Investors, employees and business partners have demonstrated their adoption of the environmental, social and governance (ESG) agenda over the past few years. As well as asking senior leaders to deliver growth and profitability, they want to see a commitment to a wider set of values — from animal welfare and sustainable product development to community projects and a circular economy.
Values-driven consumption in retail is a growing and tangible consumer trend. People are re-evaluating and reprioritizing their values, moving away from pure consumerism and toward values-based, purpose-driven spending.
As Forrester writes in The Power Of The Values-Based Consumer — And Of Authentic Brand Values, this isn’t just a nice-to-have fad: strong brands are proven to deliver better business results. Almost four in 10 (37%) values-driven companies deliver double digit growth, compared with 32% of companies overall.
Authenticity is key
Authenticity is important because — regardless of age — values matter to customers. However, it must be genuine. Any suggestion of greenwashing or fake statements on values upheld by a company will be rightly exposed, and customers will likely seek a different retailer.
In Gartner’s 2019 Retail Customer Expectations Survey, consumers in the USA (27%) and UK (29%) ranked “be authentic by being honest and genuine” as fifth in the top five basic expectations that would define a good shopping experience. Consumers increasingly expect retailers to act with honesty, integrity and transparency, delivering products, services and experiences based on consumers’ values.
The pandemic has accelerated the values-driven consumption model, as people and businesses have re-evaluated and reprioritized what’s important to them. Trends such as “make do and mend” and renting clothes instead of buying fast fashion increased in popularity as people had more time to reflect on what’s most important.
A vote for sustainability
Another study by Gartner, the 2019 Gartner Consumer Values and Lifestyle Survey, supports that values-driven purchasing behavior relating to sustainability was already at an inflection point before the pandemic, and that there are now considerable opportunities for retailers. It found that 61% of consumers in Europe and 59% of consumers in the USA voted for sustainability with their wallets by doing one or more of the following:
- Checking packaging labels to ensure that the product or service had positive social or environmental impact
- Purchasing from companies committed to positive social or environmental impact
- Vetoing brands that made false claims about their social or environmental impact
- Purchasing from a company because it cared about the issues the consumer cared about
- Paying extra for products or services from companies committed to positive social or environmental impact
Preparing for the future
With volumes of values-based consumption growing fast, how can retailers prepare to satisfy demand? It’s not just about how they behave as corporate citizens, but how they choose to align with suppliers, distributors, and manufacturers across their ecosystem, as well as technology and business partners.
Retailers will also need to keep a watchful eye on changing customer expectations and adjust their sourcing and governance policies accordingly. Are consumers requiring retailers to source more products locally or according to stricter welfare codes, for example? Or have consumers lost interest in cheap fashion which can only be manufactured in poor working conditions?
Once the retailer understands what’s important to consumers, they can meet those values with action plans and reporting. UK retailer M&S publishes an annual progress report on its Plan A sustainability program. Its 2021 report showed zero waste sent to landfill, a 10% rise in the use of easily recycled materials to 87%, and a 126% increase of donated food, equalling 11.6 million meals.
Another example is US retailer Home Depot, which uses a corporate sustainability report to promote awareness of how it’s engaging with energy efficiency, water conservation, sustainable forestry, healthy homes, clean air, and the circular economy.
Meanwhile, French retailer Carrefour has seen sales boost by the use of blockchain ledger technology that tracks meat, milk and fruit from farms to stores; the company says it will extend the technology to more products to increase shopper trust.
Emmanuel Delerm, Carrefour’s blockchain project manager, reported, “Millennials are buying less but buying better products for their health, for the planet.”
QR codes are also being used to help consumers check the source of fresh food, with uptake particularly high in China. Meanwhile, the integration of mobile comms with in-store technology is creating even more opportunities to keep values-based consumers informed.
In its Future of retail operations: Winning in a digital era January 2020 report, McKinsey speculates on how a shopper may access information while browsing. “Jonathan is tempted by a new, personalized promotion that pops up on his phone as he approaches the prepared-meals aisle. But because he prefers organic foods, he wonders about the product’s ingredients. As he scans the package with his smartphone, an augmented-reality display reveals the origin of its contents, along with its nutrition information and even its carbon footprint.”
However retailers choose to apply technology to support their values-driven consumption strategy, authenticity and transparency will be crucial, whether they’re reporting on annual targets for sustainability or providing information at the point of purchase.