the researcher has tried to summarise all the factors and find out the ultimate impact on the UK retail sector which is resulting in its change. Thus, deductive approach has been undertaken to collect and go through all possible information for coming up with good set of conclusions.

Descriptive research design has been implemented for the study in order to obtain wide range of relevant information from the available information sources. This design has also been taken into account for obtaining a vivid picture of the whole UK retail business scenario (Kumar, 2019).

In terms of sampling for this study,100 customers belonging to the UK retail sector have been approached for the completion of the primary research. These respondents have been selected through simple random sampling technique. This has helped in obtaining maximum response from the targeted survey population. Also, this kind of approach has contributed towards avoiding any kind of biasing and resulted in proper generalization of the survey data (Snyder, 2019).

Primary research method has been applied for the continuation of the research study. A survey has been carried out by approaching the customers who are actively associated with shopping within the retail sector. The respondents have been approached in a random manner and explained about the purpose of the study. Questionnaires have been handed to the participants and on-spot responses have been obtained through the survey. For measurement of the responses a five-point likert scale has been used with the questionnaire. 100 completed survey sheets have been obtained from the process for continuing with the analysis part of the study. Conduction of the survey assisted in obtaining real-time data from the customers. The customers have been targeted as they are well aware of the trends prevailing within the retail sector. The survey helped in obtaining the perspectives of the consumers which assisted in tallying the secondary findings.

For analysing the data percentage and graphical analysis has been done by using MS Excel. The responses have been collected and appropriate percentages have been calculated by using excel. After that the percentages have been used to obtain the graphs which helped in providing a clear picture of the perceptions of the respondents. Later the responses have been evaluated and analysed by considering some of the findings from the literature review section.

Research ethics are an important part which is required to be taken under consideration for ensuring the validity and reliability of the research findings. In case of the survey, permission has been obtained from each of the participant to avoid any kind of confusion. Also, the purpose of the study has been explained to the respondents and no force has been applied on the participants for taking part in the survey. The information about the participants has been kept confidential and has been solely used for the research. By following Data Protection Act of 2018 no data have been shared with any third parties. For the secondary information the authors have been acknowledged through appropriate citations and references.

Data Analysis and DiscussionThe recorded responses on the frequency of online purchases, there were indications of popularity of this channel – probably due to the restrictions on free movement. More than half of the populations are recorded to make very often purchases and hence, they may be regarded as regular customers (see Figure 6). However, there are also certain sets of people suggesting that they make purchases slightly often. It may be either due to their preferences for other alternatives, or their consumption rates are lower.


Figure 6. Frequency of retail store purchases Still on the question of availability – albeit from the perspective of physical stores, a huge section of respondents agreed that they almost find whatever they are looking for within the physical stores (see Figure 8). It may be assumed that the supply chain functions of the retail stores have become more effective and the stocks are refilled timely. However, there are certain sections also stating that often they

do not find what they are looking for. This may be assumed that the physical stores have space restrains and there are also chances that some items are in high demand and get easily sold out. For instance, the items which are on discount or on offer are likely to get sold faster. Thus, some sets of customers may not be able to avail these products.

When the question on the availability of a varied range of products was posed respondents, there seemed to be a general agreement (see Figure 7). From these responses, it may be assumed that there are different types of products available in most of the retail stores. It may be assumed that the major focus

of these stores have been to cater to the needs and requirements of the customers. Hence, within the supermarket, almost everything is made available. The varied needs of customers are being met by these stores by understanding the specific requirements of customers and implementing these changes.

Figure 7. Product Range availability

Figure 8. Product availability in physical stores

Extremely often Very often Moderate Slightly often Never

28

31

22

19

0

2

12

23

35

28Strongly agree

Neutral

Agree

Disagree

Strongly disagree

Responses

Moderate

Very often

Never

Extremely often

Slightly often

3%

17%

24%

31%

25%

In response to the question of convenience of online stores, it was generally agreed that the online presences of retail stores are more convenient (Figure 9). It is evident that these options are easy to use, can save time, energy, and effort. Thus, the integration of digital platform is a smart idea. Additionally, it also

allows customers to compare prices of products in different stores and make decisions which are most suitable for them. Therefore, it may be regarded as one of the most convenient alternatives.

Figure 9. Online presence convenience

Strongly disagree Disagree Neutral Agree Strongly agree

24

36

21

14

5


The respondents agreed that the prices of products available are fluctuating. This may be attributed to the political turbulences in UK in recent times. Additionally, the consumer purchase behavior id also getting

affected due to uncertainty concerning the process of available products which are imported from different other parts of the globe. Moreover, there is also economic uncertainty which is largely prevalent.

This question on new entrants offering comparatively lower prices and value for money also records mixed responses (Figure 12). Thus, it may be assumed that even though other discounters and alternative stores are present and offer products at comparatively cheaper prices, there might be difference in quality of the products offered. Hence, it is less likely that

these products will be replaced with the ones which are offered in the general retail stores. Thus, these products are not perceived as value for money. It is likely that the individuals would continue purchasing from the retail stores to ensure that they are able to avail quality products which would effectively meet their needs.Figure 10. Prices of retail products have been fluctuating in recent times

6

12

22

29

31Strongly agree

Neutral

Agree

Disagree

Strongly disagree

This question on preference for discounters received mixed responses. It is seen that most of the individuals are neutral regarding the other alternatives (Figure 11). It may be assumed that this may be due to the fact that they are yet to make a transition and opt for these alternatives. However, a significant number of respondents disagreed regarding their preference

to discount stores. Thus, it may be assumed that even though these stores provide cheaper products, the consumers have developed a sense of loyalty. Moreover, it is more likely that they get wider variety to choose from in retail stores. Therefore, it may be stated that there are various individuals still prefer making purchases from the supermarkets.

