As it were ever thus, retail is the engine that drives our economy, but it’s the consumer’s needs and desires fueling that engine.
In decades past, retailers had more control over driving what consumers could purchase. In order to buy products, shoppers had to physically visit stores, which made product choices only as wide as the distance they were willing to travel. But online shopping has placed nationwide — if not global — product choices in the palms of consumers’ hands, giving them unprecedented power over retail. Today, it’s the consumer driving what retailers sell.
As consumers become accustomed to online options, choosing where to buy becomes more challenging. With data and algorithms driving price and search keywords, differences between comparable products sold at different retailers are disappearing. If that laser printer we desperately want to buy is the same price at Amazon, Office Depot, Target, and Staples and all of these retailers offer same-day delivery, how do we decide who gets our money?
We follow our values.
Although price and convenience are still the top purchase drivers among shoppers, a preference for sustainability is growing exponentially. More than 70% of North American consumers believe it’s important for brands to be environmentally responsible. Looking deeper, 47% of online shoppers have actually dropped a brand or retailer that didn’t match their personal values, with environmental responsibility being their top reason.
And while shoppers genuinely do care about saving the planet, they also want their efforts to be seen by their peers, giving rise to a new form of “social signaling.” Brands and retailers who embrace this trend will reap the rewards through keeping loyal customers — who spend, on average, 67% more than new customers. Even the secondhand product industry is gaining traction, with almost four in five consumers planning to shop secondhand over the coming year. Mainstream retailers such as Ikea, Levi’s, Nordstrom, Macy’s, and Gap are looking to garner a place in the circular retail market, forecasted to grow from its current $28 billion to $64 billion within the next five years.
But today’s easy online access to product information and reviews can be a double-edged sword by either influencing a purchase or revealing where a company doesn’t walk the walk. Consider recent criticism of The North Face, which drew headlines by declining to sell personalized jackets to an oil and gas conglomerate. Some consumers said “good for them,” but others quickly pointed out the company’s willingness to consume fossil fuels on travel and shipping. Today’s shoppers know how to hold retailers accountable.
The North Face might have better served its marketing play by owning up to its consumption habits and offering up the jackets to the oil and gas company in exchange for an environmental concession (or perhaps a donation to initiate a shared step toward change).
Environmental responsibility is not only a growing concern for shoppers, but it offers a way for retailers to break away from price as a primary value driver. The “value price” driver has become one of the biggest challenges for brands and retailers. As more shoppers embrace online ordering and delivery, retailers who positioned their brands around value pricing are struggling with falling profit margins, despite rising online sales.
Keeping product prices low while funding free delivery and free return shipping is driving many long-standing retailers to close stores, reduce staff, and cut to the bone to stay afloat. The cost to retailers for online fulfillment is not sustainable and will ultimately either drive price increases that alienate customers or drive retailer bankruptcies. A better way is sorely needed.
Positioning your brand around environmental purpose can be part of achieving that better way. Giving shoppers a reason to look beyond price is increasingly critical to keeping the customers you have — let alone attracting new ones. Globally, more than 70% of shoppers are willing to pay as much as 35% more for a product that’s better for the environment. And even in new retail sectors (such as convenience stores and grocery), sustainability is becoming important to shoppers. A survey tracking the sale of consumer packaged goods between 2013 and 2018 showed that sales for products marketed as sustainable grew more than five times faster than their conventional counterparts.
Building a road map toward integrating new values into your brand starts with open and transparent communication about where you are today as well as your ultimate goals and timeline. Then, it involves sharing small steps and victories as you progress. Remember: Customers are willing to support companies who are actively making an effort when they’re included in the journey.
Purpose and responsibility are becoming the watchwords in retail today, and shoppers are at the forefront of driving this change by voicing their values through how they spend their money. The results are evident: There’s now an undeniable link between business and society, with consumers increasingly choosing brands with purposes that align with their morals and values. Are you ready to adapt?