Introduction
The market for Fair Trade (FT) products has exhibited steady growth, reaching almost €10 billion in 2018 as consumers increasingly demand sustainably sourced products (Fair Trade International, 2019). However, despite the global improvements in Fair Trade product sales, the FT business remains, at best, a niche market (Canova, Bobbio & Manganelli, 2023). Moreover, FT product adoption in the US is significantly lagging behind that of Europe. For instance, per capita consumption of FT products was approximately €3 in the US compared to €34 in the UK (Fairtrade International, 2016). While the FT logo is recognized by over 60% of people in the US (Fair Trade USA, 2018), consumers in the US do not purchase FT products on a large scale. As a result, the US market share of fair trade products is estimated to be only 1% of all product sales. This gap may be attributed to historical, cultural, philosophical, and legal factors that differ between the two sides of the Atlantic.
US businesses are often considered to be reluctant to use FT products or ingredients in their operations. Businesses are slow to adopt FT products or include FT ingredients in their products not because they do not believe in the benefits and value of adopting the FT business model, but because they are fundamentally concerned about the FT market size, the cost of such products, and are unsure about the potential business opportunities FT products could offer (Moore, Slack & Gibbon, 2009). What, then, differentiates businesses that do adopt FT products and FT models in an environment that positions fair trade as a limited niche market? This study aims to answer the question through an in-depth investigation of critical motivational factors for the adoption of fair-trade business practices by focusing on the first FT town in the US, Media, Pennsylvania, and its surrounding area, a region committed to promoting Fair Trade products in the US since 2012.
We believe that for FT products to become mainstream in the US and around the globe, business adoption of FT products and ingredients needs to develop alongside the improvements in consumer demand. Current research identifies consumer characteristics, motivations, attitudes, and purchase intentions of FT products (Pavlovskaia & Kara, 2022). While uncovering the socio-cognitive determinants of consumers’ FT product purchase decisions is important, it is equally essential to understand the adoption of the FT business model by businesses. However, to date, only a few studies have investigated motivations, organizational visions, scale of operations, and merchandise assortments of businesses engaged in current FT businesses. For example, Cater, Collins and Beal (2017) found that social entrepreneurs engage in fair trade business practices because of shared values and the desire to help others, often triggered by a critical incident. Another study conducted in the UK in 2006 explored the various barriers inhibiting the future development of FT from both consumer and organizational perspectives. The study concluded that effective communication was a key factor in FT product adoption by both businesses and consumers (Wright & Heaton, 2006). They suggested that marketing communications should strategically focus on differentiating the value of FT product consumption.
However, almost two decades after that study was published, FT still faces similar challenges, namely limited appeal to both consumers and businesses. Surveys indicate high consumer and business interest in adopting FT products, but significant value-action gaps persist between what is stated (purchase interest and adoption) and actual FT product purchases by consumers and perhaps a lack of transparency in business adoptions (Gillani, Kutaula, Leonidou & Christodoulides, 2021). Therefore, to improve FT product adoption in the US market, we strongly believe that future studies should prioritize an in-depth examination of the businesses’ perspectives in their decision to adopt or not adopt FT products. While research interest in examining business perspectives has been increasing (Cater, Beal & Collings, 2016; Raynolds, 2012, 2009; Doherty, Davies & Tranchell, 2013; Smith, 2010), there is a gap in the literature examining FT product adoption from the perspective of businesses.
Our study aims to investigate this ongoing challenge and explore the critical elements of marketing and business strategies for bridging the gap in FT product adoption and practice from the perspectives of small retailers who play a crucial role in the overall retailing environment in the US. For these reasons, we conducted this study in the first Fair Trade Town in the US, Media, Pennsylvania, and its surrounding area, which has been committed to promoting fair trade products in the US since 2012 (Media Fair Trade, n.d.a). The FT Towns campaign, an idea borrowed from the UK, tries to empower communities to bring together schools, retailers, churches, and other community organizations to support small producers through trade, advocacy, and consumer action for strong community development at home (Lyon, 2014). Currently, out of 328 different small shops (businesses) located in Media, PA (Media, PA Directory, n.d.), only 18 of them (5%) have adopted a business FT business model that sells FT products or uses FT ingredients (Media Fair Trade, n.d.b). If the adoption of and the commitment to the FT business model are lagging in a town that has the FT Town designation, we expect that similar challenging trends will prevail in other similar towns across the US. Therefore, the findings of this study can provide us with an informed window into the struggles of other small businesses across the US to incorporate FT practices.
