Conscious Shopping Grows Demand for Green Business

Conscious Shopping Grows Demand for Green Business

15 Apr 2018 | Original

Black Friday is one of the busiest shopping days in many different parts of the world. In 2011 Patagonia, a manufacturer of upscale outdoor clothing recognized for its environmental efforts led a campaign against a competitor’s best-selling jackets on Black Friday due to its high negative cost on the environment. Because of this campaign, Patagonia revenues grew about 30% to US$ 543 million in 2012, followed by another 5% growth in 2013. By 2017, the company reached US$ 1 billion in sales.[1]

While many would consider this an anti-marketing campaign, Patagonia does in fact practice what it preaches. Nearly 70% of their products are made from renewable and recycled materials, including plastic bottles, and they are aiming to increase this percentage to 100% within the next five years.[2] The company has also committed 1% of sales or 10% of profits, whichever is greater, to environmental activism since 1986.[3] Two key takeaways can be driven from this story: (1) business and the environment could, and should, go hand in hand, and (2) conscious consumer behavior will shape the future of the retail industry.

Consumer behavior has dramatically changed in recent years. IBM Institute for Business Value in association with The National Retail Federation conducted a survey which showed that 81% of shoppers worldwide belong to one of two segments: value-driven consumers who want good value (41%), and purpose-driven consumers who seek products and services aligned with their values (40%).[4] The survey has also found that 57% of consumers are willing to change their shopping habits to reduce the negative impact on the environment. The 2019 Deloitte Global Millennial Survey also found that 42% of millennials have either begun or deepened relationships with businesses who have had a positive impact on the environment.[5]

Nonetheless, the retail industry faces certain dilemmas in its journey to greening their supply chain, procedures, services, and products when trying to meet certain consumer expectations. To survive, retail companies need to come up with new collections every season. This has detrimental effects on the environment since the majority of fashion retailers use coal-based energy in manufacturing clothes. Indeed, 10% of annual global carbon emissions, and 20% of worldwide wastewater are caused by the fashion industry.[6] At this rate, greenhouse gas emissions from textile and apparel are expected to grow by more than 60% by 2030.[7] Additionally, to preserve exclusivity, some retails, such as Burberry, H&M, and Nike, used to burn or destroy unsold merchandise causing more damage to the environment.[8] After public outcries against such practices, these brands, along with tens of others, have signed a pact with the G7 to stop global warming, restore biodiversity, and protect oceans.[9] Many private sector companies have been established to solve the issue of unsold merchandise, such as the Parker Lane Group who handle excess inventory and customer returns, and help find new markets for unsold items or recycles what cannot be resold. Another example is Optoro who use artificial intelligence and machine-learning software to market millions of items for resale or donation.[10]

Consumer expectations for same- or next-day delivery could have a negative impact on the environment. Trips that deliver one package can emit carbons 35 times greater than a fully-loaded delivery vans. One-day shipping could become more climate-friendly if retailers use electric vehicles. Another possible solution is the use of ‘nudging’; a study by MIT’s Center for Transportation and Logistics found that 52% of consumers in Mexico were willing to wait longer when they were told that slower shipping would save trees. Other nudging approaches include adding virtue signals to neighbors who use or do not use slower delivery options, such as different box colour, or simply giving discounts and redeemed points.[11] A German company, Organic Baby Food, has actually started offering two delivery options, either a three-day express delivery or a 30-day ‘climate-friendly’ shipping option.[12]

Businesses and manufacturers around the world play a major role in addressing climate change, and small steps could leave a tremendous impact. These steps include offering loyalty points on recycling, creating policies for returning plastic bottles, offering electric charging stations, eliminating single-use plastic, and using data to understand consumer behaviour and preferences to deter overproduction.

[1] Thangavelu, P. 03 February, 2020. The Success of Patagonia’s Marketing Strategy. https://www.investopedia.com/articles/personal-finance/070715/success-patagonias-marketing-strategy.asp

[2] Ibid, 2020

[3] Feloni, M. 21 December, 2018. Patagonia Mission Environmentalism Good for Business. https://www.businessinsider.com/patagonia-mission-environmentalism-good-for-business-2018-12

[4] The remaining 19% of consumers are either brand-driven or product-driven.

[5] Deloitte. 2019. The Deloitte Global Millennial Survey 2019. https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/deloitte-2019-millennial-survey.pdf

[6] World Bank. (2019). How Much Do Our Wardrobes Cost to the Environment?. https://www.worldbank.org/en/news/feature/2019/09/23/costo-moda-medio-ambiente

[7] ibid, 2019

[8] Cernansky, R. (2020). Fashion Has a Waste Problem. These Companies Want to Fix It. https://www.voguebusiness.com/sustainability/fashion-waste-problem-fabrics-deadstock-pashko-burberry-reformation

[9] The Fashion Pact. https://thefashionpact.org/?lang=en

[10] Cernansky, R. (2020). Fashion Has a Waste Problem. These Companies Want to Fix It. https://www.voguebusiness.com/sustainability/fashion-waste-problem-fabrics-deadstock-pashko-burberry-reformation

[11] CNN. (2019). America’s addiction to absurdly fast shipping has a hidden cost. https://edition.cnn.com/2019/07/15/business/fast-shipping-environmental-impact/index.html

[12] Crudo, B. (2020). Here’s how retail can be profitable and sustainable. Green Biz. https://www.greenbiz.com/article/heres-how-retail-can-be-profitable-and-sustainable