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Why Do Consumers Demand Sustainability While Refusing To Pay For It?
Reuters reports that consumer goods makers and retailers are investing in sustainable products in response to years of public outcry, but there’s one problem: Retailers are locked in “an uphill struggle convincing people to switch when those products cost more or look inferior.”
This ironic turn of events comes after “shareholders, consumers and regulators have pressured companies — from Kimberly-Clark (KMB.N) and Nestle (NESN.S) to Walmart (WMT.N) — into spending billions of dollars on more sustainable supply chains to produce less environmentally harmful products.”
The sustainability transformation leader at Kimberly-Clark explained that the company is seeing a gap between what people say they want and what they actually purchase. Customers once demanded sustainable products but now aren’t compromising on price and quality. This is the company’s observation after switching to mostly recycled fibers in its Kleenex tissues and Huggies diapers.
By the end of 2022, Kimberly-Clark globally reduced its Scope 1 and 2 greenhouse gas emissions by 42% and Scope 3 emissions by 10.8% compared to 2015, and it sourced about 90% of its tissue fiber from “environmentally preferred” sources.
TheRoundup, a company dedicated to promoting sustainability and environmental awareness, gathered data on consumer habits in relation to sustainability in 2021 and 2022 and shared findings in a recent article. According to TheRoundup’s findings, 50% of global consumers said they’d become more eco-conscious in 2021, a trend more prevalent among home-based workers. For instance, 62% of remote workers purchased from green companies, compared to 50% of non-remote workers.
However, eco-friendly products are often perceived as premium, with 79% seeing green transport as pricier, and similar views for other categories like electronics and food. This perception coincides with a time when 74% of consumers are cutting costs due to rising living expenses. In fact, sustainable products carry a 28% price premium, down from 39% in 2018.
As 75% of consumers feel that eco-friendly goods have become more expensive recently, sustainable brands face the challenge of balancing environmental impact and affordability.
An article from 2019 proves that this lingering issue needs to be addressed sooner rather than later. According to Harvard Business Review, “Consumers often have negative associations with sustainable product options, viewing them as being of lower quality, less aesthetically pleasing, and more expensive.”
The article proposes solutions to overcome these challenges, such as to “highlight the product’s positively viewed attributes — such as innovativeness, novelty, and safety.” Tesla, for instance, “focuses on the innovative design and functional performance of its cars more than on their green credentials — a message that resonates with its target market.”
Tapping into the potential of societal persuasion proves to be a powerful tool in promoting eco-friendly consumer habits. However, it’s a double-edged sword. When only a handful of individuals adopt sustainable practices, it can create an impression of limited societal acceptance, deterring others from embracing such behaviors.
Moreover, preexisting perceptions can hinder adoption. For instance, some men perceive sustainable choices as feminine, steering clear of them. Yet, when a brand is deeply rooted in masculine attributes, such biases can be countered effectively. One such brand that was able to achieve this is Jack Daniels, which has used catchy taglines like “Even Jack Daniel’s waste is too good to waste” to make it clear to consumers that sustainability is linked to great taste and quality.
It’s ironic that our culture is now working to sustain the very notion of promoting sustainability, but if the majority of consumers don’t adapt sooner than later, there might not be anything left to sustain.
Discussion Questions
What other ways can companies convince consumers that sustainable products are worth their value and are not low quality? Will sustainable items become a declining market?
Poll
Loading …BrainTrust
Dr. Stephen Needel
Managing Partner, Advanced Simulations
Melissa Minkow
Director, Retail Strategy, CI&T
Consumers have a hierarchy of values. Sustainability is certainly on there, but for many it comes quite some way below traditional factors like price, quality, value, and so forth. As such, it is simply not always prioritized at the point of purchase. Sustainability is also a difficult concept value wise as it is nebulous and doesn’t always directly benefit the consumer in the here and now. It is, therefore, easy to ignore or put to one side. Where sustainability is linked to direct benefits for the consumer it tends to do better – for example, associating sustainability with quality or with a lack of harmful chemicals, etc.