Specifically, the objective of this study is to explore the motivations, characteristics, and perspectives of owners-managers of small and medium-sized enterprises (SMEs) in Media and its surrounding region, who engage in FT business practices. This study employs a qualitative approach, using in-depth interviews with SME owners or managers to uncover their interests, gain insights into the nature of their FT businesses, explore their ethical, social, and moral perspectives, and to identify perceived barriers and opportunities. Thus, by focusing on the enterprise-level Fair Trade model that is applicable in many regions around the world, this study aims to uncover critical motivational factors for the adoption of FT business practices, by answering the following research questions: (1) What are the motivations and perspectives of SMEs for engaging in FT business practices in the US? (2) What are the structural and organizational differences between participating and non-participating SMEs in FT business practices? (3) What are the perceived barriers, challenges, and opportunities for adopting FT business practices?
Learning from Data: Empirics-First Approach
In their recent study, Golder et al. (2023) made a case for the value of an empirics-first research approach in generating relevant knowledge, especially in emerging areas such as FT. According to Golder et al. (2023), it is justified to begin with real-world marketing problems and focus on gaining insights from data (quantitative or qualitative), rather than attempting to test a predetermined set of hypotheses. Similarly, McShane, Bradlow, Lynch and Meyer (2023) argued that studies based on strict theory-based hypothesis testing might limit researchers’ ability to derive practical insights from data and recommended that researchers move beyond statistical significance to learn from data and focus on obtaining ‘insights’.
Following their recommendations, we adopted the empirics-first approach in this study as the study framework for several reasons. First, the concept of FT is complex and draws on conceptualizations from various fields such as economics, international trade, political science, sociology, environmental science, ethics, business environment and law. Second, empirical research on FT is still evolving and relatively in its early stages of development. Therefore, during these early stages of development, it is important to focus on identifying opportunities, exploring the terrain, and uncovering regularities (or irregularities) through discoveries. Third, FT concepts and objectives are often contentious and controversial. Reconciling the economics of FT with a firm’s financial performance remains challenging. Similarly, consumers are often expected to incur additional costs, either by paying a premium price or by selecting products from the limited available choices. Additionally, there seems to be a value-action gap among critical stakeholders (consumers and businesses) who support the general value of FT but lack the motivation to engage in actions. Therefore, understanding stakeholders’ value proposition regarding FT engagement from a macro perspective is valuable. Finally, qualitative insights obtained directly from business owners provide opportunities for deeper understanding, interpretation, judgment, subjective evaluation, and learning from data (McShane et al., 2023), which will enhance our understanding of the FT phenomenon.
Methodology
Semi-structured interviews
Based on the literature review and our study objectives, we developed a set of impact questions intended to elicit in-depth responses from the participants (see Appendix 1). All interviews were conducted via Zoom and recorded for transcription and analysis. During the interviews, respondents were encouraged to provide more detailed insights through additional prompts such as ‘Can you clarify?’ and ‘Really? How so?’ to gather additional information. Each interview varied in duration, lasting anywhere between 30 to 60 minutes. All participants in the study were individual small business owners with one manager. In addition to the semi-structured interview questions, we also collected data on the characteristics of the participating small businesses using a concise online questionnaire administered via Qualtrics. To protect the anonymity of the study participants and their businesses, we did not include any owner or business information in our results.
