Sustainability in retail: A look at consumers
While some companies have anchored sustainability in their DNA for decades, the big changes in the consumer goods industry are yet to come. Nevertheless: Sustainability is no longer a niche topic in 2020, but has blossomed into a competitive advantage, because the demands of consumers, especially younger ones, have increased.
What exactly is sustainability?
Many associate the concept of sustainability primarily with environmental protection. But there is more behind it, namely diverse ecological, social and economic aspects. Specifically, this includes, for example, the reduction of CO2 emissions, the careful use of resources, avoidance of plastic and environmentally harmful ingredients, the protection of people and animals and fair trade. Depending on the industry and retail company, the individual aspects have different weights.
Sustainability: That's what consumers are demanding
Numerous consumers have enjoyed the convenience of online retail for years without thinking about the downsides – waste from packaging and returns, CO2 emissions during transport and poor working conditions in the production facilities of their fast fashion darlings. But in the meantime, a large number of people are questioning their own consumer behavior and attaching importance to sustainability when shopping.
Social awareness and the demand for effective environmental protection have been boosted since the outbreak of the corona pandemic. As the Adyen Retail Report published in October 2020 shows, the ethical behavior of companies has become more important to 62 percent of consumers in the wake of the pandemic. According to the authors of the study, this includes fair pay for staff, contributions to the community or environmental protection.
In the months before, the topic had already entered the minds of consumers. The Consumer Barometer from KPMG from the beginning of 2020 shows that a total of 79 percent of consumers paid more attention to sustainability when shopping last year; for women it is even 88 percent. The results also show which factors consumers pay attention to in individual product segments: In the case of textiles, 79 percent want products that are produced without toxic pollutants. 74 percent want fair working conditions. When it comes to electronics and household appliances, a long service life or ease of repair (89%) and good energy efficiency (89%) top the list. When choosing shops, 70 percent look at commitment to the environment, and almost as many consider social and ecological values in products and suppliers to be important.
When it comes to sustainability, those surveyed hold manufacturers to accountable, followed by legal requirements, and in third place consumers see themselves on a par with retailers.
Where do consumers get product and company information from?
According to the Consumer Barometer, more than half of those surveyed get the information they need from the Internet. 41 percent gather information in the shop or on the product. Information from friends and acquaintances is very popular among 16 to 29-year-olds, while the group of 50 to 59-year-olds prefers to get information from radio and television. However, 50 percent of those surveyed lack clear information as to whether a product is sustainable or not. They are therefore demanding more information from manufacturers and dealers.
How important it is to provide information that is simple, understandable and quickly accessible is also shown by the fact that some consumers find it too time-consuming to deal with the topic: 25% of men feel that way.
Consumers are willing to pay more for sustainable products
Several studies show that customers are quite willing to dig deeper into their pockets for sustainable products. According to the PwC study “Gen Z is Talking. Are you Listening?” Gen Z would spend more money on non-food products that are sustainably (45%) or ethically (44%) produced. They would also accept higher prices from companies that have donated to non-profit organizations (41%). At least 38 percent are willing to pay more for sustainable packaging. And the KPMG Consumer Barometer also shows that two-thirds are willing to spend more money on sustainable products – around half of those surveyed would accept up to 10 percent more.
Tips for traders
Sustainability in retail is becoming increasingly important for consumers. If you don't want to fall behind as a retailer, you should develop a sustainability strategy and incorporate it into your company's DNA. It is important to always be authentic and transparent. Sooner or later consumers will see through greenwashing or corporate social responsibility as a pure PR measure; such deceptions are likely to quickly end in a shitstorm these days.
A trading company does not go “green” overnight. So plan the time and the necessary investments and, if necessary, bring know-how into the company. This may initially mean a financial burden, but the result will improve your image in the medium and long term and strengthen you over your competitors.
A major challenge on the way to sustainability is that there is still no objectively verifiable and internationally valid catalog of criteria. This also makes it difficult for retailers and manufacturers to check their value and supply chain and offer their customers complete transparency. Nevertheless, company-specific, measurable goals can be set and goals and values can also be communicated and lived within the company. The largest areas with optimization potential in terms of sustainability in retail include, for example:
- Packaging: Avoiding plastic and oversized outer boxes, reducing waste, introducing recyclable packaging made from environmentally friendly materials instead
- Logistics: Shorter delivery routes and more efficient delivery concepts, resulting in CO2 savings
- Returns management: avoidance of returns, waiver of returns destruction, possible donations
- Energy efficiency: e.g. B. in office buildings and warehouses, move to a "green" building, energy-saving website
In concrete terms, it can help to explain the motives to customers: for example, ask them to order the garment in one size only, or ask them to understand if the delivery of several items is combined and therefore takes longer - for the sake of the environment. In most cases, this should not damage the customer experience, but even polish it up, provided that sustainability is also an authentic goal in the company.