Finding success through sustainabilityBY Australian Retailers Association
With a rise in consumer awareness and affluence, retailers with strategic sustainable solutions are reaping the rewards with increased profits, consumer growth, and brand loyalty.
Corporate responsibility and sustainability strategies can take many different forms depending on the individual retail sector, but one thing is clear: consumers are using their spending power to influence the change they want to see on environmental issues.
In a recent Nielsen global online survey, 81% of global respondents felt strongly that companies should help improve the environment. This passion for corporate responsibility is shared across gender lines and generations. Millennials, Gen Z and Gen X, are the most supportive, but their older counterparts aren’t far behind.
Furthermore, the majority (73%) of consumers said they would definitely or probably change their consumption habits to reduce their impact on the environment. And nearly half (46%) surveyed said they would be willing to forgo a brand name to buy environmentally friendly products.
In Australia, environmental issues are a significant concern to 77% of households, which is a 4% increase from 2017. These consumers actively engage in “green” activities, such as recycling and the reduction of single-use plastics and plastic bags. In fact, there has already been a 33% reduction in plastic waste since banning plastic bags in some states.
Retailers communicating sustainability attributes are also realising the opportunity it has to increase growth and profit. Nielsen’s Changing Consumer Prosperity study reveals that the majority of Australian consumers are either highly or somewhat willing to pay more for products that are environmentally friendly or sustainable (62%), contain organic or all-natural ingredients (59%), or carry social responsibility claims (55%).
Opportunity and Approach
Sustainability isn’t a trend retailers can side-step. Sooner or later, whether through government regulation, the sheer force of nature, or public outcry, retailers will need to respond. And connecting sustainability factors to how it impacts consumers is the key.
By identifying an opportunity to be more sustainable, and implementing a reasonable plan of action to accomplish it, retailers can achieve authenticity that paid advertising can’t buy. When it comes to building an approach to corporate responsibility and sustainability, it is essential to understand how each factor plays into a consumers’ mindset and the sustainability sophistication of their market.
Where the sustainability product landscape is less developed, retailers that establish themselves early can become sustainability champions, which could give them a competitive advantage before the market becomes more crowded.
However, in retail sectors where sustainability is more established, consumers are quickly becoming hyper-aware of the impacts of pollution and are demanding stronger, more aggressive action from their favourite brands and the Government. For instance, in grocery products where “organic,” “natural,” and “artificial-free” are becoming commonplace terms, consumers are starting to ask “what do you mean?” and looking for more clarity in these claims.
Recommendations to help your brand win in sustainability
- Understand the impact of ingredients and the level of scrutiny that consumers apply to the products they purchase.
- Consider the link between what’s healthy for the environment and healthy for the consumer.
- Communicate the benefits in your marketing and incorporate the applicable sustainability claims on packaging.
- Support your sustainability strategy with the right marketing, promotions, and distribution
- Understand that consumers and their expectations will continue to evolve, so keep a pulse on your marketing and fine-tune your messaging in-flight.
In the longer term, it’s important to invest in product development, testing, and research. As the market becomes more crowded, it’ll take more to stand out. Seek to build and grow your sustainability strategy to encompass every part of the business. And create a roadmap for product enhancements based on customer feedback and internal R&D, whether it's shifting to more sustainability-focused suppliers, reducing your use of packaging materials, or changing the ingredient line-up across your portfolio.
Lastly, don’t forget sustainability is intricately linked with corporate reputation and authenticity. Any false claims or sloppy vendor management can result in a major scandal and damage a brand’s reputation.
Megan Treston is the Executive Director of Retailer Services at Nielsen. For more than 90 years Nielsen has provided data and analytics based on scientific rigor and innovation, continually developing new ways to answer the most critical questions facing the media, advertising, retail, and fast-moving consumer goods industries. For more information, visit nielsen.com/au
ABOUT THE AUTHOR
Australian Retailers Association
Founded in 1903, the Australian Retailers Association (ARA) is Australia’s largest retail association representing Australia’s $320 billion sector, which employs more than 1.3 million people. As the retail industry’s peak representative body, the ARA works to ensure retail success by informing, protecting, advocating, educating, and saving money for its 7,500 independent and national retail members throughout Australia. For more information, visit www.retail.org.au or call 1300 368 041.