Fair Trade Buyers and the Global Recession

A recent study finds that consumers have remained loyal to fair trade products, even in the midst of the global recession. Those who had made a habit of buying these products before the recession continued to make the same amount of purchases even during economic distress.  Our analysis of this study is that ethical decision making is driving the growth and retention of fair trade product adoption and that product availability may be more important than price in creating customer loyalty.

The 2011 study, published by the Journal of Business Ethics*, researched changes in fair trade buying habits among consumers in Canada, the UK, and the US before the recession (2005-2006) and during the recession (2009). Researchers looked at differences in age, gender, education, income, and nationality and found the biggest distinction in buying habits to be between what the study termed “Active” and “Occasional” fair trade consumers. Active consumers were those who had made an ethical decision to purchase fair trade products over time.  Occasional consumers were those who may have purchased irregularly.  While purchases were reduced by the Occasional consumers, Active consumers continued to purchase at their pre-recession levels.  The conclusion was that ethical considerations were prevailing over the traditional theories of self-interest which would lead consumers to buy based on price alone during an economic downturn.

From 2006 to 2007, purchases of fair trade certified products increased by 47% worldwide to 1.6 Billion GBP (2.6 Billion USD), with the UK having the highest number of customers.  Not surprisingly, UK consumers continued to purchase more fair trade products during the recession than those in Canada and the US, with purchases by US consumers dropping the most.  The study did not attribute a cause to why US consumers remained less loyal to fair trade products.  It did identify two factors that could explain the difference.  First, the only demographic factor that related to fair trade product loyalty was age.  The study found that consumers of age 35 – 54 were more likely to be Active consumers.  Fair trade consumers in the US are younger than in Canada and the UK.  Second, the study observed that distribution issues were more likely to affect consumer behavior in the US.  Since adoption of fair trade products was comparatively low in the US, these products were most often found only in high-end retailers such as WholeFoods.  The study observed that when under financial duress, US consumers were more likely to shop at discount locations that do not offer fair trade products.  This suggests that that the ability to easily find fair trade products seems to be a predictor of whether an individual will become an Active consumer.

The purchase of fair trade products is an ethical decision.  Let’s keep making it a habit to do the right thing!

* Source: Bondy, T., & Talwar, V. (2011). Through Thick and Thin: How Fair Trade Consumers Have Reacted to the Global Economic Recession. Journal Of Business Ethics, 101(3), 365-383.

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