There had to be a few cringes in the room after she said it.
In December, Kmart CMO Kelly Cook was at St. Jude Children's Research Hospital in Memphis celebrating an amazing accomplishment. Over a decade the retailer had raised $100 million dollars for the hospital's cancer care and research, making Kmart the hospital's biggest donor in its 50+ year history.
"It took us ten years [to raise $100 million], said Cook. "Next $100 million in five years! Five years!"
Behind all the smiles and applause in Memphis was the cold truth that online retail would soon steamroll Kmart into oblivion. There would never be another $100 million from Kmart.
From a peak of over 2,100 stores in 2000, Kmart has shed over 1,000 stores in the past 17 years and will close 150 more this spring.
Kmart isn't the only retailer suffering. Big retailers are in full retreat as consumers are finding better selection and deals online. Bloomberg reported last week that over 50 retailers could file for bankruptcy in 2017 alone.
Also on the chopping block are big donations to nonprofits. According to Engage for Good, an industry group that helps companies and causes engage consumers and employees around social issues, large checkout fundraisers like Kmart's raise hundreds of millions of dollars for nonprofits.
"We looked at the top 70 or so programs three years ago and collectively they raised $400 million," said David Hessekiel, founder and president of Engage for Good. The fundraisers include:
- Macy's Believe fundraiser that raises $2 million annually for Make-A-Wish America.
- Gamestop's million dollar campaign for Autism Speaks - just one of four fundraisers the retailer hosts annually for causes.
- JCPenney's "round-up" fundraiser that has raised as much as $7 million for after school programs.
Yet all three of these retailers are struggling, as are many more.
- Due to poor sales, Macy's is closing 63 stores this spring, and may close another 34 stores before the years is out.
- Gamestop just reported its worst quarter and is closing 150 stores as more consumers are buying their games on the Internet.
- JCPenney has been reeling for years. The once-storied retailer will shutter 138 stores this year.
Checkout fundraisers, which typically involve an "ask" at the register for consumers to donate a dollar or two to a cause are the backbone of retail fundraising. But it won't be for long if big retailers continue to collapse. Fewer big stores with fewer customers means fewer donations for causes. It's simple math. What's not simple is figuring out what's next for retail fundraising - or business giving in general.
To figure out what comes next, I asked America's top business giving experts to share what - if anything - would replace the hundreds of millions of dollars collected from 'checkout charity' in the post-retail world of 2022. Here's what they had to say.
Only A Retail Revolution Will Revitalize Giving
"The tried and true bricks and mortar experience no longer works. Companies like Warby Parker, Shinola and Yeti stores allow consumers to enjoy storytelling and hands-on opportunities in-store. This is perfect for cause storytelling, and creates an opportunity for consumers to learn more about how they can engage with a cause. Millennials and others want choice: 'Don’t ask me to add a dollar. Tell me how I can take action and make a change.' Experiential retail is the channel for this." - Philips McCarty, Chief Executive Officer, Good Scout Group
"Other high consumer traffic venues will fill the gap as evidenced in the rise of cause marketing among casual dining, gyms, yoga, golf courses and even gun ranges utilizing the "customer ask" model. The giving buck isn’t going anywhere." - Rich Maiore, Vice President, For Momentum
"Surviving retailers need to innovate swiftly. One option is to replicate the personal interaction and engagement shoppers have enjoyed in the traditional brick and mortar context to go beyond the strictly transactional purchasing model. This would include providing personal shopping concierges to enhance the experience and provide unparalleled attention while simultaneously learning shoppers’ individualized preferences for products, interests and social causes. Such engagement could allow brands to share their charitable commitments and could bring customers along, join in the efforts and give via a customized e-commerce experience." - Kasia Reterska, Managing Partner, McPherson Strategies
"Businesses need to move away from a 'request' model and toward a 'reward' one. Instead of pleading customers to make a donation themselves, businesses should use giving to thank their customers for engaging with their brand. Whether a customer makes a purchase, becomes a repeat visitor, or takes some other valuable action, businesses should reward that behavior by making a donation out of their own pocket on the customer’s behalf." - John Rougeux, Co-founder & CMO, Causely
