Sustainable retail is more than a Gen Z trend: consumers worldwide are embracing the practice—and demanding that the brands and businesses they use embrace it. But despite this growing interest in sustainability, a pair of major factors are discouraging consumers from purchasing brands with sustainability-oriented practices.
According to new research from consumer insights think tank The Conference Board, consumers cite the top deterrents as the price premium associated with sustainable products, but they also have issues with brand communications—resulting in consumers insufficiently knowing about, trusting, and understanding brands’ sustainability claims.
Despite these barriers, the results also show that companies can attract consumers through certain sustainability initiatives. A brand’s eco-friendly practices rank as the top feature that most influences consumers’ brand choice.
The new survey asked more than 30,000 consumers around the world about their views on various aspects of sustainability. Respondents from more than 60 countries participated.
How can brands overcome these barriers? The research offers three suggestions:
Innovating around sustainability offers an opportunity for companies to introduce new additional benefits that consumers value, which can reduce shoppers’ sensitivity to price.
To make sustainable products more affordable, companies can consider various cost-efficiency strategies, including industry-wide collaborations, such as developing and sharing recycling technologies.
3. Communicate and validate
To strengthen awareness and trust, companies can seek certification from independent organizations about their environmental and social practices. In addition, communicating in concrete terms the sustainability benefits of buying choices, such as the amount of packaging saved, can enhance a brand’s appeal to consumers.
Supporting social causes—a double-edged sword for companies
Promoting causes that consumers care about can help a brand, while contrarian views on issues can alienate them. But the new report finds that consumers are more likely to gravitate to a brand that endorses social causes they find appealing than to turn away from one whose stances they don’t believe in.
The case for not speaking out
Almost half of all consumers globally say they refrain from buying brands that take strong positions on social causes for one of three reasons: 1) they don’t think brands should take social positions at all; 2) they don’t want their purchases to appear like an endorsement of a brand’s social position; or, 3) they often disagree with the positions taken.
Before taking a stand, companies should have a clear understanding of their customers’ and employees’ values. They should tread carefully, only choosing causes that authentically fit the brand’s positioning.
Which issues do consumers associate with “sustainable” products?
Environmental issues are front and center—globally, most consumers associate sustainability with environmental issues: environment, recycling, and alternative sources of energy are the top associations. Consumers rank them ahead of social issues such as fair price and fair labor conditions.
In addition, there is significant geographic variation—while environmental associations lead at the global level, there is significant geographic variation in how consumers understand sustainability:
- North America: Consumers there mostly associate sustainability with recycling.
- Europe and the Middle East & Africa:Consumers in these regions mostly associate it with fair price.
- Latin America:Consumers there mostly associate it with alternative sources of energy.
- Asia-Pacific: Consumers there mostly associate it with the environment.
Given the different associations, brands should consider tailoring their communications geographically. That could entail using differentiated labels for their array of sustainability initiatives rather than universal labels such as “sustainable.”
Which sustainability features most influence consumers’ choices?
Environmentally-friendly production leads—globally, consumers rank it as the sustainability feature with the biggest impact on determining their brand choices.
Fair labor conditions have less purchasing influence—issues such as fair labor/wages and equal pay are less likely to inspire purchases.
In light of the heightened concern around climate issues, companies that offer and highlight their environmentally-friendly production will most likely benefit with new sustainability-minded customers. At the same time, fair labor practices might become more important as a purchasing criterion.
“Improved communications about a brand’s equitable working conditions could increase the influence that fair labor practices have on consumers’ purchases. Shoppers are increasingly interested in supply chain transparency, but today they often don’t know which brands are more fair. And that’s the leading reason for them to not buy such brands,” said Denise Dahlhoff, senior researcher, Consumer Research at The Conference Board, in a news release.
Which institutions and sectors do consumers think should care most about sustainability?
Government falls short of expectations—at a global level, consumers believe governments – ahead of tech companies and other policy and business organizations – should care the most about sustainability. However, governments aren’t living up to those expectations: They rank third in consumers’ perception of performance regarding sustainability.
The tech sector and the United Nations get the highest marks—globally, consumers perceive these institutions as doing the best on sustainability.
Certain industry and service sectors exceed expectations—the survey results reveal that tech companies, utility providers, financial institutions, home appliance makers, retailers, and hotels exceed consumers’ expectations regarding their sustainability efforts relative to their expectations for other sectors.
Given their disappointment with governments, consumers are looking more to companies to fill the void. It’s an opportunity for brands to innovate, differentiate themselves, and satisfy consumers’ needs and wants with initiatives around sustainability. Doing so can foster emotional attachment, willingness to pay, and word-of-mouth promotion to ultimately create financial value.