Figure 11. Preference for Discount Stores

Figure 12. New Entrants Value for Money

When the question on agreement on behaviour change due to the political climate arose, most respondents seemed a bit neutral (Figure 13). It may be assumed that it is likely that the consumption pattern of the customer would be affected due to the changing political environment. The Brexit would reduce the numbers of products imported

from different parts of Europe will be limited. In addition to this, it may also be stated that the currency fluctuation is having direct impact on the purchasing powers of the customers as well. Therefore, it may be stated that the purchasing decisions are influenced by these factors.

Figure 13. Changing political climate compels purchase behavior change

Neutral

Agree

Strongly disagree

Strongly agree

Disagree

12% 12%

15%

33%

28%


18

21

28

20

13

4

4

34

32

26Strongly agree

Neutral

Agree

Disagree

Strongly disagree


When the selection of retail stores is done for making a purchase, it is seen that the brand value is taken into account by majority of the customers in recent times (Figure 14). This provides them assurance of quality and effective service. In addition to this, it may also be stated that the overall brand value is increased by ensuring that proper CSR practices are undertaken by the organisations. It may be assumed that practices as such are effective in creation of a positive impression of the company on customers, which eventually leads them to make repeated purchases.

On the basis of the discussion on the effectiveness of loyalty schemes by retailers, it is obvious that the customers are looking forward for these schemes (Figure 15). This ensures that they are able to gain added privileges by making purchase from a certain brand. Thus, their satisfaction lies on the manner in which the retail stores treat them and make them feel more inclusive. It may also be assumed that with the introduction of loyalty schemes, the customer behaviour and their trends are properly evaluated by the retail marketers and ensure that they are able to adapt with the changing behaviour of the customer in most effective manner.

Conclusions and ImplicationsThe undertaken research highlights the fact that over the years the retail market has changed drastically. There are numbers of external environmental factors which are responsible for these changes. The foremost being the changing social perceptions. It is seen that the tastes and preferences of the customers have evolved. Due to the world being more global, customers have widened their choices and preferences. Thus, in order to cater to these expanded needs of the customers, the retail sectors have tried ensuring that their functions are altered accordingly. Furthermore, another important aspect is the integration of technology and digital platform. Over the years, the development of technology has been immense. Like most of the other commercial sectors, the retailing industry also recognised the potential of technology and incorporated the same in their supply chain as well as marketing processes. This has ensured that the reach as well as the productivity of the retail stores increases exponentially and the customers are provided with satisfactory services which would have maximum appeal.

Moreover, it is also seen that there has been changes in the political atmosphere. With the Brexit being fully implemented, the impact of the same is yet to be properly measured. It may be stated that the purchase power of the customers would be affected which would be reflected in the overall sales of the retail industry. In addition to this, the supermarkets are more likely to be stocked with local products since the imported products from other European states would lessen. Thus, the retail industry is taking steps to understand these trends and ensure that strategic steps are taken to address the issue. Nevertheless, it is obvious that the customers purchasing behaviour is largely based on the key aspects like value for money outcomes and better brand recognition. It ensures that they are able to store better faith on the retail stores in comparison to other options available. Moreover, their loyalty is often determined by the CSR practices that the organisations undertake. This may be largely due to the fact that the consumers are becoming more aware and responsible. Thus, any company taking initiative to give back to the community is largely appreciated by the customers and they ensure that repeated purchases are made from the company. Hence, increasing numbers of retailers are undertaking this method.

Since the external environment is rapidly changing and retailers requiring keeping pace with the changing environment to ensure long term sustenance within the industry, it is recommended that most retailers try and invest on market assessment tool. This would enable them to understand past as well as present trends. In addition to this, it would also provide them further scope to ensure that they are able to make strategies in regards with forecast of future trends which may be implemented.

Moreover, since it is seen that there are numbers of e-retailers taking over, it might be difficult for the existing physical stores to keep up with the competition. Therefore, it is important that they shift their focus on the digital platform more. Even though there are numbers of top retailers which have made their presence effective, better and more updated strategies are required to be adopted in order to extend its reach and ensure that they are able to meet the customer needs more successfully. Furthermore, it is also crucial that the retail industry focus more on their customer service. Integrating technology in customer service is likely to be more effective since the customers would have a convenient channel to reach out to the organisations. In addition to this, interactive platforms would also ensure that the overall customer satisfaction is enhanced as well.

Limitations and ImplicationsDue to lack of adequate time and resources, the study was constrained. The study uses certain effective literary sources and also conducts a survey. However, it is undeniable that there are further areas which remain unexplored. A detailed secondary study with proper evidence would have supported the observations in the survey. Moreover, inclusion of qualitative study would also have provided a better significance to the study. The sample size could also be increased to get the broader idea. Hence, with more time and resources the overall study can be done in more elaborate manner which would increase the authenticity of the study.

Figure 14. Brand value and CSR are important while making purchases

Figure 15. Retailer Loyalty schemes are essential

Neutral

Agree

Strongly disagree

Strongly agree

Disagree

5%

11%

27%

36%

21%


76

20

37

30


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