Real staying power?
Editor's note: Jennifer Wehr Holt is a professor of marketing and management at Haile/US Bank College of Business, Northern Kentucky University. Bridget Nichols is a professor of marketing and sports business at Haile/US Bank College of Business, Northern Kentucky University.
In the past decade, few things have changed as rapidly as retail shopping. Thanks to disruptive fads, trends and the innovations of a few key players, consumers now hold more control and more power over retailers than ever before, for one main reason: they have more options than ever. And the more options you have, the more power you have.
We have more stores, more ways of shopping, more delivery methods and more products than the largest superstore can hold. If Amazon doesn’t have it, Apple didn’t innovate it, Alexa doesn’t know it and Google can’t search it, does it even exist?
We live in a world where immediate gratification isn’t fast enough to keep up with increasing demand – for fast delivery, low price, good value, high quality. For products that are recyclable, sustainable, natural/organic and locally-sourced.
And do we dare admit that there is a direct, linear relationship between increased customer options and increased expectations? In fact, consumer expectations of manufacturers and retailers for product choices are at an all-time high, yet brand loyalty is at an all-time low of 9% (Nielsen, 2019). So in today’s shopping world, disloyalty may be the new loyalty.
Adding to decreasing loyalty and endless product options are the latest trends. Some are merely fads but others are not only here to stay but are gaining traction across all generations. For example, consumers, as well as companies, are increasingly taking on social and environmental responsibility as they become more aware of how their actions affect personal and planet health. Many companies have increased sustainability-friendly product options and have joined the races to fight the battles and win the war by going beyond what consumers thought was possible as far as food choices, shopping options, environmental efforts and trends such as the plant-based movement.
But in the consumers’ minds, are these efforts simply the newest marketing ploy or is there actual substance behind them that influences their purchase decisions? Are consumers really so skeptical of these socially responsible strategies as some suggest? (BusinessWire, 2019)
There is information overload coming from everyone in every direction and often with conflicting opinions. Remember the good old days when noise was actually a sound? People talking, children laughing, grocery cashiers asking how they can help? Today, the noise comes in the form of thousands of buzzwords, advertisements, promotions, claims, options, trends and offers. All of this can be overwhelming when trying to decide: who to listen to and how to listen; what’s important and what to buy; what to eat; how to buy it; how to recycle it, etc.
Is this situation an intersection of controlled and correct communication from company to consumer or is it an opportunity gap yet to be capitalized upon? Are companies reaching consumers across generations the right way and putting their efforts where we as a planet need them to? Do these efforts match consumer attitudes, behavior and demand? And how is this different across generations?
Further, what’s really important? Who is it important to? And is it important enough to change behavior, impact purchase and loyalty and the price consumers are willing pay?
To answer these questions, we surveyed 1,250 U.S. respondents via an online quantitative study to measure opinions and actions across generations from Baby Boomers, Gen X, Millennials and Gen Z.
Using a five-point Likert scale (very important, somewhat important, neutral, not very important, not at all important), the four main topics tested included recycling (being able to be reused), sustainability (defined as meeting the needs of today without compromising the needs of the future), natural/organic foods and plant-based foods.
The oldest and most well-established practice, recycling, was rated the most important across all generations, while the newest trend, plant-based food, was rated significantly less important: 86% of those surveyed rated recycling as somewhat to very important compared to 82% for sustainability, 56% for natural/organic and only 44% for plant-based foods.
Be more involved
The majority of respondents want to be more involved in recycling (64%) and sustainability efforts (59%) and 71% of all surveyed want to do more than they’re currently doing to support these efforts. The largest gap was with Baby Boomers: while 88% of them rated recycling at least somewhat important, the highest of all generational groups, they also rated sustainability the lowest of all groups.
Baby Boomers were the only group that indicated “not having the knowledge/don’t know how” as the reason for not being more involved in recycling, while collectively, respondents indicated the lack of involvement was due to it not being convenient, taking too much time/effort and not thinking their efforts have an impact. Gen X and Baby Boomers rated their children as the biggest influence on recycling efforts, while Millennials and Gen Z rated how they were raised/grew up as a strongest influence.