"The only reason checkout charity works now is because of convenience. When it is equally convenient and contextual to give elsewhere that will be the better option. Ultimately, companies need to offer an environment of giving in which they can provide an experience, connection and relationship. Some big companies are doing this, such as VF Corporation. They are building giving experiences that include employees, communities, supply chain, sourcing, end-of-life product reclamation and more." - Chris Jarvis, Owner & Partner, Realized Worth
New Technologies Will Optimize & Expand 'Checkout Charity'
"Mobile pay and online shopping is on a fast growth trajectory - set to become the new normal in the next five years. Charitable checkout campaigns should leverage these new technologies in-retail, and embrace out-of-retail transactional tie-ins like mobile peer-to-peer payment apps (i.e. Venmo and Square Cash). With the latter accounting for nearly $100 billion in transactions next year, I'm encouraged by new fundraising options that can make it quicker and easier than ever to donate to our favorite causes." - Brittany Hill, Chief Innovation Officer, Catalist
"We predict an overall increase, not a decrease in corporate social investments through 2022 and beyond. Checkout charity isn’t dying. It is migrating away from the counter and into the virtual world. Digital tools are giving all companies the direct touch-points with consumers, historically reserved for retailers." - Mark Feldman, Managing Director, Cause Consulting
"We're focusing a lot of time and attention on the power of digital engagement and fundraising and see it as a major growth opportunity in the years ahead. Meeting donors where they are is essential for charities that want to capitalize on new avenues of fundraising. As one example, I think it’s important to look to the sharing economy - lots of mobile transactions going on here with a social good deficit and much growth potential ahead." - Dan Goldenberg, Executive Director, Call of Duty Endowment
"The next iteration of cause marketing is integrating new technologies like virtual reality, gaming and streaming media to bring the cause to life and put consumers in the shoes of those they are helping. It will be critical that corporate partners and nonprofits find them and engage them in creative ways on multiple platforms with compelling content and a clear call-to action." - Amy Shapiro, Director, Corporate & Cause Marketing Partnerships, Boys & Girls Clubs of America
Online Retailers Will Pick Up Where Big Box Retailers Left Off
"Online fundraising can and should bridge the gap in retail-based fundraising. As shoppers flee from storefronts to digital shopping destinations, brands would be smart to pick up where their in-store fundraising will inevitably leave off. Online systems make it even simpler to click a button to add $1, $5, or $10 to a purchase for a good cause. It's time for retailers to focus more on cause marketing via their online storefronts." - Anne Erhard, Senior Vice President, Business + Social Purpose, Edelman
"There is a huge opportunity to migrate checkout charity to the online world. Over the years we’ve seen successful examples of online retail programs such as crisis-linked appeals that raise millions and donation incentive-based referral programs that outperform discount incentives." - David Hessekiel, Founder & President, Engage for Good
"All signs point to online corporate giving and digital partnerships as ways to activate customers. Among our retail partners, we’re starting to see more inquiries about online giving. DonorsChoose.org has responded by creating a next generation online POS integration that keys off of a customer’s zip code and displays the customer’s impact at a hyperlocal level." - Janelle Lin, Senior Vice President, Partnerships & Business Development DonorsChoose.org
Company Employees Will Save The Day
"In a world of ever increasing transparency, people seek out and embrace the authentic. Consumers increasingly distrust marketing. They also distrust the executives at big companies. But they continue to trust the employees of those companies to tell them if the brand promise is authentic, or simply marketing hype. Employee volunteering and giving programs are the gold standard for authenticity. Brands that embrace employee volunteering and giving reap a bounty of rewards, and see a fantastic ROI - not least of all because their employees demand them - but in terms of more authentic marketing, improved employee engagement, better retention, and even higher profitability. That's where we'll continue to see the most significant growth of corporate cause engagement." - Ryan Scott, Founder & CEO, Causecast
