Independent research shows that environmental concerns have influenced 75 per cent of UK consumers to make changes to their lifestyle; Fairtrade food penetration, for example, has grown from 20 per cent in 2005 to 50 per cent today.
Desire for sustainable products is certainly increasing, but their share remains low – less than 4 per cent of total retail expenditure last year, according to PwC. The primary barrier is price, with 48 per cent of consumers declaring they are unwilling or unable to pay a premium for more sustainable goods.
PwC calculated an average premium of about 45 per cent across 75 selected items; respondents said they might be willing to pay closer to 20 per cent. Reducing this disparity is key, a task made more acute by rising food inflation and falling consumer spend.
Another deterrent is the mass of unclear or contradictory information. When asked: “Who do you trust to tell you the truth about the environmental impact of a product?” NGOs were chosen by 51 per cent of respondents, government by 20 per cent and retailers by only 9 per cent.
So what can retailers do? In PwC’s consumer research, 62 per cent identified using less packaging as the most important action, another being waste reduction. Such lower-cost initiatives could turn sustainability on its head, creating win-wins for environmentally concerned consumers in a more price-sensitive world.
Germany is the fiefdom of the Greens, but also of the hard discounters. In Munich last week, at the CIES World Food Business Summit, Stephan Grünewald of the Rheingold Institute put these seemingly incompatible sets of German consumers on the couch. Homo Ecologicus and Homo Economicus are not, he claims, such strange bedfellows after all. They happily co-exist, spawned equally by Germany’s past – “green” arising from “greed” and “guilt” giving birth to “thrift”.
At the summit, Rewe chief executive Alain Caparros named trust and sustainability his top priorities. “We are locked in a new qualitative competition for customers’ trust... Customers will pay much closer attention to the way products are made... When it comes to the costs... if retailers can afford this effort, I do not think industry will have any trouble affording it... One point is clear: We must afford it. They must afford it. Both of us simply cannot afford anything else,” he said.
As PwC’s report concludes: “The risks of being left behind are becoming too great to ignore.” The future, it seems, must be green.
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