Perhaps it’s no surprise that recycling was the top-rated practice in many aspects across all generations but even here consumers do not think it is universally beneficial: 70% of all respondents think recycling has an impact on the environment but only 41% think it has an impact on their health. Three-quarters of all respondents indicated that having “packaging that can be recycled” or “reduced packaging” impacts their purchase decision. This had the greatest impact on purchase decisions for Baby Boomers (79%) and the least impact on Millennials (72%). (It’s worth noting that all groups were over 70%.) Although recycling appears to be the most important to Baby Boomers, they’re the least likely to pay more for recycled products. Our survey indicated that 57% of Millennials would pay more for a product that could be recycled, compared to 61% of Gen Z and only 42% of Baby Boomers.
Turning our attention to sustainability, 82% surveyed think sustainability efforts are important and 65% of respondents think their efforts have an impact on the environment but only 46% think they have an impact on their overall health. Seventy-one percent of all respondents indicate they want to be more involved in sustainability efforts, with Gen Z the highest at 77% and Baby Boomers the lowest at only 62%. Of Baby Boomers, 41% indicated they “don’t know how to do more/lack the knowledge” to get more involved in sustainability efforts.
Gen Xers indicated their children as the major influencer in encouraging their sustainability efforts while the remaining groups cited the news/media. Although 70% indicated that products that contribute to sustainability have an impact on their purchase decision, only 58% of all surveyed would pay more for those products. Gen Z (68%) and Millennials (65%) would pay more compared to 56% Gen X and only 44% of Baby Boomers.
Even though companies know that sustainability is important, only about 25% have a strategy or initiative in place (Forbes, 2019). The U.S. ranks 27th on the Environmental Performance Index, well behind Sweden, France, Switzerland and the U.K. (Natran, 2019).
Respondents we surveyed also said they want more from companies. Fifty-three percent of Gen Z think companies are “not doing enough/could do more” as far as not harming the environment and practicing sustainability (51%). On a positive note, although most don’t think companies are doing enough, 68% of respondents think what the companies are currently doing will have a positive impact on future generations. The largest difference in this expectation is between Gen Z and Baby Boomers. Gen Z (73%) think the positive impact of sustainability efforts outweighs the cost, compared to only 60% of Baby Boomers.
Feel good about their efforts
In general, consumers feel good about the impact their efforts have on the Earth and its people. Overall, recycling and sustainability were rated higher for contributing to environmental preservation and natural/organic and plant-based foods were higher for contributing to overall health.
Overall, products that are environmentally friendly are seeing a rise in purchasing and growth. A little more than half of those surveyed (58%) are willing to pay at least 25% more for products contributing to sustainability. Gen Z was most willing (68%), compared to only 44% of Baby Boomers. In fact, products with sustainability efforts are on the rise as far as consumer purchasing. “[I]n the U.S., the market is growing rapidly. In fact, from 2013-2018, NYU Stern Center for Sustainable Business and IRI reported that in 90% of CPG categories, sustainably-marketed products grew faster than the category as a whole…. (and) by 2021, Nielsen predicts sustainable product sales to reach nearly $150 billion – nearing a 20% increase from the estimated $129 billion in 2018.” (Food Dive, Barry Callebaut Group, 2019)
Other trends that have received increased attention are natural/organic and plant-based foods. This is most important to Millennials (47%), while only 48% total respondents would pay more for plant-based foods. The overall reason given for not eating more plant-based and organic food was cost. Sixty-nine percent of all respondents indicated being organic was important and 64% would pay more. Gen X has the strongest opinion on natural/organics where 60% think this is at least somewhat important. When looking at diet types, only 36% of respondents following the standard American diet think eating plant-based food has an impact on the environment compared to 75% who currently eat plant-based diets. Vegetarian/vegan/flexatarians were all over 65%.
Although this is a new trend, it’s making a huge impact! Overall U.S. retail food sales only grew 2.2% for 2019, compared to plant-based food sales, which climbed 11.4% to reach $5 billion (PBFA.org/Spermarketnews.com). In a world of omnichannel retailing and omni-cultures, what happened to all the omnivores? Of course, this trend is also gaining attention not only because some view eating a plant-based diet as better for your health but it’s also been deemed necessary as far as planet sustainability and reduced carbon emissions. “One-third of the world’s arable land is used to grow feed for livestock, which are responsible for 14.5 percent of global greenhouse-gas emissions.” (New Yorker, 2019) However, food manufacturers have already faced challenges keeping up with soy and pea demand. The solution may need to be somewhere in the middle with a variety of plant-based protein options to aid in sustainability and health while at the same time ensuring supply and demand.
