Category: Insight

Sharing insight on shoppers

Sustainability & the shopper. Part III

Navigating evolving trends in 2023

Every 2 years, I embark on an exploration of the ever-evolving landscape of Sustainability. From a deep dive into data in 2019 to navigating the impacts of the pandemic in 2021, it’s become somewhat of a routine. Now, as we are approaching 2023’s closure, it’s time to make a return with the latest insights, fueled by the most recent research. The good news is that there have been significant shifts in consumer habits, concerns, and perceptions of responsibility regarding sustainability and environmental issues over the past two years. So quite a bit to talk about. Let’s get started.

Climate Change Realities and Consumer Concerns

The global impact of climate change is no longer an abstract concept but a tangible force disrupting consumption habits across diverse societies as highlighted by the latest EY Future Consumer Index. This disruption is not limited to the physical environment; it extends to the collective mindset of individuals. The surge in conversations on social media, with a notable shift from generic weather discussions to explicit references to climate change, suggests a rapid increase in awareness of its impact.

GlobeScan Healthy & Sustainable Living survey emphasizes that people are not just acknowledging climate change; they are experiencing its effects firsthand. The report notes that a tipping point is approaching where half of the global population feels greatly affected by climate change. This underscores the urgency of addressing environmental concerns on a global scale.

The EY research also reveals that combating climate change is the top global sustainability issue, closely followed by health and well-being, affordable and clean energy, clean water, sanitation, sustainable ecosystems, biodiversity, and ending poverty. The interconnectedness of these issues highlights the complexity of the sustainability challenge facing the global community.

The Challenge of Living Sustainably

While a substantial 70% of global consumers express the importance of living sustainably, the adoption of conscious consumerism remains in its infancy according to Nielsen’s Great Divide report. Mintel also indicates in their Global Outlook on Sustainability that, in many cases, consumers are more likely to engage with small-scale lifestyle changes that do not significantly alter their daily lives or consumption habits.

The intention-to-action gap is evident, with almost two-thirds (61%) of the global population lacking the awareness, motivation, and action required to live more sustainably as reported by Nielsen. A significant challenge lies in the fact that most people do not fully understand which actions have the most impact – leading to a sense of helplessness for GlobeScan. 

Nielsen’s segmentation of sustainability mindsets, ranging from skeptics to evangelists, provides valuable insights into consumer motivations and readiness for sustainable consumption. I encourage you to read the report – a link is provided at the end of this post. Speaking about segmentation, a notable trend identified by GlobeScan as well as Mintel is the growing cohort of people seeking both health and sustainability.

The Need to Tackle the Intention-to-Action Gap

Consumers express a strong interest in healthy and sustainable products, and an increasing minority is willing to pay more for them says EY. Sustainable purchasing trends are primarily driven by young people and those with families adds GlobeScan. However, Nielsen points out that the intention-to-action gap persists, with consumers facing barriers such as cost, access, and a lack of clarity regarding the environmental and ethical impact of their choices.

Kantar’s Sustainability Sector Index highlights practical barriers that contribute to the gap. These include the difficulty in discerning ethically sound products, uncertainty about where to find sustainable/ethical products, the perception that environmentally and socially beneficial products are more expensive, and the desire for clear certification explaining the environmental/ethical benefits that would influence purchasing decisions.

The recent cost-of-living crisis, as noted by Mintel and Kantar, has impacted consumer attitudes toward sustainability as well as limited the ability of ‘eco-conscious’ consumers to make sustainable choices. The trade-off between prioritizing sustainability and economic factors presents a significant obstacle, given that « sustainably marketed products cost 70% more than the category average price » according to Kantar.

Who’s in Charge of Catalyzing Change?

As pointed out in Ipsos Earth Day survey, global opinion is divided on when is the right time to invest in climate change, with 38% asserting that now is the right time and 30% claiming it is the wrong time. However, a majority agrees that the negative impact of climate change is close enough to worry about it (52% vs. 23%). Furthermore, the prevailing view is that the economic cost of climate change will be greater than the cost of measures to reduce it (42% vs. 26%).

Responsibility for action is seen across citizens (63%), government (61%), and businesses (59%) says Ipsos. The Who Cares Who Does study from Kantar challenges this view and points out a recent and notable shift in people looking towards governments, rather than companies or themselves, to champion the cause of the planet. Having said that, EY mentions that consumers still expect companies to demonstrate more leadership in reducing negative environmental impact.

Brands and Retailers: Walking the Sustainability Talk

For Nielsen, consumers are calling for immediate action from brands and retailers to address sustainability issues and assist them in leading more sustainable lives. The top ways to contribute to help people be more sustainable is that brands can offer comparable prices and retailers reduce plastic packaging – note the latter is confirmed by the Kantar survey.

