Who is the future consumer? Consumers are savvier than ever and demand for sustainable and ethical products and services continues to grow. ACRS builds the business case and shows how sustainable consumer choices can be supported by brands and retail environments.
Collaborative consumption, defined as the “acquisition and distribution of a resource for a fee or other compensation”,1 is growing in popularity. Uber, Airbnb, and Airtasker are all examples of brands built around what is, in essence, sharing. Owners with an underutilised resource provide others with access to the resource for compensation. Of course, sharing models have been around for years, so why revisit the topic? Rather than the model of Uber or Airbnb where the brand merely provides the platform for consumers to share their own resources, a number of new sharing models use the brand’s own resources in a subscription-based service that not only provides consumers access to products they may otherwise be unable to afford, but also encourages sustainable consumption.
For brands such as Airbnb that provide a platform for peer-to-peer sharing, research suggests that perceived sustainability of the platform is key to developing positive attitudes toward it, which somewhat translates to actual behaviour.2 The study also found that the economics benefits of shared consumption is a strong motivator for participation. These results may extend to brands offering their own products in a collaborative consumption model. For example, Toyota launched its Kinto subscription service in Japan earlier this year.3 Consumers pay a monthly subscription to access vehicles (with registration, taxes, and insurance included) and earn points from Toyota based on safe or ecofriendly driving behaviour which can be used toward paying the subscription cost. Another example is Knotel, a workspace provider based in the United States that now offers its modular furniture line as a subscription. Clients are able to subscribe to the service to alter their workspace as needs and tastes change. The subscription model reduces the challenges of ownership (such as how to dispose of used products) and paves the way for a more flexible and less wasteful office environment.
Extending the sharing model beyond products, Ikea’s Space10 and architecture firm EFFEKT are exploring the concept of subscription living through The Urban Village Project. The Project encourages communal living where residents subscribe to monthly ‘shares’, which progressively increase the ownership of houses by the individual. What makes the project unique is that residents can swap and change houses as their family needs change, meaning they can stay within the same community indefinitely. The facility utilises a modular building system, allowing houses to be changed as necessary. Additionally, residents can subscribe to services such as food, transport, and media while also using communal spaces and facilities such as childcare. While The Urban Village Project was only announced as a concept in early 2019, it has the potential to provide a more sustainable (both environmentally and financially) way of living.
1 Belk, R. (2014). You are what you can access: sharing and collaboration consumption online. Journal of Business Research, 67(8), 1595-1600.
2 Hamari, J. Sjöklint. M., and Ukkonen, A. (2015). The Sharing Economy: why people participate in collaborative consumption. Journal of the Association for Information Science and Technology, 67(9), 2047-2059.
3 LS:N Global. (2019). Source.
The National Retailer Association and Victorian State Government have partnered to ban single-use plastic bags by the end of 2019. Earlier in 2018, Coles and Woolworths banned single-use plastic bags from their stores, with an estimated one and a half billion fewer plastic bags used in under six months.1 While banning plastic bags is a seemingly simple way to reduce plastic, a number of brands around the world are investing in innovative packaging or retail initiatives that address environmental concerns.
Many brands are pursuing plastic-free initiatives, a positive step considering ninety percent of the world’s plastic has never been recycled.2 For example, cosmetics retail Lush opened a plastic-free store in the United Kingdom. Products sold at the store have zero plastic packaging including shampoos and conditions which have been designed as a solid soap-like bar instead of the traditional liquid in a bottle. The brand has also expanded into packaging-free makeup with a new solid foundation covered with peel-able wax.
An alternative to plastic is plant-based packaging that allow waste to be composted, rather than incinerated or put in landfill. For example, Earlybirds is a breakfast juice due to be launched in the United Kingdom in April that uses sugar cane in its packaging rather than plastic. Another example is a project called The Shellworks, a group of four designers who have built machines that extract a natural biopolymer from crustacean shells that can be transformed into a biodegradable alternative to single-use plastics.3 While biopolymer packaging has been created before, the project aims to make the process more accessible and allow for greater experimentation.
Brands are also collaborating to provide consumers with a convenient place to purchase zero-waste products. Loop, a shopping platform set to launch in the United States and France in 2019, offers a range of products from major FMCG brands that arrive in reusable containers. Rather than throwing waste, Loop focuses on a delivery system that restocks durable containers – consumers empty the container and schedule a free pick-up where Loop collects the containers, sanitises them, and refills them with the consumer’s preferred products.
The above are only a few examples of how brands are innovating for a more sustainable future. While this Bitesize has focused on packaging, there are brands innovating in other areas of sustainability such as IKEA’s new curtains that cleans indoor air or 3D printed outdoor furniture in Greece made from recycled plastic waste.
1 The Sydney Morning Herald. (2018). Source.
2 Royal Statistics Society. (2018). Source.
3 LS:N Global. (2019). Source.
UK supermarket Iceland’s 2018 Christmas advertisment was banned from British television for breaching relevant clearance regulations and being considered ‘too political’. The advertisement, exploring the devastating effects on orangutans in sourcing palm oil for human products, gained significant traction despite the ban, receiving over 5.5 million views on the company’s YouTube channel in under a month.1 It has led to an outpour of support with some consumers even saying they will now choose Iceland over competitors for the festive season.