Environmental issues aren’t going away, regardless of what consumers do. Changing consumer perceptions, sorting out supply-chains and creating good quality, lower cost, more sustainable products takes time. And as a back drop, historic inflation is a big headwind that’s forcing consumers to opt for less sustainable, less expensive goods. I do believe that Tesla and Jack Daniels have the right idea – make great products that also happen to be produced more sustainably.
We have discussed many times about companies greenwashing their products. Apparently consumers are greenwashing their purchases. Is it a surprise? Not at all.
I don’t beleive companies can convince many consumers that sustainable products are worth thier value. Being environmentally conscious is a visceral concept that escapes the spoiled American consumer. How often do you find someone keeping their A/C at 68 when 78 will do just fine? How often do you find someone keeping their A/C at 68 when A/C may not be necessary at all?
I am betting on future generations. My grandchildren are very aware in knowledge and action of sustainability. I have even been dressed down a time or two for making poor environmental decisions. The solution is education. Education from the youngest age. I am a Boomer, habits are hard to break, so make sustainable habits before those other ones are made.
If the manufacture of sustainable products costs more than traditional manufacture, someone will pay for it. Sustainable items will grow based on the fact that currently younger generations and future generations will demand it. Quality will not be impacted in the end. The market will figure it out.
Having watched young adults come to the realization that fast fashion is often cheap, low quality fashion and not worth the price, I am confident that the improved quality which comes from more sustainable practices will become part of the value equation for consumers. Takes time to realize the benefits not only to the earth, but to our closets.
This is a case of defining value. Doing the right and good thing is not always as valued as price. This is also a case of the consumer should be dictating the market, not the market trying to influence the consumer. Major pivots, especially more costly ones need to be gradual and responsive. Forcing consumer behavior, even if they publically say they want it (think about those who say they watch PBS), will always be judged at the registers.
Momentum and inertia are powerful forces of nature, not easily redirected. And nodding in agreement to a well intentioned speech is easy…very easy. Socially correct. So nodding yes does not easily or quickly convert into changed behavior. There’s an expression that says change doesn’t happen until the pain of staying the same is greater than the pain of change. And that’s probably the case now for some people. But not enough people currently feel the pain for those people to feel the impetus to change their behavior. This whole process is going to be painful…both environmentally and financially. “Affordable, comfortable change” will remain an oxymoron for some time to come.
Yeah, innovative and safe are great, but what it really comes down to is performance. More often than not, consumers are being asked to pay more for something that works less well. And that’s a line in the sand many consumers won’t cross. You want greater adoption, I think you can still charge a premium for green products, but they need to last at least as long and work at least as hard as the trade-off.
For a broader view, I suggest a look at the NYU Stern / Circana report released in April, (https://www.stern.nyu.edu/sites/default/files/2023-04/FINAL%202022%20CSB%20Report%20for%20website.pdf), which shows sustainably-marketed products’ growth outpacing conventional options by around 2x and accounting for about 17% of the market. And, they still command a price premium of nearly 30%.
All that said, there is a growing need for R&D that produces products that win on price, quality, and experience, irrespective of sustainability claims. In many categories, emerging brands are doing exactly that, some of which are finding their way to mass distribution independently, and others of which are increasingly attractive R&D targets.
Sustainability and environmental stewardship are ultimately local concerns. Retailers and brands need to push their actions down to the communities they serve and that only works when they listen to those communities first. There are plenty of examples of this, including retailers hosting local recycling centers and brands including waste reduction info on their packaging. We need more and we need to share best practices more widely. Sustainability really shouldn’t be a competitive advantage for companies, but rather an benefit for all.
Ron,
This marks one of the rare occasions I’m forced to disagree with you, at least in part.
The “Big Ticket” environmental issues, and therefor the burden of stewardship, tend to all be global issues — climate change, air and water quality, erosion of international farmlands, standards, metrics, and agreements, goal setting, etc. It doesn’t really matter what happens in Des Moines if Des Moines becomes uninhabitable because the Chinese and India are boring too much coal. Of course, local efforts are also critical, especially in aggregate but the existential environmental issues the human race faces demand a global approach.
