Why brands should take the long view of consumer habits
Note: This post originally appeared in Strategy Magazine.
MaRS’ Sue McGill on why brands need to keep sustainability in mind when it comes to their future customers.
When it comes to shopping, can consumers truly make smarter choices, or is talk cheap?
The majority of consumers say they would love to support sustainable business practices. One study by BBMG, GlobeScan, and SustainAbility found 66% of people across six different markets say they need to consume or buy less to reduce their impact on the environment. And 82% of people in developed countries say they’d avoid products if they caused environmental or social damage.
According to the same survey, 75% of respondents said they would switch to sustainable products if the products performed well or better than the competition, while 70% said they’d switch if the product didn’t cost more.
Here in Canada, the results are much the same (if not slightly better): Ipsos found that 84% would make the switch if those same conditions were met.
A full 83% of millennials (18- to 30-year-olds) said they think businesses need to do more to create a positive change in the world, and they’re backing this up with their wallets. What’s more, the next wave of power consumers, the highly sought-after millennial cohort, will make up 75% of the global workforce by 2025.
You need only look at the tremendous success of eyeglass seller (and certified B Corp, the business equivalent of Fair Trade designation) Warby Parker and the continued support of the buy-local movement to see that this cohort is willing to pay for products they perceive as making a difference in the world.
It’s now up to brands to take the long view and meet these changing consumer habits.
One company in MaRS’ ecosystem is doing just that. R3VOLVED is a Toronto-based startup that specializes in making school and office supplies (which contribute an estimated 10% of all waste sent to garbage dumps) from recycled materials. Now in its third year of business, R3VOLVED products can be found on shelves at Walmart in Canada, with a number of U.S. retailers in talks for next year.
Jacqueline Cyr, co-founder of the company, says she knew it couldn’t compete at retail if the products weren’t affordable or on par in terms of quality with the competition. She focused on designing items people wanted to use. The company works with a number of ethically certified manufacturers in China to keep the goods affordable. Cyr recognizes it’s not an ideal solution, but it’s important to start somewhere.
Cyr is not alone. In Toronto, a number of MaRS startups are embracing sustainability as their go-forward retail strategy including Nanoleaf, the world’s most energy efficient LED lightbulb with an automatic dimming solution, and ReDeTec, a company that recycles plastics for 3D printers.
While it’s easy to praise a small startup that’s baked sustainability into its business model from the beginning, big businesses are also looking to adapt to future consumers and need to start somewhere as well.
In 2010, CPG giant Unilever launched its sustainability initiative with the goal of reducing its environmental impact by 50%. This goal has already had a positive impact on the company’s bottom line, with an estimated $541 million in savings (its environmental record is also impressive—see its 2014 sustainability report here).
And it’s about more than just savings. Here in Canada, Hellmann’s Real Food Movement, which supports local urban gardens and Canadian free-range chickens, helped the brand reach a 53% market share in 2014.
With more information available online than ever before, and a much more tech-savvy, informed consumer cohort on the rise, buyers are making smarter decisions, which is spurring greater transparency from the entire supply chain—from farm to final product. For marketers, this is both a blessing and a curse. The more consumers know, the more likely they are to buy your products, but only if you’ve got the sustainable bonafides to back them up.
This sustainability trend is only set to grow. More and more consumers are casting their vote on how they want the industry to operate with every purchase they make. If brands don’t change the way they operate and market their products today, tomorrow’s consumers will simply vote them out of business.
Sue is the Head of Consumer & Commerce and Executive Director, JOLT. A startup mentor and advocate for innovation, she has been actively involved in over 200 startups in the emerging technology space. See more…