Consumers Want Sustainability - and They Are Willing to Pay for It
“93% of global consumers expect the brands they buy from to support social and environmental issues.” [source: SalesForce 2022 Holiday Planning Guide for Retailers].
Modern consumers are focusing on more than just the quality and price of a brand’s product. Other factors like a business’s stance on climate change, fair wages, and diversity matter. Additionally, the ESG-related (environmental, social, and governance) claims on the products themselves, as well as their packaging, are all playing a very important role in their purchase decisions.
Sustainability and the Customer Experience
Many large retailer and consumer brand companies are increasingly announcing or implementing CSR (corporate social responsibility) pledges that include environmental goals and social responsibility initiatives with the intent to appeal to customers and create a positive reputation around their brands.
Millennials and Gen Z now account for over 40% of the US population, and their share of the consumer market will continue to grow in years to come. They are loyal to brands that understand their social values, environmental concerns, and needs, and they intend to back them up with their wallets.
Further, a report from Aflac said that 77% of consumers are more willing to purchase from a company with a CSR pledge.
Sustainable Profitability
There are anywhere from 15,000 to 60,000 SKUs found in traditional grocery stores. CPG companies are increasingly promoting ESG-related (environmental, social, and governance) claims on their product labels: for example “fair trade”, “cage-free”, “eco-friendly”, “biodegradable”, and other related designations.
A recent joint study from McKinsey and NielsenIQ set out to track actual dollars being spent on these products versus consumer sentiment: “Do shoppers follow through and buy these products while standing in front of store shelves?” Here is what they found:
“Over the past five years, products making ESG-related claims accounted for 56% of all growth - about 18% more than would have been expected given their standing at the beginning of the five-year period: products making these claims averaged 28% cumulative growth versus 20% for products that made no such claims.
Additionally, a 2019 report from Accenture found that 72% of consumers were buying more environmentally friendly products and that over half of consumers are willing to pay more for products designed to be reused or recycled.
Businesses may assume that meeting today’s consumer-conscious demands comes at a cost. It’s not a ridiculous assumption either; making sustainable changes to your business, processes, and supply chain can take a lot of time, resources, and money.
According to Challenge.org, companies that plan with climate change in mind see an 18% higher return on investment (ROI) than businesses that don’t. And that increased ROI comes alongside meeting the demands of your customers, resulting in more loyalty and sales.
Per the array of research data above, it's apparent that consumers are shifting their spending toward companies and products with sustainability at its core. Focusing on this agenda is not just a moral imperative, but a smart business decision.
Ethics and the Future
While there are plenty of business and financial reasons why your business should focus on sustainability, at the end of the day, we are all on this planet together. If sustainability efforts are completely ignored, we will eventually run out of our already limited resources and cause irreversible damage to the environment.
Even if the moral plea behind sustainability doesn’t move you, there is an economic case to be made as well. Forgoing sustainability efforts can result in a future where your business is much less profitable and possibly not even able to exist. If you want your brand to succeed for years to come, focusing on sustainability is a must.
In summary, sustainability is more than brand differentiation; it’s about brand survival.
The market is heavily saturated with products. Companies that choose to make a difference and lead with purpose will stand out among their stakeholders. It’s a win-win-win: for your business, consumers, and the planet.
At Orora Visual sustainability is “Our Promise to the Future”. We consider how our business decisions impact the planet every day: from sustainable practices and sourcing to offering eco-friendly print solutions for retailers and consumer brands’ in-store marketing materials, signage, displays, and packaging. CONTACT US before your next retail campaign hits the drawing board.