Sample
We interviewed a total of 14 owner-managers of small and medium-sized businesses in Media, PA, and its surroundings. As a borough and a suburb of Philadelphia, Media, with a population of 6,000, is considered an example of a ‘planned community’ including both a commercial centre and a place to conduct public business. Historically, it was an important stop along rail and highway routes between Philadelphia, Baltimore, and Washington, DC (Mayberry, 2015). Located only a few miles from Philadelphia, Media became the first US Fair Trade Town in 2012, representing a town which is committed to the promotion of FT goods and is home to multiple Fair Trade designated schools, universities, congregations and businesses. Most of the businesses that we interviewed were restaurants and coffee shops which adopted Fair Trade products and ingredients in their operations. A few other businesses we interviewed were boutiques that sell Fair Trade gifts, jewellery, clothing and home goods. The only exception was Ten Thousand Villages, which is a larger chain Fair Trade store with a location in Media. The four FT retailers located outside of Media conduct their businesses in the surrounding areas (Delaware, New Jersey and New York) and are primarily online retail marketplaces, with only one of them utilizing a public retail shop.
In addition to in-depth oral interviews, we asked owner-managers to fill out a Qualtrics online survey to gather information about the owners, specifics of their business and the types of FT products their businesses use as ingredients and sell as finished products. Table 1 shows that there was a mix of sole proprietorships, partnerships, and corporations with most businesses employing between 1 and 10 people and operating in business for more than ten years.
Profile of small businesses that participated in the study
| Participants | Freq. | % | Participants | Freq. | % |
|---|---|---|---|---|---|
| Small business category | Gender | ||||
| • Coffee shop | 2 | 14.3 | • Male | 6 | 42.9 |
| • Restaurant | 4 | 28.6 | • Female | 8 | 57.1 |
| • Crafts | 6 | 42.9 | • Education | ||
| • Chain store | 1 | 7.1 | • Less than college | 1 | 7.1 |
| • Farm Market | 1 | 7.1 | • College | 9 | 64.3 |
| Respondent | • Grad Degree | 4 | 28.6 | ||
| • Owner | 9 | 64.3 | Type of FT product/ingredients | ||
| • Owner/chef | 4 | 28.6 | • Raw materials (i.e., coffee beans) | 7 | 50.0 |
| Manager | 1 | 7.1 | • Finished product (i.e., crafts) | 5 | 35.7 |
| Average number of years in business | • Clothing | 2 | 14.3 | ||
| • Less than 10 years | 5 | 35.7 | Number of employees | ||
| • 10 to 20 years | 4 | 28.6 | • 1 to 10 | 11 | 78.6 |
| • 20 to 30 years | 1 | 7.1 | • 11 to 50 | 3 | 21.4 |
| • More than 30 years | 4 | 28.6 | Age of the participant | ||
| Share of FT products/ingredients | • 35 to 44 years old | 1 | 7.1 | ||
| • 1 to 10% | 6 | 42.9 | • 45 to 55 years old | 8 | 57.1 |
| • 20 to 30% | 1 | 7.1 | • Above 55 years old | 5 | 35.7 |
| • 80 to 100% | 3 | 21.4 | |||
| Establishment type | |||||
| • Sole proprietorship | 8 | 57.1 | |||
| • Corporation | 4 | 28.6 | |||
| • Partnership | 2 | 14.3 |
Most people interviewed were owners or co-owners of their businesses with over ten years of work experience, 45–54 years of age or older, half male (42%), and half female (57%), and mostly had college or advanced degrees. All businesses used some kind of Fair Trade products at the time of the survey. Fair Trade coffee was the most common product sold across the businesses. Other food-related products included FT sugar, produce, chocolate, tea, and clothing, while non-food-related products included clothing, jewellery, soccer balls, crafts, greeting cards and ornaments. One of the businesses sold FT bananas in the past. Owner-managers sourced those FT products by either one or a combination of several methods: direct import from artisans and farmers, via importer, using Fair Trade Federation members, and by working with local produce suppliers and local distributors which carry FT products. Despite their expressed commitment to Fair Trade initiatives, businesses, on average, typically had only 1 to 10% of FT products (or ingredients) in their offerings, with the exception of one store that had almost all FT products in their store (non-profit organization), but they had a different organization structure supported by a national chain which differed significantly in its structure and mission from the other for-profit SMEs participated in the study.
