Five Things Retailers And Brands Need To Know About Sustainability
Contributor: Richard Kestenbaum
Thai natural resources
It’s the word you hear every day when you shop: sustainability. But what does it mean and what should companies be doing about it? The Conference Board has just completed an exhaustive worldwide study of 30,000 consumers in 64 markets and has some definitive answers to those questions. Here are the five most important takeaways.
1. What Sustainable Means
Unfortunately, the meaning of sustainability depends who you ask because the answer varies by region around the world.
In the U.S. and Canada, the most important meaning is "recyclable."
In Asia, it’s “environment.”
In Europe, the Middle East and Africa, it means a fair price.
In Latin America, it’s about products made from alternative sources of energy.
2. Sustainability Is Not The Key Criterion, But It Can Tip The Balance
Consumers say they won’t buy a product only because it has sustainable characteristics. But the research found that once consumers find a product with acceptable price, function, performance, quality and convenience, consumers prefer the sustainable product and it’s a competitive edge.
3. There’s A Lot Of Confusion
The reason brands who have fair labor conditions and practices lose customers is that consumers can’t tell who’s more fair. Having third-party certifications may be a big help on the issue until standards are developed so that everyone can be measured equally. There is also an issue of trust: Without third party verification, consumers don’t know who to trust.
4. Price Is A Barrier
The number one reason why consumers don’t buy sustainable products, however they define it, is price. Until carbon taxes or efficiencies level the playing field, price will continue to prevent growth in sustainable products.
5. Government Is Failing
Worldwide, consumers believe governments should be leading the charge on sustainability but they aren’t. Consumers find that the leaders in sustainability are the leaders in the following industries:
Home appliance manufacturers
Around the world, 81% of consumers find it extremely or very important that companies should help improve the environment. About 75% think CEOs should take the lead on creating positive change rather than waiting for government to act. Over 70% of employees think it’s critical for their CEO to respond to challenges in industry and politics.
What To Learn From All This
In the era of Reconstruction and several years beyond, from 1865 to about 1900, the presidents of the United States were less influential than their predecessors or successors. Think about the names you know from that period and what you’re likely to come up with are business leaders like Mellon, Rockefeller and Carnegie. After the civil war, Americans lost confidence in government, but during that time confidence in business leaders was much higher and business is where society looked for leadership.
These days, when people think about leadership in government today, confidence is not what they’re feeling. But it’s different for business leaders; names like Bezos, Buffett and Gates are much more revered than political leaders. It may be that we are entering, or have entered, a period similar to Reconstruction where business leadership is more important than government. That’s not necessarily a good thing — problem-solving often requires massive resources that only government has.
But it may be an enormous opportunity for brands and retailers. If it’s right that consumers are looking to businesses for leadership, then giving that leadership to consumers is a huge opportunity for brands and retailers. In this environment, brands that can harness the values that consumers want in sustainability and other social purposes can develop loyalty among consumers that nothing else can match. You can see that in the way that certain, but very few, brands like Patagonia, Stella McCartney and Allbirds are regarded. The values they convey in sustainability and their attitudes make the price of their products less important. Because they represent what’s meaningful to consumers, price stops being the most important criterion in the purchase decision.
That is where brands who want to maintain high gross margins, high profitability and sustainability values need to go. Consumers want leadership now and giving it to them may be the best way to build a business in this environment.