They want it all
So, what do shoppers want? Well, of course, they want it all! Looking at the 10 attributes we asked them to rate – free of hormones and antibiotics; made of all-natural ingredients; ingredients sourced responsibly; organic; environmentally friendly; free of chemicals and dyes; contributing to sustainability; having recyclable packaging; plant-based; having reduced packaging – our participants rated all of them as having a great/significant impact on their purchase behaviors, “free of chemicals and dyes” and “made of all-natural ingredients” tied for the highest impact at 79%, while “plant-based” scored the lowest rating at 59%. Consumers are the most willing to pay more for products that are free of hormones and antibiotics (68%).
Although the largest differences are to be expected on the tail ends of the bell-shaped curve when comparing Gen Z to Baby Boomers, overall they’re not as dissimilar as we expected. Current economic conditions as well as how these generations grew up certainly come into play. We have to keep in mind that Baby Boomers and Gen X grew up on the big screen and trusted commercials and used coupons whereas Millennials and Gen Z grew up with a library of information and power in their handheld device. The biggest difference could be traced back to the fact that Baby Boomers grew up trusting the information companies gave them because companies held retail power. These are the folks who may remember some of the cigarette ads that boasted weight loss and other health claims. That coin has flipped and Millennials and Gen Z are used to being in control and having power and, often, being skeptical.
We need to remember that we (as marketers) are the ones that empowered consumers when we added the fifth P of marketing – people – to the original four (product, price, promotion, place). Dare we add a sixth – perception – since perception is reality? Adding “people” as consumers gave them a voice and arming them with smartphones gave them power. We changed (or they demanded) that the marketing monologue become a dialogue. Companies did a great job keeping up with this during the days of call centers but now consumers’ voices are shouted across social media and can reach millions within seconds. Since life now moves at the speed of a digital snap, swipe or post and viewpoints can be created, edited and shared in seconds, we have to respond with action versus reaction and not just hear what consumers are saying but listen.
Julia Wilson, vice president of global responsibility and sustainability at Nielsen, shares a bit of listening advice: “Options bring opportunity, especially as the spectrum of what’s included in sustainability is growing. This goes beyond environmental factors and also includes fair wages, diversity, corporate governance and more. We can all aim to shape a smarter marketplace that contributes to a ‘healthy for me, healthy for we’ mentality. This starts with strategy. CPG companies and retailers have a big opportunity to shape a strategic approach that is proactive in order to deliver the right information and products to the right people at the right time so consumer needs and preferences can be built into their offerings sooner. Better connections with consumers that starts with trust and transparency will create an enhanced journey for all.” (Wilson, 2019)
Pay attention
Our intentions as marketers are often interrupted so it’s important that we pay attention to these intersections and close the gaps. A gap can be okay as long as we remember to turn it into an opportunity. If recycling is still the go-to behavior and sustainability is lagging a bit but gaining momentum and organic and plant-based are newcomers, how do we marry these efforts in the consumers’ minds so they have the knowledge and power to be as involved as they want? The answer: trust and transparent communication.
We need to keep in mind that consumers are just as risk-averse as companies and the more information they have – that is transparent and trustworthy – the more action they’ll take. It takes safety to soar. We need to prove that efforts make a difference, that actions are important and that recycling, plant-based and natural/organic trends are among the many that will fuel and feed us in a sustainable way. After all, the circle of sustainability is the circle of life and we’re all in this together.
References
www.nielsen.com/us/en/insights/article/2019/disloyalty-is-the-new-black/
www.businesswire.com/news/home/20191002005697/en/Consumers-Expect-Brands-Support-Socially-Responsible
www.forbes.com/sites/serenitygibbons/2019/02/28/3-ways-to-make-sustainability-a-part-of-your-business/#59d5eea96637
www.thegaragegroup.com/food-waste-v-packaging-waste-what-is-the-tipping-point-for-consumers/
www.theguardian.com/us-news/2019/jul/02/us-plastic-waste-recycling
https://natran.com/the-most-sustainable-countries-on-earth-according-to-the-environmental-performance-index/ 2019
www.forbes.com/sites/samanthatodd/2020/01/21/who-are-the-100-most-sustainable-companies-of-2020/#2b6076b14a49
www.supermarketnews.com/consumer-trends/plant-based-food-retail-sales-reach-5-billion
Wilson, Julia. Personal interview. January 24, 2020.