Calling the shots

In recent times, there has been an increased drive towards sustainability in the retail sector led by consumer demand for brands to align with eco-friendly and responsible causes

Until recently, shopping comprised of taking a trip, planned in advance, to a favourite store. With the advent of the e-commerce revolution, the whole dynamic of the relationship and the activity has been turned on its head. In lieu of going to a store, people are increasingly purchasing goods and services online. Thanks to mobile technology and social media, consumer preferences have been rewired as it pertains to shopping, ushering in one of the industry’s biggest shifts in consumer behavior. In today’s day and age, consumers come highly informed with specific demands pertaining to price, ingredients, delivery options, production methods, and much more. For brands, it has now become important to offer items based on specific qualities tailored to meet consumers’ demands, such as products that are certified as organic, fresh, environmentally friendly, parabens-free, and the like. Over 70 per cent of respondents say they are looking for specific attributes that are important to them when choosing a brand.

Described as the achieving of the maximum by using the minimum, sustainability is a concept that has gained traction, especially in light of the global pandemic over the last two years. One sector that has witnessed a massive upheaval is the retail market in which consumer preferences and shopping patterns have quickly shifted and are unlikely to return to pre-pandemic behaviours. The topic has never been as critical and important as it is right now. Recent consumer research conducted across more than 27 countries shows that the importance of sustainability, the environment, ESG [environmental, social, and governance], safety, natural products, local sourcing, ethical sourcing, et cetera, has been reinforced, not just in Europe but all over the world. More and more consumers are showing willingness to pay more for sustainable products, which has led to greater environmental regulation. For example, more than 70 countries have put legislation in motion for plastics.

According to Najeeb Ghyas, Head of Marketing – MENCA at Electrolux: “The drive for sustainability is growing in the region. Shoppers are making more environmentally conscious decisions while purchasing new products. This trend can really be seen in consumer appliances industry where ESMA rating has become an important factor. At Electrolux, sustainability is embedded in everything that we do. Our broad range of appliances are designed to make flavors, clothes and wellbeing last. Our purpose is to Shape living for the better”

In recent times, sustainability has become an expansive term that can encompasses anything from environmental conservation to factory conditions to employee relations, and everything in between. For companies, this translates into incorporating sustainability into its strategy and operations. Increasingly, consumers are showing willingness to embrace social causes by seeking products and brands that align with their values. According to recent findings, nearly six in 10 consumers surveyed are willing to change their shopping habits to reduce environmental impact. Nearly eight in 10 respondents indicate sustainability is important for them. And for those who say it is very/extremely important, over 70 per cent would pay a premium of 35 per cent, on average, for brands that are sustainable and environmentally responsible.

There are two broad categories of consumers: value-driven and purpose-driven. Value-driven are primarily concerned with getting their money’s worth and select brands based on price and convenience, whereas purpose-driven consumers select brands based on how well they align with their personal values and are willing to ‘walk the talk’ when it comes to sustainability, changing their behavior, and even paying more for brands that get it right. According to the latest findings, 81 per cent of respondents worldwide belong to one of two shopper segments: value-driven consumers (41 per cent) who want good value and purpose-driven consumers (40 per cent) who seek products and services aligned with their values. Furthermore, 57 per cent of consumers are willing to change their purchasing habits to help reduce negative environmental impact and 71 per cent of those surveyed indicated that traceability is very important are willing to pay a premium for brands that provide it. This has led retail and consumer products companies globally to increase their focus on sustainability over the past five years. Since 2014, global sustainable and environmentally responsible investment is up 68 per cent and now tops $30 trillion.

James Mudie, CEO of natrl Box Water said: “Sustainability awareness plays an increasingly prominent and integral part of the purchasing decisions of consumers globally. This trend is particularly evident in the bottled water market where the environmental impact of the single use plastics traditionally used in packaging water is a daily topic of concern in the media. There is a growing expectation from consumers that producers will offer them the opportunity to make conscious, sustainability oriented purchasing decisions.” For companies, success now requires them to include sustainability as part of their long and short-term strategic planning from start to finish. Companies and brands need earn consumers’ confidence through transparency and traceability. Consumers’ are now demanding more product information in exchange for brand loyalty and purchasing decisions. To win over consumers, companies need to employ the latest technologies to provide transparency of production methods and traceability of source materials. According to results of surveys, consumers are willing to pay a premium or change behavior to reduce environmental impact. To compensate for that, companies need to offer options that provide trade-offs between supply chain cost, service, and environmental impact as these trade-offs can reduce variable logistics cost while enabling the consumer to participate in initiatives that reduce emission or otherwise help maintain a healthy planet. Most crucially, companies need to align sustainability initiatives to its core competency. This is because brands and retailers need to identify the specific traits and causes which rank highly in consumer preferences so they can factor that valuable information into product design and development. In the age of the circular economy, brands and retailers are actively looking to participate in varied ways to find innovations to reduce waste and fulfill customers’ sustainability demands with new products and processes.

Alia Jashanmal, Co-Founder of Aloushi’s said: “Sustainability has become an essential factor when consumers search before purchasing a product. It’s not only where the product is made, it’s how it’s made. Consumers are more aware of the story that goes behind each piece and are willing to support small businesses to achieve their goals and make their dreams come true. Aloushi’s provides the platform with its core values being sustainability, diversity, and creating a timeless community.”

With sustainability occupying such a central role, consumers are increasingly demanding to know more than just the list of ingredients on a label. They want details about sourcing, how products are made or processed, as well as how they are delivered. Of the consumers surveyed, 73 per cent indicate that traceability of products is important to them. Of those who say this trait is very important, 71 per cent would pay a premium for it. Shoppers also seek information on corporate sustainability policies. Many want assurances that brands support recycling, fund charitable causes, or take other actions demonstrating social responsibility. When consumers choose a product with sustainability in mind, 84 per cent say brand trust is important. To put it simply, at the end of the day brands must realise that retail has evolved into something beyond mere shopping. Consumers are using brands as a proxy for the attributes they seek. Therefore, trust and credibility need to be constantly reinforced.