Why was this advertisement so successful?
Controversy. In a world where consumers are exposed to on average more than four thousand advertisements per day,2 controversial advertising is an age-old technique used to help stimuli be noticed. Controversial advertising captivates people’s attention by exposing them to shocking content that prompts them to physically engage with the advertisement.3 The nature of the content leads the consumer to take the time to comprehend the message, enhancing message retention and positively influencing purchase behaviour.
In today’s modern world, societal values have changed. Being controversial has expanded to taking a public stand in support or opposition to social and or political views. Studies show that US consumers are 8.1% more inclined to purchase from a brand that shares their opinions,4 highlighting that it is about more than just what a company sells, it is also about what their brand represents. Further evidence from the ACRS Omnibus behavioural tracking data confirms that consumers place high importance on the alignment of a brand’s core values with the consumer’s personal values.
Who else is seeing success from being controversial?
In September, Nike took a similar approach in their “Dream Crazy” advertising campaign featuring the highly controversial NFL star, Colin Kaepernick, who was promoted as an inspirational athlete. Kaepernick chose to kneel during the American National Anthem, sung before multiple NFL games in 2016 to protest against police brutality, which lead to a backlash from US society, particularly from nationalists. Despite an initial dip, Nike’s stock price reached an all-time high and a 30% increase in sales following the advertisment’s release as it was well received by socially conscientious consumer groups, including millennials and Gen Z’s.5
Does the reward always outweigh the risk?
Pepsi released an advertisement in 2017 showing a protest and used a bottle of Pepsi to unite both parties, however, it suffered extreme criticism over their glorification of protests, as well as the presence of multiple other political issues. Pepsi was forced to make a formal apology and cull the ad from screens. While taking a controversial standpoint can be highly successful, it can backfire if not properly thought through.
1 Iceland Foods. (2018, November 8). Source.
2 Sanders, B. (2017, September 1). Source.
3 Dahl, D. W., Frankenberger, K. D., & Manchanda, R. V. (2003). Does it pay to shock? Reactions to shocking and nonshocking advertising content among university students. Journal of Advertising Research, 43(3), 268-280.
4 Data Freaks. (2015, March 12). Source.
5 Jansson-Boyd, C. (2018, November 12). Source.
With increasing consumer awareness of the impact their consumption has on the planet, a number of brands are tackling the culture of planned obsolescence – where products are designed to be thrown away after a certain usage period.
Luxury British department store Harvey Nichols provides luxury aftercare services through its in-store service The Restory. Customers can drop off their worn or broken shoes and accessories in-store and have them delivered to their home fully restored. Alternatively, customers can arrange for their shoes and accessories to be picked up from a location to be restored and returned within a few days. The Restory caters to the growing consumer interest in aftercare services. Rather than throwing out a product when worn or broken, aftercare services extend the life of products, recycling products that may have previously added to the piles of waste resulting from planned redundancy.
Another interesting example that addresses used products is Save Your Wardrobe, an app that provides users with information of how they can reuse or revive their clothes. The app synchronises with the user’s online fashion purchases and calendar to provide outfit recommendations. Considering that the average woman uses only 44% of her wardrobe regularly,1 the app provides a range of recommendations that increases the number of uses per garment. In addition to providing recommendations, the app also provides information about garment re-sell value or encourages unwanted clothes to be donated to charity.
Beyond the fashion industry, Whirli is a subscription-based toy brand that considers the often short attention spans children have toward their toys. Rather than purchase toys that children grow bored of, Whirli sends boxes of toys to parents that children can play with as long as they like. Once the child grows bored of the toy, the parents can return the toy to Whirli where it will be completely sanitised and provided to another child. Additionally, when a child plays with a toy for more than nine months, Whirli transfers ownership of the toy to the child. Through the subscription model, old toys can be given a new story, reducing the environmental impact of toys and the clutter in households.
1 Oxfam. (2016). Source.
Image retrieved from LS:N Global. Source: LS:N Global
In response to the recent outbreak of E. coli infections in the United States, Walmart has announced that it will be implementing blockchain technology to track its vegetables. This will allow customers to see where the produce was grown and how it was transported to the store, providing a high degree of transparency to Walmart’s vegetable supply chain. Walmart is not the first retailer to incorporate transparency to its supply chain – a number of other retailers, fashion retailers in particular, provide detailed information about where and how their products are made.
Why should retailers incorporate transparency?
Eighty three percent of consumers indicate that transparency is key to building trust.1 This is supported by academic research that not only indicates transparency efforts by brands are key to building trust, but that they also lead to more positive attitudes towards brands.2 The demand for transparency has resulted in a number of third party groups providing information about brands and their sourcing. For example, Good On You allows users to compare the impact of fashion brands on the environment, workers, and animals.