Global insights from Nielsen IQ on how businesses help shoppers to be sustainable

According to several reports, a barrier lies in a prevalence of false or misleading information about brands’ sustainable actions. For instance, 52% of people globally reported seeing or hearing false or misleading information about brands’ sustainable actions according to Kantar. Nielsen emphasizes that authenticity emerges as a crucial factor, with 77% of global consumers expressing zero tolerance for greenwashing. For certain groups, this intolerance reaches as high as 96%.

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In summary, we are experiencing a significant shift in awareness regarding the impact of climate change, with a growing realization from people of its tangible effects on their lives. However, and while there is a strong interest in sustainable living, a substantial gap still exists between good intentions and actual actions, driven by barriers such as cost, access, and a lack of clarity on sustainable products and practices. Economic constraints contribute to the challenge of adopting sustainable lifestyles, hindering widespread behavior change. 

Consumers increasingly look towards governments and businesses to champion environmental causes – with a shift towards public authorities in recent times. Companies – brands and retailers in particular – can contribute by offering affordable and accessible sustainable options and reducing the economic barriers associated with eco-friendly choices. Meanwhile, states can play a role in encouraging sustainable behaviors through information and incentives. 

It’s worth mentioning that greenwashing is emerging this year as a critical challenge, emphasizing the need for authenticity and transparency. Clear and substantiated communication from brands and retailers is crucial in helping consumers and shoppers make informed, sustainable choices, addressing the knowledge gap.

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PS: Unlike chatGPT, I provide my sources. You can read the reports by clicking on the links below:

EY Future Consumer Index (November 2023)

GlobeScan Healthy & Sustainable Living (October 2023)

Kantar – Sustainability Sector Index (October 2023)

Kantar Who Cares Who Does (September 2023)

Nielsen The Green Divide (September 2023)

Mintel Global Outlook on Sustainability (June 2023)

IPSOS Earth Day (April 2023)

If you come across an insightful report which is not in the list, please send me a message through the contact form.

Sustainability & the shopper. Coronavirus update

What is the impact of the COVID-19 crisis on sustainable and responsible shopping?

In summer 2019, I wrote that people were concerned about sustainability and that the planet mattered when they were shopping. But there was a significant gap between intentions and actions. 18 months later, in the middle of a global pandemic, what’s the status? Does sustainability still influence shoppers? Does the gap still exist? Based on an in-depth review of 2020 surveys, the short answer is yes and yes. Let’s drill down into data.

People are more and more concerned about sustainability

During the pandemic, sustainability concerns have persisted – and even accelerated. According to a recent Kantar survey1, climate change remains the number one issue globally for 16.9% of respondents. The second biggest issue is still plastic waste for 14.8% of respondents. And people are not only concerned: half of them have experienced environmental problems firsthand.

Worries are put into perspective by the BCG2: since the beginning of the outbreak, people are more anxious about infectious diseases and environmental issues. Further to that, two-thirds of the people think that health and environmental issues are equally concerning for the world. Kantar confirms that environmental issues keep on being important for most people after COVID-19 and a bit more than one-fifth of them believes those issues are now more critical than ever3.

People want to live, consume and shop more consciously

People are increasingly aware of their impact on the environment and they are willing to act. As revealed by GlobeScan4, a majority of people agree that what’s good for them is often not good for the environment – a surge of 13 pts in one year! And nearly three-quarters of them know the solution: they need to consume less to preserve the environment for future generations – plus 8 pts vs 2019.

People are also considering sustainability when they shop. More than two-thirds of shoppers surveyed by Capgemini in October last year5 declared they would be more mindful in their purchase habits once the pandemic is over – an increase of 3 pts in 6 months. Note that Accenture reports an even higher number: according to a research conducted in June 20206, nine consumers out of ten were planning to make more environmentally friendly, sustainable, or ethical purchases after the COVID-19 crisis!

Some shoppers plan to go as far as switching retailers or brands to align with their values. In that respect, McKinsey pointed out7 that purpose was a reason for shopping at a new (e)store or trying a new brand for a little more than one-fifth of the shoppers. And the Capgemini research mentioned above uncovered that buying sustainable products was making almost two-third of shoppers happy.

