Ace Hardware And Walmart: Different Models For Cause-Based Marketing

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Good causes create good customer relationships. As many as 90% of consumers said they are more likely to switch to brands that are associated with a good cause, according to a 2015 study by Cone Communications. So why not get involved?

If done properly, cause marketing can be quite effective. But the effort has to be sincere: both the retailer and consumers must be passionate about the cause.

A number of retailers are setting good examples when it comes to cause marketing. Retailers such as TOMS Shoes and Warby Parker have gained a solid reputation with charitable business models where an item is donated to people in need for every item sold. Others, including Walmart and Ace Hardware, have launched campaigns that include employees pitching in for volunteer work.

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Ace Hardware Focuses On Youth Causes

One way retailers can give back to the communities they serve is by involving local employees in charitable services. To assess its current program, Ace Hardware recently conducted a Community Involvement Survey to determine how local store owners and employees contribute to causes they’re most passionate about.

The survey revealed that Ace Hardware is indeed the “place with the helpful hardware folks,” as its advertising suggests. A majority of the respondents said they support local youth-based organizations and advocacy programs.

Some key findings from the survey included:

  • 99% of local Ace retailers that participated in the survey donated money to a charitable organization or cause;

  • 88% contributed to youth education and advocacy programs in 2014, including Boys & Girls Clubs of America and Big Brothers Big Sisters; and

  • 85% of Ace stores implemented some type of environmentally sustainable practice, and 69% have recycling programs.

“Our local Ace owners continue to demonstrate that a servant heart is not the enemy of a successful business, but rather the enabler of it,” said John Venhuizen, President and CEO of Ace Hardware Corporation, in a statement.

The numbers bear out Venhuizen’s statement. The vast majority, 95%, of Ace’s top-performing stores do fundraising for Children’s Miracle Network Hospitals. Stores that host fundraising events, such as an annual “bucket promotion,” see an overall lift in store performance, according to the company.

In addition, market basket data shows transactions with Ace’s 2015 fundraising bucket offer drove average sales of $2,217 and gross profit dollars of $726. The average basket size was $54.74, a more than 8.5% increase over the year before.

Walmart Taps National Brands To Help Feed America

Walmart recently announced plans to donate up to $3 million to Feeding America with a new “Fight Hunger. Spark Change” campaign. The strategy aims to encourage shoppers to purchase specific items from vendor partners such as Campbell Soup Company, General Mills and PepsiCo to provide meals for those in need. For each participating product purchased in Walmart stores between March 28 and April 25, 2016, the manufacturers will donate nine cents to Feeding America.

“Successful partnerships are the key to making a positive impact on the issue of hunger in the U.S. and we’re proud to once again work with Feeding America, the nation’s leading organization dedicated to fighting hunger,” said Kathleen McLaughlin, President of the Walmart Foundation and Chief Sustainability Officer for Walmart, in a statement. “Together with Feeding America, our suppliers and customers, we’re working to generate the equivalent of 75 million meals that will make a real difference for families who are struggling with hunger.”

Cause Campaigns Raise Private Label’s Profile

While enlisting national brands can help steer charitable efforts, there also is significant opportunity for brands offering private label products, according to Greg Buzek, Co-Founder of the Retail Orphan Initiative.

By offering to donate proceeds from sales of a private label product to a charity, retailers are not only able to do good, they are more likely to generate first-time buyers for those more profitable internal brands. “The typical private label brand makes two times the gross margin for a retailer than a national brand,” said Buzek in an interview with Retail TouchPoints.

In all cases, the key is to find a charity that relates to both the brand and its customers. “Different customers have different passions,” said Buzek. “If you can find a charity that aligns with all of them and communicates that, that would be good. Or, better yet, if you can allow your customers to choose the charity, and they simply make the donation, that’s also a good option.”

Besides contributing to the general good, implementing a cause marketing strategy builds a strong relationship between a retailer and its customers — whether it’s through company-wide volunteer work or donations via private label products. Putting a little extra effort into finding a charity that resonates with your employees as well as your customers will go a long way.

 

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