Consumers splash cash with ethical mind and heart
As the global retail industry remains in a state of flux, new research by Monash University reveals an increasing number of consumers prefer – and are prepared to pay more for – products that use sustainable or recycled materials.
Revealing a significant shift in the decision-making and purchase drivers of consumers, today’s shoppers are more likely to buy from a brand or retailer that aligns with their personal values. In fact, consumers believe their shopping habits have a significant impact on the world.
These attitudes give rise to a new type of 21st century individual, the post-growth consumer, according to lead researcher Dr Eloise Zoppos, from Monash Business School’s Australian Consumer and Retail Studies unit (ACRS). And these consumers are changing the retail landscape.
“Consumers today find less joy in excessive spending, and choose to spend money on experiences rather than material goods. The modern shopper is constantly searching for meaning, not only in how they live, but also how they consume,” Dr Zoppos said.
“Price and convenience aren’t the only purchase drivers anymore; consumers want to buy ethically, with global impact being front-of-mind.”
Research shows that 91 per cent of consumers want brands to use sustainable ingredients or material, and 92 per cent believe sustainable business practices should be standard. More than half of people think it’s important that products are fully made from recycled materials.
In good news for retailers, customers are willing to pay more for these options. Two-thirds of consumers are willing to splurge on products from a sustainable or socially conscious brand (this rises to 73 per cent for millennials), while 70 per cent will pay more for products that don’t infringe on human rights.
“In the past two years, there’s been an 11 per cent increase in ethical cosmetics sales. This is primarily driven by millennials who are demanding more ethical products from the beauty industry,” Dr Zoppos said.
“There’s also been a decline in the sale of leather shoes and, in the same period, a 60 per cent increase in the number of women buying second-hand clothing. This behaviour has been fed by concern about the environmental impact of ‘fast fashion’.”
In order to remain relevant, Dr Zoppos says, retailers need to become an ally to the new consumer by enabling them to make consumption choices that align with their values. This is more than just providing shoppers with a memorable or personalised in-store experience.
“Green spaces in shopping centres can also reduce consumers’ cognitive load and give them the mental space to be more mindful and considered in their shopping choices, and, ultimately, more satisfied,” she said.
The report, released today, follows the presentation by Dr Zoppos at the World Retail Congress 2019 in Amsterdam. More than 14,000 people, including representatives of the world’s leading consumer brands, attended the conference.
For more information about Monash Business School’s ACRS unit, please visit monash.edu/business/acrs.
To read the full article, visit Monash Business School’s Impact.