But good intentions do not convert into actions

Many people want to change their way of life but some fail to do so. According to GlobeScan, roughly half of the people have a desire to take care of the environment or help others, but only a quarter has made major changes to their lifestyle. Capgemini indicates that a significant proportion of shoppers (42% precisely) declare they have already changed their purchase preferences based on social, economic, or environmental impact. But globally speaking, 21% of the people surveyed do not want to change or do not care! Further to that, GlobeScan uncovers that more than two-thirds of shoppers have considered buying products from or speaking positively about responsible companies but only half of them have done so.

The intention-to-action gap
Source: GlobeScan 2020 Healthy & Sustainable Living survey (June 2020).

Why is that? Value has been consistently reported as a key barrier to responsible shopping. For instance, the Conference Board listed8 ‘extra-cost’, together with ‘lack of trust’ or ‘confusion regarding environmental claims’, as the most important barriers to buying brands with better environmental practices. More specifically in the UK, PwC revealed9 that the top 3 barriers to conscious spending were cost (59% of Britons), availability (51%), and lack of time to do research (40%).

Brands, retailers, and governments need to do more to unlock commitment to change

Conscious shoppers want more from brands in terms of product offering and information. According to Accenture, two-thirds of consumers expect companies to create better products and services having a positive impact on society and our planet. And half of the people surveyed by GlobeScan want companies to make it easier to understand which products and services are better for both people and the environment.

But it’s even more important for brands and retailers to bring value to shoppers. Quoting again McKinsey, in the 3rd quarter of 2020, ‘value’ was a reason to switch to a new retailer, store, or website for 55% of the shoppers and to a new brand for 69% of them. Considering the economic and personal finance outlook, value is likely to remain a key purchase criterium for the coming months.

Beyond that, companies and institutions need to accelerate the pace of change. As stated by the BCG, people expect companies to do more to protect the environment; they also want governments to embed that priority in their recovery plans. The former is confirmed by Accenture: one-third of people expect greater business involvement in improving social and environmental outcomes. And the latter is echoed by Kantar: the same proportion of people think that actions to address climate change should be a more pressing priority for governments.

To summarize, people remain concerned about environmental and social issues. They want to live, consume, and shop in more sustainable and responsible ways. But value, trust, and support from brands and governments are critical to encourage and facilitate the adoption of new behaviors.

Sources

1. Kantar. #Who Cares, Who Does? May-June 2020
2. BCG. Global survey on COVID-19 and Environment. May 2020 (pdf).
3. Kantar. Global COVID-19 Barometer Wave 7. July 2020
4. GlobeScan 2020 Healthy & Sustainable Living survey. June 2020 (pdf).
5. Capgemini. Sustainability in Consumer Products & Retail Survey. March 2020 (pdf)
6. Accenture COVID-19 Consumer Research. June 2020
7. McKinsey & Co. Consumer sentiment during the coronavirus crisis. October 2020. Average scores based on data from 8 markets (France, Germany, Italy, Spain, UK, India, China and USA).
8. The Conference Board Global Consumer Confidence Survey. April 2020.
9. PwC UK Purpose survey. July-August 2020.

Sustainability & the shopper

Are shoppers really taking a stand and acting?

Earlier this year, I wrote that sustainability and responsibility were not buzzwords any longer. Today, I’d like to support this statement with facts. It’s quite clear that people are increasingly mindful of the environmental and social crises. Sustainability and responsibility are starting to trigger new consumer needs as well as to inspire purchase decisions. Traditional currencies of quality, price, and convenience still play a critical role when people are shopping, but brand values and actions have a growing influence on mindsets and behaviors. Over the last two years, several reports from consultants, research companies, and agencies have explored the phenomenon. Let’s do a deep dive.

People are concerned about sustainability.

According to the JWT Sustainability report from 2018, almost everyone claims to be trying to live more sustainably. Eighty-nine percent of people care personally about protecting the planet. Seventy-nine percent are increasingly conscious of their impact on the planet, and fifty-seven percent know the importance of preserving it for future generations. The importance of sustainability is confirmed by PwC’s Global Consumer Insights Survey, which states that very few people (13%) do not have any interest in the topic.

People are changing their way of living. As highlighted by JWT, nearly four out of ten claim they compost waste, two-third that they limit water use in their home and half that they choose more sustainable forms of transport than cars. They avoid the use of plastic – particularly single-use items. But a majority of people think they could probably do more.

JWT reports that sixty percent of the people aim to consume less in general. Reducing their impact on the environment is a key motivation to change their consumption habits for nearly three-quarters of consumers, says Nielsen. It is confirmed by Gartner, who identifies that sixty-one percent of the people practice sustainability because it’s good for the environment. Other motivations uncovered by the consulting firm include being healthier for them and their families, being necessary to sustain the quality of life for future generations, and ultimately making people feel good.

