Do Non Profits Equal Brand Loyalty for Retailers?

Image ©Vogue/Evan Sung

When I read an article from Vogue about Nordstrom opening a charitable NYC concept shop, it got me thinking about the future of cause marketing. In case you’re not familiar, cause marketing is basically a type of marketing involving the cooperative efforts of a for profit business and a nonprofit organization for mutual benefit. There are a tremendous amount of cause marketing initiatives in the world today with some of the most notable being Product (Red), TOM’s shoes, and Yoplait's "Save Lids to Save Lives."

But Nordstrom is pushing the boundaries of cause marketing. The new store called Treasure & Bond has a boutique, fashion forward vibe that donates all of its proceeds to charity. I believe this is an amazing precedent for such a large retailer to set and hopefully it inspires others to follow suit. But while it’s a great measure of good faith by Nordstrom, from what I can tell it also has the potential to be pretty good for their bottom line.

According to the Edelman goodpurpose® Consumer Study, 62% of global consumers would switch brands if a different brand of similar quality supported a good cause. It’s also worth noting that similar studies showed a considerable increase from just before to just after September 11, 2001 – indicating a greater interest in cause marketing during challenging times. This makes me wonder if we will see similar statistics that support these ideas as we climb out of a recession. Consumers not only have become more aware of where their money is going, but they may be looking for alternatives in lieu of contributing cash directly to nonprofits when budgets are tight.

So with the name Nordstrom tied to Treasure & Bond, customers may develop a stronger sense of brand loyalty to Nordstrom in general and thus it could become their department store of choice, benefitting Nordstrom’s chosen nonprofits as well as its own bottom line. In 1981 a time-tested cause marketing campaign by American Express had similar positive results: the company saw a 17% increase in new users and a 28% increase in card usage in the San Francisco area when the company donated two cents each time new members applied for a card and more when it was actually used. The funds totaled $108,000 and went on to benefit nonprofits associated with the San Francisco Arts Festival. More recently, American Express has donated $4.5 million through its Members Project promotion that uses social media to connect consumers to charities. It will be interesting to see what kind of impact Treasure & Bond can have in 2011, with Nordstrom committed to donating a full 100% of the store’s profits.

With that being said, I know I would have greater loyalty to a brand that supports a nonprofit over competition that does not. Would you?

Amberlee Isabella is an interior and graphic designer in Gensler’s Atlanta office focused on international retail work and is part of the team that is bringing Abercrombie and Fitch abroad. Amberlee has a passion for branding, trend forecasting and fashion. In college, she led the largest student-run philanthropy in the Southeast, DanceBlue which inspired her interest in nonprofit design. In 2010, Amberlee spoke at NeoCon on personal branding and is currently serving on the IIDA Georgia board. Contact her at amberlee_isabella@gensler.com.

Comments

[Mike Swenson]

This is a great idea from Nordstrom. Brands that give back are rewarded and the more authentic and transparent it is, the better. What is more authentic and transparent than a separate store with all proceeds going to a good cause. And with Nordstrom behind it, you know the customer service will be second to none!

[Halley | Clothing Tags]

It's natural to be persuaded on buying something that's for a good cause. It's the idea of being able to help other people that makes the 62% buy a different brand of similar quality than the one they used to opt for.

[Amberlee Isabella]

I could not agree more with your comment Halley. It's about that willingness to give back. What also fascinates in that some studies support the idea that millennials more than any other generation are more willing to make the switch. According to the Cone Millennial Cause Study in 2006, 89% of Americans (aged 13 to 25) would switch from one brand to another brand of a comparable product (and price) if the latter brand was associated with "good cause". With statistics like that, that generation is really leading the retailers in the directions. What a great trend!

Mike, I also think you bring up a great point. A lot of brands give back to the community but have limited PR surrounding their efforts. Nordstrom’s has really put it on the main stage. This ‘authentic and transparent’ strategy will no doubt lend to a strong association between Treasure & Bond and non-profits which is what the shoppers are looking for.

Thank you both for sharing your thoughts!
~Amberlee

[Colin O'Brien]

There is also a lot of research that shows dramatically increased levels of engagement from employees of companies that support positive social impacts. As our jobs become increasingly complex, they are finding that many people feel greater reward from these benefits than increased salary. Dan Pink wrote a great book on this topic called "Drive".

[Halley | Vinyl Banners]

I noticed that it's becoming a trend for some popular brands and going back to your question, I guess it can. I mean as a consumer, I feel good whenever I buy something and at the same time I know that my money helps a non profit organization.

[Amberlee Isabella]

I could not agree more with your comments Colin. I believe companies need showcase and use their non-profit and social commitment to recruit potential employees. I know with some of my friends it has tipped the balance when accepting job offers.

Halley, I wish I could post pictures on here! I recently was shopping at Target for face lotion and noticed that the generic brand advertised that they gave 5% back to schools and other community organizations right on the package! I think that's great and makes it VERY personal. I felt like I was empowered to make a good choice and like you for the afternoon I felt good knowing that little choices can help!

~Amberlee

[Tim Williams]

Starbucks CEO Howard Schultz is now pushing their own cause initiative taking matters into their own hands for job creation to help the public get money to small businesses since lending institutions requirements have become so restrictive.
http://news.starbucks.com/article_display.cfm?article_id=572
I'll be very interested to see how that program works out for them. Helping others tops the charts in those things that make a person feel better about themselves.It is also noteworthy that companies who have pushed a green initiative have seen a significant jump in sales as well.