Transparency also has a number of practical benefits for retailers. For example, the blockchain technology that Walmart will be implementing will allow them to track which farms produce comes from in case of future contaminations – a technology that would have been helpful throughout the recent strawberry fiasco in Australia. Another example is the use of blockchain technology to tackle the issue of counterfeiting through the ability to track and verify if a product was made by the actual brand.
Which retailers are incorporating transparency?
In addition to Walmart and its implementation of blockchain technology, a number of brands incorporate transparency into their marketing communications. For example, H&M’s new brand, Arket, provides information on their website about where their garments were made and by whom. Another example is Everlane and their transparent pricing strategy, where they list individual components of garments so consumers can see the mark up the brand charges. While it is difficult to obtain true transparency, brands can demonstrate their good corporate citizenship through incorporating transparency principles into their business practices.
Image retrieved from Flickr. Source: Mike Mozart.
1 SAI Global (2017). Source.
2 Kang, J. and Hustvedt, G. (2014). Building trust between consumers and corporations: the role of consumer perceptions of transparency and social responsibility. Journal of Business Ethics, 125(2). 253-265.
In early 2018, iconic toy brand LEGO announced their plans to manufacture most of its products and packaging from sustainable plastics by 2030. Along with this announcement, the brand released its first sustainable blocks made from sugarcane plastic rather than oil-based plastics. Sustainability has become a strong force in business, with consumers becoming more aware of how their consumption impacts the longevity of the world’s resources – the world is expected to product 2.2 billion tonnes of waste annually by 2025.1 In fact, one third of consumers internationally choose to purchase from brands that are socially or environmentally good.2 Additionally, 66% of consumers are willing to pay more for sustainable products.3
LEGO is not the only brand innovating for sustainability. A number of brands globally are implementing sustainable business practices to appeal to the conscious consumer and lower their environmental footprint. For example, Ekoplaza, a supermarket chain in the Netherlands, opened a plastic-free aisle earlier this year where products are displayed in packaging alternatives such as glass, cardboard and compostable materials. The chain intends to roll out the aisle to the rest of its stores by the end of 2018. Adventure-wear brand The North Face has created its own circular fashion system, where it re-uses garments that have been returned or deemed defective. Garments are refurbished where necessary and cleaned before being sold online at a discounted price, reducing the number of wasted products.
In addition to brands incorporating sustainable business practices, research into biodegradable alternatives for packaging and products is fruitful, with a number of options in development. For example, crab shells and tree fibre has been used by to create sustainable packaging that may actually keep food fresh for longer than traditional plastic packaging. Algae is being used by Algalife to create biodegradable clothing that provides additional benefits to the wearer such as vitamins and antioxidants released onto skin.
Advances in science and thinking have resulted in alternatives to many plastics and unsustainable products. While it may take some time for consumers to adjust to sustainable consumption, brands can take the lead to encourage a positive future where the environment can co-exist with financial goals.
1 The World Bank (2018). Source.
2 The Guardian (2018). Source.
3 Nielson (2015). Source.
Image retrieved from LEGO. Source: Wired.
The global online marketplace for handcrafted products – Etsy – opened a pop-up store in London late 2018 to promote products craftsmanship, sustainability, and wellbeing. The store provided QR codes that consumers could scan to discover more information about the maker. Etsy has had strong growth over the past few years, boasting a 20.9% increase in revenue in 2017 compared to 2016.1 The strong growth Etsy is experiencing suggests that there is a demand for handcrafted products.
What drives demand for artisan products?
Handcrafted products are argued to contain a quality that machine-made products do not: love.2 The study finds the existence of a handmade effect, where products that are marketed as being handmade are perceived to be imbued with the love of the creator, thus increasing the product’s attractiveness. These perceptions were particularly prevalent for handmade products intended to be gifts for close relationships, though became less prevalent for more distant relationships. Furthermore, the effort invested into a product influences its quality perceptions.3 Products – such as handmade products – that are perceived to take more time and effort to create are rated as having higher quality.
Which brands are incorporating artisanship into their offerings?
As mentioned in the introduction, Etsy provides consumers with a marketplace full of handmade products, often from small businesses or independent vendors. However, there are also major brands marketing handmade products. For example, Lush emphasises the handmade quality of every aspect of its stores from the products to the hands-on approach of the staff members. This allows the brand to promote its ethical ingredients and adds exclusivity to their products as no two handcrafted items are the same.
1 Etsy. (2018). 2017 Annual Report. Retrieved from https://investors.etsy.com/~/media/Files/E/Etsy-IR/annual-report-proxy-materials/etsy-2017-annual-report.pdf
2 Fuchs, C., Schreier, M., and van Osselaer, S. M. J. (2015). The handmade effect: what’s love got to do with it? Journal of Marketing, 79(2), 98-110. DOI: 10.1509/jm.14.0018
3 Kruger, J., Wirtz, D., van Boven, L., and Altermatt, T. W. (2004). The effort heuristic. Journal of Experimental Social Psychology, 40(1), 91-98. https://doi.org/10.1016/S0022-1031(03)00065-9