Analysis and Results
In analyzing the data collected for this study, we employed an interpretive approach (Hemingway, 1990; Schwandt, 1994), aiming to triangulate and assign meaning by content analyzing the transcripts of the interviews (Berglund & Schwartz, 2013). Similar to Nielsen et al. (2020), instead of simply recording and counting keywords, our focus was on carefully evaluating the entire text (response) within each predetermined study theme, with the aim of uncovering latent meanings and nuances. All co-authors conducted independent reviews of the transcripts, identifying core themes. Subsequently, we convened to validate the consistency of information derived from the interviewees. Throughout the process, we discussed the emerging themes and the underlying meaning of the recorded interviews, to iteratively construct coherent answers to our research questions.
The resulting themes speak to our research questions by illustrating the fundamental connections between the business owners’ values and motivations, the business practices they use (FT business adoption), and the customers’ needs and values that either support or hinder the sales of FT products (FT consumer demand). The structure of the results section thus first outlines the sources of the owner’s business practice commitments and values. Next, we describe the barriers formed through a lack of alignment between businesses and customers’ values. Finally, we document how such barriers may be overcome through education, community action, and alternative forms of practice and what lessons may be learned from our participants’ efforts to adopt and extend the reach of fair trade in this region. Specifically, we encouraged participants to think creatively by responding to a ‘magic wand’ prompt: ‘If you could have a magic wand to make FT products widely adopted or mainstream in the US, what issue(s) would you want this magic wand to solve? Please assume that you had the power to enact changes in your FT business and the absence of barriers condition’.
Defining Fair Trade values and the formation of commitments
When asked to describe fair trade in their own words, business owners placed differential emphasis on the principles identified as FT guidelines through the World Fair Trade Organization. For example, one owner prioritized fair trade practices centred on fair wages, the lack of child labour, good conditions, and lack of discrimination:
… there’s fair trade practices and that is equal opportunity for men, no child labour, good conditions. It’s simple terms … A living wage to people for their work, for their products. It’s paying them fairly for what you’re receiving. And paying them so they are able to live off that wage.
Another business owner whose business functioned as an intermediary between foreign makers and US retailers offered a description focused on lessening global inequities, capacity building, and sustainability:
Fair Trade is a set of business practices designed to create more justice throughout the … set of economic relationships from a maker artisan to the end customer, and the idea is to acknowledge inequities, systemic inequities across that set of relationships … In our case the artisans are in a more economically precarious position, so mitigate the risk of their participation in the marketplace and expand opportunities for their participation. So fair wages are part of that, but I think, the biggest commitment on our part is a long-term trading relationship with our artists and partners.
What almost all of the small business owners who participated in our study had in common was the experience of a crucial (life-changing) interaction with FT before adopting the FT business model. For instance, one of the participants shared an experience that took place during a travel education program:
I was a Spanish teacher … certified to teach English as a second language. I was in Ecuador, studying, and we had the opportunity to visit a fair trade coffee collective in the cloud forest. I learned about the practices they were engaged in, and what really impacted me was how they used money collectively to purchase equipment that was out of reach for individual farmers. They made joint decisions on equipment purchases, took turns using it, and maintained it together. They even had a school where all of their children attended. It was a truly beautiful community that I had the chance to visit, and it stayed with me.
Another participant shared their experience of discovering Fair Trade in their own local region:
One of our vendors, when we first opened in Chester Springs fifteen years ago, was One Village Coffee, located in Catboro, Pennsylvania, near King of Prussia. We learned about them from a fellow ice cream purveyor who carried their products. We visited their facility, and they strongly emphasized the fair-trade message and the story behind why they were doing it. What ultimately stood out was not just the message but the exceptional quality of their product at a reasonable price.
Having personal exposure to the communities who make FT products and are impacted by the practice helps inspire and cement commitments to envisioning FT business practice. This connection is often lacking not only in the majority business community, but for customers of FT stores who fail to connect with the FT business mission. One participant suggested to overcome the barrier as follows:
If I had a magic wand, I would just gather a huge group of people and say, “We’re visiting ten countries and we’re going to stop at each place, and we’re going to visit with these artisans and see what they’re doing.” And we’re going to hear the stories about how dignified employment has transformed them and their children and their communities.
