Sustainability In Retail: How To Build Ethical Value And Effectively Communicate It To A Wide Consumer Base
By Farah Thalji, Director at Simon-Kucher & Partners
It is no secret that standards set by consumers for brands are rapidly shifting and increasingly looking to complement expectations of a personable and conscious lifestyle, both from a social and environmental point of view.
While individual choices cannot match the intensity of choices made by corporations and policymakers, nor absolve them of blame in connection with unsustainable practices, dismissing the importance of individual behaviors is unwise.
Eco-consumerism works to alleviate any guilt that consumers might be feeling, and with the 2022 IPCC report shining a spotlight on all the ways we have so far failed to produce any real change, people have never been more aware of the impact of their purchases.
Sustainability is a global issue, and one that all brands, not just retailers, are being taken to task for in entirely new ways by connected consumers, who make up 86% of the regional population. The good news is that support for more eco-friendly practices can really elevate a brand’s standing in customers’ eyes. Specifically, Simon-Kucher and Partners have identified sustainability and loyalty programs as two key factors that can be leveraged to ensure a consistently growing, favorable consumer base.
In this piece, we explore the future of retail through the lens of personable and sustainable buying behavior.
Eco-conscious consumerism is growing
As per Simon-Kucher & Partners’ 2021 Global Sustainability Study, 80% of global consumers report having environmental sensibility at the top of their mind when deciding where and how to spend. Their overall objective is to lead a more sustainable life, and purchasing power is one key area where they can exercise that control. The data tells us that in the UAE, for example, 1 in 4 people have taken considerable action to make more sustainable purchases in their day to day lives over the last five years. One in 3 says they would choose the more sustainable option over a non-recyclable, non-reusable, non-durable or otherwise not environmentally sound alternative.
Which begs the question: with such a large margin, what can retailers do to fill this market gap?
Here’s a few actionable examples:
- Investing in organic manufacturing, which is a term people are already familiar with thanks to efficient marketing in the food sector.
- Offering second-hand tailoring options, which is fast becoming a mainstream market in the online space thanks to the momentum around the circular economy. A case in point is Shift Eco, a UAE startup offering a wide range of eco-friendly (such as bamboo, natural, recycled, etc) products within a curated marketplace, who says their goal is “to make sustainable buying easy and fun.” Another example is Farfetch, who encourages customers to “find a treasure” by delving into their collection of pre-owned designer pieces.
- Putting their philanthropic efforts center stage in their communications strategy, such as letting customers know that they’ll donate a portion of every sale to a charity of their choice.
While these are non-exhaustive options, as industry response to these shifts continues to evolve, we’ll see more and more examples of how to successfully adapt and elevate brand value, as well as how to carefully and successfully present consumers with this reshaping.
The power of e-commerce
Ecommerce makes this a lot easier, and by far cheaper than in-person retail, but it is also important to stress that putting concrete environmentally friendly practices into place does come at an entra cost. This might not be true in the future, if they continue to become more and more widespread, but right now consumers are still facing higher price points for sustainable ranges than they do for a lot of their alternatives. So, who’s happy to pay more and save the planet while they’re at it?
According to the Simon-Kucher and Partners study looking across the generational divide, Millennials and Gen Z are more likely to be willing to pay a sustainability premium than Gen X. With Gen Z still largely expected to grow into their collective purchasing power, and the younger half of them not having any income at the moment, whether disposable or not, the study is a vital indicator of how things are to progress from here.
And since Millennials and Gen Z are the generations in line to exercise the most control over the ways the retail space will shift in coming years, loyalty is another important factor highlighted in the Simon-Kucher & Partners’ 2021 Global Sustainability Study.
Whereas sustainability practices might still require premium costs, loyalty programs can be streamlined and still be just as impactful. Consumers have come to expect customized touchpoints such as direct communication, product recommendations, and promotions, and we already know the value of strong customer relationships is always going to be sky-high. Personalization along the consumer journey makes people feel appreciated, and they are more likely to shop from the same brand again.
Still according to the study, 72% of connected consumers in the UAE report being a part of at least one loyalty program, while 40% say they’re part of more than one. With figures so strong, it’s almost a given that consumers in the region will be more likely to complete a purchase with a selected ecommerce platform if the latter presents personalized discounts, recommendations, offers, and if it makes an effort to interact with its consumer base.
Market trends are continuously shifting, and so are consumer demands, so adaptability of the value model remains key. But by combining concrete sustainability efforts and an enhanced purchasing experience, brands can make sure to elevate awareness as well as conversion numbers.