"The push towards more employee engagement will offer greater encouragement of employees to give and a better process for companies to match employee gifts to the causes they care about. This process is ripe for disruption. Most employees don’t take advantage of their company programs. Non-profits haven’t figured out how to capture the potential, and companies haven’t figured out how to best leverage it. That will change." - Chris Mann, National Vice President of Corporate Partnerships, City Year
"Employees are the new face of business giving - employee fundraising, employee-directed corporate gifts, employee-centric storytelling. And it's not just be driven by Millennials. Point-of-sale (aka checkout charity) is the impulse buy of cause marketing. Employee engagement is about loyalty, to the employer and to the cause." - Allison Morris, Managing Director, Corporate Engagement, Mercy Corps
Business Giving Will Become More Purposeful, Holistic
"The real opportunity is when business identify and address social problems that intersect with their business. By using their strengths and assets, including employees, they can leverage the power of market-based competition to address social problems at scale. Companies like Unilever, Nestle, Trico Homes and many more are reimagining their business models around social good. This sets them apart from the competition and is augmenting profitability, opening new markets and saving them money. With the help of NGOs, governments, and other stakeholders, business has the power of scale to create real change that sustains our economy and society over time." - Jocelyne Daw, Founder & CEO, JS Daw & Associates
"Social impact will be built right into the product or service, the channel strategy and the promotion. It will no longer be about asking a consumer to give a few dollars to a worthwhile charity. Companies will be social actors, living their values through the issue they are working to change, making money doing so and building a network of consumers, ambassadors, and partners that all align around the desired social impact." - Phil Haid, Co-Founder & CEO, PUBLIC Inc.
"Business giving will need to shift to becoming a part of a brand's overall product strategy and thought of as a brand identifier. Instead of touting one-off donations for unique products, corporate and nonprofit partnerships should create a cause halo across a product line that can incentivize brand loyalty, make it easier for consumers to give by asking them to do nothing except buy the products they already love, and allow for more impactful giving to organizations benefiting from those purchases." - Courtney Hadden, Partnership Manager, Sustainability at Keurig Green Mountain, Inc.
“Today and moving forward, leading companies across retail, CPG and all sectors will focus social investment and philanthropy strategies around their core competencies. While benevolence has become an important part of corporate culture and customer engagement, when companies align giving with where their products, services or business offering offer value to customers and employees, everybody wins. Only with this approach can companies use all of its strategic resources to improve society.” - Jeff Terry, Global Corporate Social Responsibility, Amway Corporation
"Corporate giving, employee engagement, cause marketing and sponsorship are converging into larger flagship programs that tick more than just one box for the corporation. Traditional corporate giving will continue to shrink and will continue to be influenced by other departments - like marketing and HR - while higher ROI investments that can mascaraed as philanthropy will continue to grow. The language of philanthropy is changing to the language of marketing and sales quicker than most charities can accommodate." - Chris Baylis, President & CEO, The Sponsorship Collective
Reports Of The Death Of Checkout Charity Are Fake News
“When looking into your crystal ball for the future, you have to remember that checkout charity campaigns serve an important role for both cause players. For the charity, dollars and awareness are the benefit. But, for the business, employee engagement is the prize. We are working with several retailers that are already making plans for checkout charity programs for 2019 and beyond. The future looks bright to me." - Mollye Rhea, Founder & President, For Momentum
"Retail is not dead. Nonprofits should stay the course and evolve with the marketplace. For every trend there is a counter-trend and for every dip a rise. In 2016 whereas traditional department stores in the US may have faltered, there was a surge for off-price soft goods retailers like TJ Maxx, Five Below and Nordstrom Rack. Bass Pro Shops led the way in hard goods, while food retailers like Trader Joe's opened stores at break-neck speed. Savvy cause marketers should target brands that are in growth mode." - Kristian Merenda, Senior Vice President, Social + Purpose, Edelman
What do you think of is future of retail and business giving? Do you agree with one or more of the perspectives above or do you have you own? Leave your comments below!