The megatrend being adopted by leading retailers
I do not believe in immortality of the individual, and I consider ethics to be an exclusively human concern with no superhuman authority behind it.
– Albert Einstein
Don’t sell me a product, sell me a purpose. This is now the catch-cry of some of the most successful global and domestic retailers, amid an increase in consumer consciousness in recent years.
From Anita Roddick of The Body Shop fame to the US-based business Everlane, sustainable consumption has become a mainstream topic influencing many consumers’ attitudes and behaviours, and this is changing the retail landscape.
In our 2019 Global Consumer Report, we dove into global attitudes on the topic of sustainability and ethics in retail and revealed some fascinating insights.
It’s no longer just about quality and affordability
Quality and affordability are no longer the sole drivers of purchase decisions, with a rising number of consumers wanting to buy ethical products. They don’t want to buy a product – they want a sustainable lifestyle from an organisation with purpose.
This shift is being spurred by the digital revolution that has given consumers access to more information on production methods, global impact, sustainability issues and ethics.
Social media continues to be the main accelerator of the rise in consumer awareness, with platforms such as Twitter and Facebook making it simpler for consumers to share information and lobby for specific campaigns.
In addition, many consumers feel that companies are responsible for their environmental impact. As a result, consumers want brands to use sustainable materials and exercise social responsibility. They are devout in their desire to associate brands and retailers aligned with their values on transparency, sustainability and social responsibility.
Research shows that 40 per cent of consumers surveyed have chosen to buy products from a retailer due to the company’s sustainability efforts in the past 12 months.
Consumers driving change
The good news for retailers is that consumers are willing to pay more for these goods. They are willing to splurge on goods from a sustainable and socially conscious brand. And millennials in particular are at the forefront of the forces driving sustainable shopping.
Our research shows that over half of millennials have chosen to purchase products from a brand because of its sustainability initiatives.
To remain relevant, retailers and brands need to do more than just provide a personalised or memorable experience – they need to become allies to the modern consumer by giving them options that align with their personal values.
From the use of recycled materials to providing good working conditions for employees, respecting human rights and donating to charities, consumers feel that it’s important for brands and retailers to employ social responsibility initiatives. Eighty-four per cent of consumers we surveyed said they want companies to care about sustainability and offer services like recycling.
Issues such as environmentally-conscious manufacturing processes, equal pay, ethical behaviour, responsible farming practices and prevention of counterfeit goods are at the forefront of consumers’ minds when making purchasing decisions.
Transparency top of mind
Transparency is another issue that has emerged as a big factor that is influencing consumers’ decisions. Running your retail business with transparency has become more of a requirement than a choice.
Seventy-nine per cent of consumers surveyed want retailers and brands to provide information on how their products are manufactured. They expect you to give them access to information about your company, production methods and supply chain, among others.
But more importantly, customers expect the information to align with their values and the responsible mindset they have. Therefore, any retail business looking to gain consumers’ trust and build relationships must adopt transparency throughout their value chain and product life cycle. And the only way to ensure transparency is through open communications built on high levels of information disclosure, accuracy, and clarity.
Companies need to find ways to give customers access to this information when they are looking to buy a product because that’s when
Business models need to adapt
The rise of consumer consciousness has also created a demand for ethical and sustainable business models. Many consumers are of the opinion that sustainable business practices should be standard. They are increasingly turning to the sharing economy concepts such as Airbnb, Uber, Netflix, and Lyft. As a result, the sharing economy is growing at a very high rate, with many start-ups operating with a share-based model.
Such concepts offer more sustainable and financially sensible services, and these business models are gaining traction. While most people still prefer to own their possessions rather than lease, share, or loan them, there has been an increased interest in renting products from companies as well as renting out their own belongings.
We found that 40 per cent of consumers are interested in renting products from companies while 33 per cent express interest in renting out their belongings.
Today, sustainability, transparency, and ethics have become crucial factors in consumers’ purchasing decisions, and their significance will only continue to rise.
It is no secret that businesses must be responsive to consumer demands and expectations. Therefore, brands and retailers will have to incorporate this megatrend into the business models in order to survive, and those that fail will suffer consumers’ backlash.
Brands will need to show strong commitments to sustainability, and ethics through transparency and addressing material issues.
Trust and purpose are increasingly the foundation of great brands and their retail deployment. They are very much the currency of great brands,
Authored by Brian Walker, CEO of Retail Doctor Group, and Anastasia Lloyd Wallis, GM of consumer insights at Retail Doctor Group, a retail advisory and consultancy group and the Australian elected partner member of the global retail expert’s alliance Ebeltoft Group.