In fact, some retailers do organize such educational trips as part of their services. However, educating a customer base is an obstacle not easily overcome with a single measure. In the following section, we will document the range of barriers to FT and potential solutions tried or envisioned by our participants.
FT barriers: Profit and availability
A primary challenge described by FT businesses concerns financial performance and profitability in their FT operations. Participants indicated that making money with FT products was exceedingly challenging due to the high costs of FT ingredients and limited consumer demand (turnover), and at times, lack of availability. One participant stated:
… if we could secure a better wholesale price, allowing us to make a small profit, that would motivate me to sell it more. That would be my “magic wand” moment, as it’s difficult to commit to something when I know I won’t make a profit, whereas the products sitting on the shelf are probably making $3.
The misalignment between the cost of FT products and consumer demand for ‘affordable’ and readily available goods needs to be creatively negotiated. For example, one participant expressed their perspective as follows:
I also think that FT coffee tastes great. However, we pay $9.50 per pound, which is an exorbitant wholesale price by almost anyone’s standards. Most restaurants only pay $2 or $3 a pound wholesale for coffee beans. So, coffee is not a money-making product for us. It’s a significant commitment and investment that we have to make to continue selling FT coffee. It truly reflects our commitment to fair trade, coffee, and the relationship we have with the roaster.
Another participant highlighted supply-chain concerns and availability:
Availability is one of the hindrances, you know, is it readily available? Pricing is not justifiable for a small business because we work on very small margins, and there’s not much room for error. This is particularly evident in a small business like ours. Therefore, an opportunity in the fair-trade world is to consider pricing and make it as competitive as possible. Our profit margins on fair trade products are about 10 points lower compared to non-fair-trade products. People often approach me with new products, and I have to evaluate how many of these I need to sell to justify their inclusion.
One of the participants emphasized that even though they are a non-profit organization, they had to restructure some business operations to achieve their mission of running a financially sustainable organization.
… the problem is how to structure our business model in terms of margins, for example, and sort of market positioning. To be a sustainable organization is a is a big question for us and has been a big point of evolution over time … we are a nonprofit organization. And for a long time, we really existed as basically a side project, with very underpaid staff, and people doing it largely fueled by their passion and commitment. We made the decision to operate in a sustainable way. So, e-commerce has been vital for our business.
Overcoming barriers: Increase consumer knowledge and awareness
Consumer knowledge and awareness emerged as a significant theme during the interviews, with participants indicating that consumers either do not know about the significance of FT or do not place much importance on it. For instance, one participant shared their perspective:
We still have a lot of people who don’t know what we do or what we have in here. We encounter people who don’t care much. Frankly, we get people who don’t care that we have fair trade merchandise. They often complain or express surprise about our pricing. We also have a small number of customers who believe that we’re lying or not being truthful about our ingredient cost … this is just a conspiracy thing.
It is clear that the benefits gained from engaging in FT business and purchasing Fair Trade products are not uniformly shared among all market participants and stakeholders. While producers or farmers may see immediate benefits in the form of better prices and improved work environments for their employees, other stakeholders, such as supply chain members or consumers, may not perceive these benefits immediately but rather face immediate cost incurring. Consequently, there is a need for all FT business participants to make adjustments in their mission, business models, and perhaps shift their expectations and focus away from immediate economic value toward promoting better social value, differentiation, and shared benefits across the value chain. One of the small business owners emphasized this perspective:
The message, you know. I think that part of your brand has to do with what you stand for and the principles you anchor yourself to. Whenever we’re asked if we use some fair-trade products, we make it known, and it’s well received. I believe that’s a significant value. It’s a high-quality product. So, you know, that’s a value. It’s high quality. When we decided to start this, you could sell ice cream and buy a 10-gallon bucket for $20, but it doesn’t taste good to me. Value is also in the artistic and product quality. That’s the direction we wanted to take.