By the way, I fully agree that, “Sustainability really shouldn’t be a competitive advantage for companies, but rather an [SIC] benefit for all.” Couldn’t have said it better.
Part of the problem is the survey instruments themselves. Of course everyone is in favor of a better environment. They are also in favor – “prefer” – peace on earth, social equality, and true love – all elements, like authentic ecological solutions, in equally short supply. If manufacturers were actually committed to the environment, they would just make the appropriate changes in product formulation, packaging, and distribution and not relabel everything “Earth Friendly” or whatever. The truth is people want what they want and they are altruistic – in that order. Oh, and no, they won’t pay extra to do the “right thing.” Consider the irony of hosting this discussion via computer, and/or phone, and Internet. The mindless search for rare earth metals that enable these technologies – notice the key word “rare” – is destroying the environment in several African nations. But, do we care? Sure, right after we get that latest generation iPhone that is.
Substitution and consolidation are powerful drivers of consumer-led sustainability but not immediately recognized: an iPhone takes the place of a camera, a clock/radio, a flashlight, an extra TV set, a calculator, a Kindle, and a landline telephone. All those items did not have to be manufactured, shipped, and sold, and their packaging did not need to be produced. The shipping of the iPhone, even by air, used far less fuel and emitted far less CO2 than the rest of those items put together. It enables more people to do some degree of work without needing to commute to an office, further reducing emissions. And it eliminates the use of a lot of paper – newspaper, homework assignments, office printouts, promotional literature, airplane tickets and timetables, etc. Hundreds of paper factories around the world have closed because demand has dropped off, for instance – reducing pressure on forests and chemical discharges into waterways. There are 1000 fewer office supply superstores in the US because the goods they sold just aren’t needed as much anymore. Videotapes, CDs, DVDs – virtually gone, as are their polluting supply chains. Cathode ray tubes aren’t made anymore and thank goodness. Should iPhones be made more sustainably / have better recyclability? You bet, though they last a lot longer than they used to and folks aren’t switching out models as often (because an 11, 12, or 13 is still a really great product).
Scott,
Good points, but respectfully, it is easier to regrow a forest- used as the raw material for paper products – than it is to replace either are rare earth metals which are of course irreplaceable and in steadily increasing demand, the lives lost mining them, or a livable environment for future generations of Africans. And, as always, it’s important to think globally and with an eye toward the facts. You say, for example, that the use of technology has reduced the need for paper, but the fact is that global paper use has increased 400% – yes four hundred percent – over the last 40 years. And, if we are just looking at America, we see that the average American uses over 700 pounds of paper every year – the highest per capita paper consumption in the world. So … progress? Maybe not so much.
Ever since green products appeared in Europe in the 1980s, consumers have loved the idea but refused to pay more or, as the tech improved, even the same. Sustainability sounds good in a survey but not so much on the store shelf.
More statistics from a company – ironically with the same name as a toxic chemical – that doesn’t list the number of consumers polled.
Why do consumers demand sustainability while refusing to pay for it? Welcome to America 2023. We talk a good game but rarely follow through. You have to wonder how many of those who claim to have gone green are really dedicated to making that happen?
First off, sustainability as a value proposition is not well defined in my view, making it kind of similar to calling something “Organic”. In the case of organic, one pays a 10-20% premium…for what exactly? Because the can of organic beans @ $1.20 taste exactly the same as the “regular” beans at $1.00….so is the 20% premium worth it? Hard to say.
Without a well understood definition, “sustainable” can become another form of virtue signaling. When you can “tell the story” of the sustainability of your product, that definitely increases the value proposition. To illustrate: If one wanted a teak dining room set, and you knew the set you want was made with wood from a teak “farm” as opposed to laying waste to the Amazon, and you had any kind of moral compass (thought I would throw that in here!) that attribute would influence your buying decision. Hopefully!