Sustainability matters for shoppers

As PwC found in their Global Consumer Insights Survey, people are not only having good intentions: around one-third of them choose products that help protect the environment; they also buy items with less packaging. Two third of them actively buy local rather than imported goods, and a good half of them buy in bulk to minimize the use of packaging. Several studies highlight that people are inclined to pay higher-than-average prices for high-quality products, respectful of the environment and human rights. But brand owners should be careful: according to Nielsen, nearly half of the shoppers are ready to forgo a brand name to buy environmentally friendly products.

Brands commitment to sustainability
JWT Intelligence. The new sustainability: regeneration. September 2018

The JWT Sustainability report reveals that more than eighty percent of shoppers are willing to pick a brand showing a better sustainability record or just demonstrating a commitment to sustainability. The values and the actions of companies and brands influence purchase decisions. People can buy or ban companies and brands based on their beliefs and behaviors. For instance, Accenture states that the ethical values and the authenticity of companies drive purchase consideration, and the words, the values, and the actions of their leaders influence buying decisions too (for respectively sixty-two and sixty-five percent of respondents). When companies act in a way betraying what they stand for, people are disappointed and can even stop doing business with those companies. Related to that, they also believe their protest actions, such as boycotting a company or speaking out on social media, can make a difference in how companies behave. Edelman adds that two-third of the people claim they will buy or boycott a brand solely because of its position on a social or political issue.

There are still gaps between intentions and actions.

People are increasingly concerned with sustainability, and they tend to prefer brands and companies that they believe are good for the environment. Recent research published by the NYU Stern Center for Sustainable Business in March 2019 confirms the evolution of CPG shopper behaviors. Between 2013 and 2018, sustainability-marketed products grew five points six times faster than conventionally-marketed products, and three points three times faster than the CPG market. But categories are not created equal: sustainability-inspired purchases are less common in functional categories like detergents. The truth of the matter is that mindsets don’t systematically translate into behaviors. JWT gives indications on the order of magnitude of the gaps: although almost everyone claims they recycle (89%), only half of the people always do (52%); most people say they refuse single-use plastic (85%), but only a few of them do it every time (20%); most people agree that they buy too many clothes (86%) but almost half of them concede they often buy new clothes to keep up with trends in fashion (40%). Along the same lines, the Shopper Explorer study from Havas Paris highlights that a significant proportion of consumers think it’s still possible to keep on consuming like before without damaging the environment (numbers range from 55% in France, 61% in the US and 86% in China). Debunking myths and helping people embrace more sustainable and responsible ways of buying and consuming is critical.

What does it mean concretely? That’s for another post. In the meantime, you can click on the links below to read the full reports mentioned in the article.

Shoppers are creatures of habits

4 inspirational books to help shift shopper behaviors.

In a recent article I tweeted about, Strategy+Business commented the PwC’s seventh annual global survey of consumers. The title and the content of the article ‘Competing for shopper habits’ was really good food for thought and encouraged to write this post.

In shopper marketing, there is a rule of thumb: only a mere 5% of purchase decisions are rational and the remaining 95% are purely intuitive. If, most decisions happen in the subconscious mind, can we really compete for shopper habits? There are 4 books I find particularly inspiring to address this question.

“Thinking fast and slow” by Daniel Kahneman.

The most famous researcher who dismantled the myth of the arch-rational decision-maker is the 2002 winner of the Nobel Prize in economic science, Daniel Kahneman. Ironically, he is not an economist but a psychologist – maybe another manifestation of the shoemaker syndrome. Kahneman proposes an alternative decision-making theory, more faithful to human psychology, called the “prospect theory”. But his work is more often epitomized by the System 1 – System 2 duet.

According to Kahneman, people are essentially relying on two systems when making decisions: a “System 1” using association and metaphor to produce a quick and dirty draft of reality, and a “System 2” drawing upon explicit beliefs and reasoned choices to produce a more complete and accurate picture of reality. “System 1” is fast, intuitive and prone to errors. “System 2” is slower and more rational but also labor-intensive and therefore way more tiring. That’s why instead of systematically analyzing every single situation and weighing the pros and cons of every option, our brains mostly rely on System 1 to make day-to-day decisions like purchases. In a nutshell, people are not rational when they are making most of the decisions they make.

“Predictably irrational. The hidden forces that shape our decisions” by Dan Ariely.

Dan Ariely, a professor of economics at MIT, and an evangelist of behavioral economics develops an interesting argument: people are not capable of consistently making the right decision for themselves. But the good news for shopper marketers is that they do so in ways which are systematic and repeatable – hence the subtitle of his book, “Predictably irrational: the hidden forces that shape our decisions”. What matters, he says, is to understand when and why people deviate and make irrational decisions.