Connected to the marketing of fair trade product value is the emphasis on how fair trade builds community. As one participant stated, FT businesses deliver ‘… being part of a community. Many people come out to support us because of fair trade and our emphasis on nonprofit efforts. They recognize our commitment to the immediate community. We’re continually working on strengthening this bond’. However, currently, these values are not well communicated to the customer base. In terms of value emphasis, one participant stressed the importance of communication:
I think we need to communicate it better. Having a little sign or poster that educates customers about why they’re paying a dollar more and why it’s important could be a compelling selling point. People pay more for luxury products or products produced domestically. It’s not just about being a good citizen and helping others; it’s about the collective process that benefits everyone. Paying a little extra now doesn’t mean you’re getting less, but the value will be realized or captured in the future as collective gains.
Another participant who emphasized education around specific practices that make some business practices ‘less fair’, suggested increasing
the level of consumer awareness and engagement with … ethical purchasing, and like a sense of … agency and interest. I think one side of this is to build awareness about which elements of trade are unfair like, I think people don’t really … care about fair trade unless they know about the injustice side of it …. governmental regulation and kind of like awareness of what’s the bad behaviour that exists, and why we shouldn’t have to tolerate it …
The owners showed a deeper emotional connection with the role and value they were creating. One participant emphasized the role of divine powers in her decision:
So, I’m a Christian and I felt like God was placing my heart to really use what I had been given and create this shop. That is my story and God opened the doors to make it happen. And here I am, That is lovely. I feel like doing what I do has opened my eyes a lot more to just what’s going on in the world. One, when I started it was like, oh, I want to be a help to third world countries way over there who are hurting. And then realizing it’s right in my community too. I don’t want to exclude the hurt and the stuff going on in my community. I want to be a help there too, just realizing the inequalities and equalities as well. We are all humans. We are all people who should be valued and have dignity, and we’re more alike than we’re different. At the heart of it, the mums in India want for their kids. What I want for my kids, I grew up with a lot of support and other people didn’t. How can I be part of a support structure for those who need it? It’s wonderful.
They emphasized the need to share their story more effectively to convince customers about the value of FT products/business. One of the study participants expressed this view as follows:
I think, for our business thinking about like the long-term trajectory of how we’ve developed part of the value of Fairtrade has been in finding community and determining peers. Just simply the idea of partnering with talented makers. I mean, even just logistically, it’s a challenging business model, language and culture differences, negotiations and translations that happen. We need to find customers … who share a sense of the value of our values and are likely to want to hear more of the story. So, I think that’s largely the value for our business that needs to be better communicated.
Overcoming barriers: Create a FT community
Many of the study participants expressed the need for additional resources, particularly in the areas of support networks and information/awareness campaigns. One participant articulated their thoughts on this matter as follows:
… before the pandemic, when I was more involved with the Fair Trade Committee, I felt like there was some momentum building, but it was interrupted. It would be beneficial to have supportive policies from the township. It would also be great if the Media business authority and Visit Media PA folks highlighted fair trade more frequently, as they used to do. There used to be more discussion about fair trade in the Media, PA, business authority and communications. I appreciate it when the Fair Trade Committee provides materials and messaging that I can use for my social media. Anything that’s easy for me to share and post without too much extra effort is welcome. Attention-catching and easy-to-read educational materials or brochures would be wonderful to have. The Fair Trade Committee gave us printed postcards with the message “What’s in your cup?” along with an infographic that provided details. I love that infographic; it’s a simple and concise way to encourage customers at Bittersweet to think about Fair Trade coffee. For a small business like mine, having these communication materials provided to us for easy sharing with our customers would be greatly appreciated.
The owners pointed out the difficulty of staying engaged in their mission when they struggle to keep their business afloat:
It would be great to hear from customers who actually say, “I would come here if you used Fair Trade coffee, so I’m going somewhere else because you do not carry it.” You’d need to hear that to stay motivated in what you’re doing. The goal is to encourage more restaurants in Media to use fair trade products, and the simple answer is if consumers start asking for them and patronizing the places that sell them. Otherwise, you’re essentially telling businesses, “Can you please make less money on every cup of coffee you sell? Can you please make less money on every dessert that you sell?” And that’s a tough sell to small businesses.
