By N. Lothungbeni Humtsoe
Sustainability concerns are now influencing consumer behavior among more than half the population. However, despite intentions to be sustainable, there is a gap between what consumers think they know, and what they actually know, about sustainability.
A new report from the Capgemini Research Institute examines the impact sustainability has on consumer purchasing patterns and how well consumer product and retail (CPR) organizations understand consumer expectations. The report finds that sustainability has risen up the customer’s agenda with 79 percent of consumers changing their purchase preferences based on social responsibility, inclusiveness, or environmental impact.
Moreover, Covid-19 has increased consumer awareness and commitment to buying sustainably with 67 percent of consumers revealing they will be more cautious about the scarcity of natural resources due to the Covid-19 crisis, and 65 percent said that they will be more mindful about the impact of their overall consumption in the “new normal”.
‘Consumer Products and Retail: How sustainability is fundamentally changing consumer preferences’ finds that 53 percent of consumers overall and 57 percent in the 18-24 age group have switched to lesser known brands because they were sustainable.
More than half of consumers (52 percent) say that they share an emotional connection with products or organizations that they perceive as sustainable. 64 percent say that buying sustainable products makes them feel happy about their purchases; which is even higher in the age-group 25-35 with 72 percent.
Both consumers and enterprises have a lot more to learn about sustainability
Despite intentions to be sustainable, there is a gap between what consumers think they know, and what they actually know, about sustainability: 78 percent of consumers are not aware that it takes 1,000 liters of water to produce a chocolate bar and 68 percent are not aware that an average burger results in more emissions than driving 15km in a large car. Nearly 68 percent of consumers who purchased these products were willing to purchase a more sustainable product once they were made aware of the sustainability issues.
CPR organizations also understand the benefits sustainability has on their relationships with customers: 77 percent indicate sustainability leads to increases in customer loyalty, while 63 percent say it increases brand revenue. This highlights the need for more sustainability-related information to be available for consumers and reinforces the importance of brands driving the sustainability agenda.
However, a knowledge gap also exists among retailers and manufacturers who think their shoppers know more than they do. 65 percent of executives say their consumers are very much aware of their sustainability initiatives, but 44 percent consumers say they do not trust product sustainability claims.
Most organisations are just scratching the surface of sustainability
Nearly 80 percent of organizations mention the impact on margins or cost overruns as a challenge in scaling sustainability initiatives and for almost three in four organizations, other issues take priority. Three out of four CPR organizations say they have a strategy, infrastructure, and resources in place to drive sustainability and circular economy efforts. However, when it comes to deploying company-wide initiatives that have impact, less than one quarter of organisations have managed this.
The most commonly scaled initiatives are fair labor policies and safe working conditions with 48percent of organizations claiming to have achieved scale in these areas.
Pia Heidenmark Cook, Chief Sustainability Officer at Ingka Group says, “I think a challenge that many organizations face is change management. A perception many organizations have is that sustainability is more expensive. However, they do not realize that initiatives like waste reduction or energy efficiency will reduce your operational costs. So, I would say the key challenge that stands in the way of sustainability is change management – showing the business case, why it makes sense, and influencing and inspiring people to understand why it makes a difference.”
“So far, many organizations have viewed sustainability as a bolt-on,” says Kees Jacobs, Vice President, Consumer Goods and Retail at Capgemini. “However, when baked into an organization’s mission and purpose, sustainability has the potential to entirely change an organization’s relationship with its customers and partners. The pandemic has heightened global desire for authenticity and responsibility, particularly from large organizations. As businesses focus on transformation in the wake of the pandemic, they should put sustainability at the heart of their efforts.”
(N. Lothungbeni Humtsoe can be contacted at firstname.lastname@example.org)