This is what you can see on my bookshelf

“The Power of habit: Why we do what we do and how to change” by Charles Duhigg.

The New York Times business reporter, Charles Duhigg suggests that habits can be changed – if we understand how they work. Although not focused on purchase decisions, his approach is valuable for shopper marketers. According to the author, the neurological loop at the core of every habit consists of three stages: the cue, the routine, and the reward. When a task is done repeatedly, the brain anticipates the reward and a ‘craving’ forms. To change a habit, marketers need to understand the craving and find new ways to satisfy it. Interestingly, the research conducted by Duhigg shows that changing the routine – not the cue or the reward – is the most effective way to break the habit cycle. He also shares three drivers of success: familiarity, social commitment, and individual empowerment.

“Nudge: Improving Decisions about Health, Wealth and Happiness” by Richard Thaler & Cass Sunstein.

Nudging is another interesting concept for shopper marketers who aim at influencing behaviors. Richard S. Thaler and Cass R. Sunstein, professors in Economics and Law at the University of Chicago, established it in their best-selling book back in 2009. Their key argument is that details that may look insignificant can have a major impact on people’s behavior. Human beings, they say, often act in ways that seem detrimental to their own wellbeing: eating junk food, spending conspicuously, smoking cigarettes or failing to save money for their pension. Most efforts of private and public institutions to educate people about the risks are proving unsuccessful. Gentle “nudges”, rather than prescriptive “nagging”, are much more likely to drive real shifts in behavior. They use a now-famous example on how to best drive healthy food eating. “Putting the fruit at eye level [in the supermarket shelf] counts as a nudge,” they say. Banning junk food does not”.

If you have a book to recommend in that category, please feel free to leave a reply with the title and author.

Learnings from journey research experts

Take-aways from two insightful events from late 2017.

As briefly mentioned in an earlier post, in the last quarter of 2017, two global players, McKinsey & Co and Geometry*, who have been looking at journeys for the last eight years or so, broadcasted respectively a podcast and a webinar, to share observations and reflections about their journey research practice. Talking to colleagues and clients, it seems that the two events have been largely unnoticed which is a shame considering the insights they uncovered. Let me share a topline summary.

McKinsey & Co: being in the initial consideration set is critical for success

Looking at data from more than 125,000 consumers in about 30 categories, McKinsey & Co found out that only 3 of the 30 categories were ‘loyalty-driven’, while the other 27 were ‘shopping-driven’. In other words, they demonstrated that loyalty was a myth for a majority of categories. Within those 27 categories, the dominant behavior was ‘switching’: 58% of shoppers were buying a different brand from one purchase cycle to the next. The key conclusion they drew was that it was critical for a brand to feature in the ‘initial consideration set’: 70% of brands were actually chosen out of this short-list. Therefore, the battleground for brands was what they call the ‘active evaluation’ phase when people switch to shopping mode and draw upon past experiences, external influences and biases to list brands that could fulfill their needs.

I don’t disagree with their conclusion but, as a shopper marketer, I’m also interested in the 30% of brands selected later on in the journey. In between the lines, it tells me that activating shoppers along the journey to displace incumbents can generate positive outcomes.

Geometry: the levels of risk and involvement are key variables to segment purchase behaviors

Building on the analysis of 66,000 shopper journeys across 38 categories, Geometry found out that differences between categories and markets were based on the effect of only a couple of variables. The starting point is that no shopper wants to make a bad decision. Against this statement, Geometry identified two criteria that discriminate people’s behaviors: firstly, the level of risk associated with the purchase decision and secondly, the level of involvement in the buying process. When you map journeys against those two axes, three behavioral typologies appear: ‘guesswork’, which is low risk/low involvement; ‘copying’ which is some risk and some involvement; and ‘research’ which is high risk/high involvement. While diverse behaviors can be observed, understanding the dominant behaviors in a category and a market can help shape the overall strategy to meet the needs of the majority of shoppers.

Once again, this is a very interesting finding for shopper marketing: if the two variables above – or proxies – are present in your dataset, you can focus your activation efforts on the main behavior in your category and ultimately increase conversion.

The above paragraphs are only short summaries and I strongly encourage you to read the full transcripts and associated reports.

McKinsey podcast: “Driving business growth by zeroing in on the consumer decision journey“. December 2017.

Geometry webinar: “Shopper marketing: Purchase journeys, behaviors and pre-triggers“. September 2017.

*Disclaimer: Geometry is my employer at the time I’m writing this post but the views I’m sharing are my own and do not represent those of the company.