Emphasis was on creating communities through long-term shared responsibilities. In addition, respondents also emphasized the role of government regulation and leadership when it comes to ethical and social business practices.
Discussion and Conclusion
The objective of this study was to expand our knowledge of the motivations, decisions, and desires of business owners in the FT sector, by sharing their stories and providing insights into their dilemmas and successes. We present their stories related to experiences with involvement in FT businesses in a small town in the US, designated as the first fair trade town in America. While the sample size used in this study was relatively small, our study objective was not to provide quantitative and significant statistical results based on large a sample but rather to get an in-depth view of FT small businesses in the US. In addition, the sample used in this study may be considered a good representation of the cross-section of all FT businesses in a specific geographical region we studied. Based on in-depth interviews and the analysis of transcripts, various conclusions have been drawn regarding the perceptions and perspectives of small businesses in relation to their experiences with selling FT products and adopting a FT business model.
Given the demographic characteristics of Media, PA, it may be considered an ideal town for a FT business model to flourish. More specifically, Media, Pennsylvania, is known for its diverse population, socio-economic prosperity and rich cultural background. Its population is relatively well-educated, with a higher proportion of college-educated residents compared to national averages. Likewise, Media is close to many universities and colleges, job opportunities in professional sectors, and a generally higher standard of living attracting educated professionals and families to the area. The cost of living is high in Media, and accordingly its population is considered affluent with an annual average household income of $108,000 (above the US national average). Media has a vibrant arts community, and a thriving local food scene, with numerous restaurants, cafes, and farmers’ markets showcasing diverse cuisines (https://visitmediapa.com/about/). In addition, it is a Fair Trade Town, which increases awareness about FT products and its mission. We presume these characteristics present an ideal environment for the success of the FT business model.
However, most of the FT small business owners who participated in the study emphasized the considerable challenges they face in generating profits by selling FT products or using FT ingredients in their products. Many of these businesses depended on the profits earned from non-FT products for survival, yet they persisted in selling FT products due to the strong beliefs they have about the overall benefits they were creating for society and the environment. This is what Raynolds (2012) called as the ‘mission-focused’ or ‘mission-driven’ organizational characteristics. They had a strong personal and emotional commitment to the collective responsibility but also needed collaborators and partners to accomplish their objectives. These business owners explicitly expressed a desire for and importance of collaborations among various stakeholders, particularly in their efforts to enhance consumer awareness and through consistent information/communication campaigns. To this end, getting involved in outreach, consumer education, and establishing advocacy networks could be helpful. They request more consistency in messaging and streamlining the supply chains for transparency and direct producer-seller contact to improve operational efficiencies and reduce costs.
Small business owners emphasized that to mainstream the FT products in their communities, a key emphasis should be placed on ‘creating value’ and communicating it effectively to consumers and other stakeholders (actors). Additionally, there is a desire to increase customer engagement in FT businesses, especially through online word-of-mouth communication and reviews. Although satisfied customers are more likely to provide online reviews and feedback (advocacy), loyalty programs should be developed that encourage customers to participate in such behaviours and all stakeholders should cooperate to incentivize such behaviours. Owners were perplexed by the lack of customer involvement, even among their most loyal patrons who consistently purchase FT products. These customers either hold back from sharing their experiences, especially on online social media platforms, or appear to be unaware of the ethical and social significance of their FT purchases.
Considering that most FT products are sourced from small businesses in international markets, there exists a disconnect between FT and the value it could potentially provide to local communities. In contrast to popular perceptions, it is possible to procure FT products locally from farms within the community where FT products or ingredients are sold. Business owners who participated in the study emphasized that some of the FT ingredients they use, such as milk, are sourced from local FT farms. Unfortunately, this information often goes unnoticed due to the prevailing perception that purchasing FT products primarily supports overseas producers (farmers), rather than local farmers. They stressed the importance of linking ‘Buy local’ movement campaigns or slogans with ‘Buy fair’ messaging. Participants felt that establishing a stronger connection between ‘Buy Fair’ and ‘Buy Local’ and effectively communicating this to a broader audience is essential. They emphasized that these two concepts do not necessarily conflict but can rather have great potential to complement each other.
