(Source: Inside Retail Asia | 15 September 2016)
While most consumers say a retailer’s sustainability/eco-friendly credentials are important, they are not willing to pay more for ethical sourcing when it comes to clothing and footwear, according to research company Verdict Retail.
Its data shows, however, that consumers are willing to pay more for style, quality, range and value for money.
This means retailers must strike a balance between investing in ethical policies and driving sales, says the company. Its research shows…
60 per cent of consumers say a retailer’s sustainability/eco-friendliness credentials are important to them when they are buying clothing and footwear
15.6 per cent of consumers say they would not buy from retailers that are not transparent about their sustainable credentials
20.2 per cent of consumers would not pay any more for eco-friendly or sustainable products, and only 3 per cent would be willing to pay more than 21 per cent extra.
“While it appears to be a no-brainer for a retailer to ensure that its practices are ethical, the fact remains that it requires a fundamental change in supply-chain practices of retailers, and the investment case for such change is not that straightforward,” says Verdict Retail.
“Despite growing awareness, ethical consumerism remains a fairly niche market, with not enough people willing to pay more for eco-friendly/sustainable clothing to warrant huge company transformations to ethical trading.”
While there is insufficient incentive for retailers to change practices, Verdict Retail says a lack of consideration for ethical practice can make or break a reputation and lead to commercial harm.
It cites the case of UK sports goods retailer Sports Direct, where revelations concerning its treatment of its workers were followed by a 0.8 per cent decline in retail store sales in its latest financial year compared with the previous year. Verdict Retail says consumers started buying instead from competitors Footlocker and JD Sports.
“The topical case of Sports Direct serves as a reminder that retailers cannot be complacent,” says Verdict Retail analyst Sarah Johns.
Lack of willingness by consumers to pay more for sustainable products signals a crucial point: that as consumers’ disposable incomes are squeezed, the lure of sustainably produced clothing alone will not be enough for them to part with their cash, says Verdict Retail.
Style at forefront
“Consumers demand style, range, quality and value for money alongside ethical credentials, as evidenced by the fact that the clear winners in the sustainability stakes are collections such as Asos Africa, H&M Conscious and Topshop Reclaim,which put style at the forefront of their proposition along with sustainable credentials.”
Verdict Retail data indicates that of consumers who had not bought any sustainable or eco-friendly clothing in the past few years, 31.1 per cent did not do so because they thought products were too expensive. While higher prices on sustainable clothing are unavoidable because of a more expensive supply chain, retailers need to justify these via design detail, innovation and quality.
Availability and range are also key considerations, given that 18.8 per cent of consumers did not buy any sustainable or eco-friendly clothing because they felt it was not easily available, while 17.5 per cent did not do so because they felt there was not enough choice.
“By actively engaging with ethical consumers, retailers not only have an opportunity to boost sales by tapping into a dominant ethical consumer mindset, but also to protect and improve their brand image,” says Verdict Retail. ‘“Ultimately, retailers must be able to ensure sustainability is at the heart of their supply-chain practices, but in the interim emphasis must be placed on what the customer actively seeks out: style, range, quality and value for money.