First and foremost, consumers purchase products to fill a need. The question they may ask themselves after that is whether or not a more sustainable product can fulfill that need in the same way as the less sustainable version. The answer can be complex as a number of different factors come into play: Did the sustainable product fail to perform for them in the past? Do they have an understanding of what sustainable means for this product? Has the product’s manufacturer been accused of greenwashing? Is the price differential too high? The list can go on and on. It boils down to what is important to the consumer and whether or not the manufacturer can demonstrate value. It’s the same for every product on the market, just a few additional metrics when claiming sustainability.
Consumers generally believe in the spirit of sustainability, ranging from sustainable carbon-neutral supply chains, aligning with brands with net zero ambitions, and philosophically aligning themselves with companies that have shared their environmental beliefs. Unfortunately, the harsh economic reality of having to make purchase decisions due to the relentless inflationary fueled economy, the rising costs of living, a disrupted housing market, and a relatively unstable job market, in many instances, consumers are unable to buy premium, sustainably produced products.
The emerging consumer demographic, GenZ, is coming of age and being fully conscious of their carbon footprints, environmental impact, and a greater awareness of their purchase decisions. They certainly influence their GenX and Millennial parent’s purchase decisions. Additionally, the looming federal regulations around net-zero carbon emissions are forcing manufacturers to, by default, offer more sustainability-produced products and packaging and sustainable supply chains.
Sustainability matters and should be at the forefront of the upcoming national election. However, until the economies of scale kick in and the sustainability products become more accessible and affordable, consumers will gravitate to what their budget allows.
This issue is always price, and if the sustainable products aren’t more expensive, they’re still perceived to be. Until brands can successfully market sustainable products at price points that appeal to consumers, this tension will unfortunately exist.
Often, there is a cost to a “sustainable” product. Some companies/brands/retailers simply charge a little more. While not the lowest price, the price is often close enough. our customer service/experience research (www.Hyken.com/research) found that 41% of customers are willing to pay more if a company or brand has a cause that is important to them. That was especially important to GenZ (60%) versus Boomers (27%). Price may be less sensitive depending on your customer base and how you promote your sustainability program.
It seems to me that there’s a built in bias at work here. When asked about sustainable products, the average person knows the “right” answer. Of course we all want to do what’s best for the environment. But shopping carts are driven by the realities of our budgets. Rather than trying to convince consumers to buy something they can’t afford or don’t really need, the most successful retailers sell what people buy. Think Sam Walton and Walmart.
Because this is an example of consumers who say one thing in a focus group but then behave completely differently during the purchase process.
One example in the past year I’ve purchased some Dial hand soap concentrate that was discontinued and some of it when I diluted it worked great, but some was already a gloppy mess that didn’t work when diluted and jammed up my dispenser really bad so I had to throw a dispenser away.
There has also been some Dawn dish soap concentrate that has been on clearance recently and again this works but for whatever reason people didn’t buy it.
This is nothing new. 20 years ago stores had fabric softener refills in milk carton type paper containers- what happened to those? Gone. Customers didn’t buy.
Kimberly-Clark explained that the company is seeing a gap between what people say they want and what they actually purchase: I’m shocked…shocked
The problem, largely, is matching costs and benefits: the consumer sees the cost, but the benefit is harder to see as it’s diffused and largely intangible. So a product is always better off if can show some personal,/i> benefit: “safer” or “stronger” is better than something esoteric like “sustainable”; indeed the average person struggles to understand what the latter term evens means…ask five people and you’ll get seven answers (and a few blank stares).
Buying sustainable products or services is a values based proposition, with many variables, perceptions and outcomes in what it means. It’s not a one size fits all proposition. Each consumer will see or value things differently than another. For some, it’s living an 85% sustainable life, while others they simply want to make smart/good decisions with money and resources, regardless of how it helps the planet.
Companies need to figure out for their customers, and demonstrate in the business an ideal sustainability threshold. For many businesses, most customers seem happy if they make small strides, or with a selection of a several sustainable products, or by demonstrating reasonable operational choices, in recycling or energy usage. For other companies, more is required.