Finally, many of the FT products utilized as ingredients or sold as finished goods by these businesses are typically categorized as commodities (e.g., produce, milk, coffee, etc.), often lacking recognized brands and are differentiated. As products become less differentiated, demand for those products tends to be more price-sensitive. However, concerning FT products, business owners noted that they already pay elevated prices, yet they have the limited capacity to transfer those cost increases to customers through price adjustments. Suppliers of FT products are urged to prioritize the establishment or development of brand identity and recognition, wherein consumers specifically seek out recognized brands and are willing to pay a premium due to perceived added value and brand identity. When crafting brand identity messaging, emphasis on higher-order values such as community, collective responsibility, sustainable future, and emotional appeal should be emphasized. In essence, successful branding efforts may render higher prices more acceptable to consumers.
Future Research Areas
The qualitative results reported in this study need to be validated by replicating them in different communities across the US. Small businesses that participated in the study were located in a very small geographical area with limited trading area. Studies should explore if the results obtained in this study could be validated in similar and different settings. Furthermore, studies should also focus on the online or e-retailing environment of FT businesses. One of the participants emphasized that high prices were not a major concern for them because of their reach to larger consumer markets through online sales and differentiated craft FT products they sold.
Future FT research should leverage existing established theoretical frameworks and methodological approaches to further examine the changing FT business practices, motivations, barriers, and market opportunities. In terms of theoretical frameworks, the FT research could benefit by adopting relevant established theories such as stakeholder theory (Freeman, 1984), the resource advantages theory (Hunt & Morgan, 1997), relationship marketing theory (Morgan & Hunt, 1994), and the circular economy theory (McDonough & Braungart, 2010). These theoretical frameworks would provide the much-needed guidance for rigorous empirical hypotheses testing that researchers and practitioners are interested in uncovering.
To this end, we argue that the challenges faced by the effectiveness of the FT industry are closely linked to both the end of the value chain and upstream levels, as well as with external actors (participants) beyond the value creation partnership. In other words, consumers lack individual incentives to engage in FT consumption behaviour due to the obscured and misaligned economic benefits of fair trade. Additionally, consumers are bombarded with competing signals, including similar sustainability labels, concerns about industry transparency, and a lack of trust (Castaldo, Perrini, Misani & Tencati, 2009; Dragusanu, Giovannucci & Nunn, 2014). Similarly, at the upstream stages of the value chain, there may be a lack of motivation to act sustainably (or efficiently) because suppliers are often invisible to consumers, and there is a deficiency in sanctions for misconduct through reputation mechanisms. Furthermore, external stakeholders outside the fair-trade partnership, such as consumers, the media, and the government, wield substantial influence over the success of FT (Grunwald, Schwill & Sassenberg, 2021). Therefore, before the FT business can expand, it is imperative to establish stricter regulations and acceptable practices concerning due diligence for companies within value chains. This legal and social infrastructure is essential to mitigate the diminishing pull effect of voluntary FT standards, which become increasingly less suitable when FT practices aspire to become mainstream business practices. The empirical question arises: ‘How can consumers and organizational buyers be encouraged to use fair trade products more frequently, thereby contributing to the further expansion of the sustainability co-creation partnership?’
Finally, future research can employ new methodological approaches to deepen our understanding of businesses’ behaviours and decisions regarding the adoption of FT products and business models. Among the various methodological approaches, qualitative comparative analysis (QCA) offers valuable potential in extracting the causal and non-linear relationships among a complex set of variables based on qualitative studies. A specific type of QCA, called fuzzy-set Qualitative Comparative Analysis (fsQCA) developed by Ragin (2008) may be used to explore the complexities of Fair Trade engagement and business decisions. Data generated based on the in-depth interviews may be used as input for fsQCA to understand the necessary and sufficient conditions for the FT phenomenon of interest (i.e., FT business engagement). Such studies would offer additional empirical evidence in our understanding of the FT relationships among a complex set of stakeholders as well as stimulate additional research in this area.