How to Innovate Your Business Practices to Be More Sustainable


sustainable shopping bagby Farah Thalji

Customer demand for environmentally-friendly offerings has been on the rise for years, but its market hold is now so strong that not even the COVID-19 pandemic managed to slow the trend down. The 2021 Global Sustainability Study authored by Simon-Kucher & Partners looks at how companies can innovate their business practices to become more sustainable, and why they should do it sooner rather than later.

The Growing Desire for Sustainable Products

Research from NYU recently highlighted the permanence of sustainability-marketed products compared to conventionally marketed merchandise: “Despite significant price premiums, sustainability-marketed products grew far faster than conventionally branded players and had lower price sensitivity in two-thirds of categories examined,” the study reports, and “in 75% of the categories examined, sustainability-marketed products performed better online than in-store.”

Even pre-pandemic, the shift towards consumers turning more to ecommerce was already in motion. Now, digitally engaged consumers make up 86 percent of the regional population. This is great news for retailers for two reasons: ecommerce provides ample choice when it comes to presenting sustainable and environmentally-friendly ranges, categories, curated marketplaces and so on; and secondly, making the switch to online retail makes it significantly easier to provide personalization options along the customer journey, such as product recommendations, promotions, and direct communication.

Communicate Your Sustainability Practices with Your Customers

Personalized messaging makes the customer feel understood and appreciated, which is a simple but effective rule of emotional marketing, but it also helps strengthen the customer’s relationship with the brand. In turn, this is something that loyalty programs can leverage with great success. In the UAE, 72 percent of connected consumers subscribe to at least one loyalty program, whereas 40 percent report subscribing to more than one. With ecommerce, in particular, shoppers are more likely to purchase from a platform if the latter shows an effort to connect with them, and if it supplies individual offers and discounts. A simple personalization push encourages both higher brand awareness and conversion.

Additionally, customers feel understood when they encounter a range of sustainability offerings to reflect their sensibilities, which makes them more likely to purchase from brands they consider to be socially conscious and philanthropy-based. Thus, it is vital that companies not only work on building ethical value chains, but also communicate them effectively.

Consumers Aim to Live a More Sustainable Lifestyle

According to Simon-Kucher & Partners’ 2021 Global Sustainability Study, one-in-four consumers have made a significant change in the last five years in the aim of living a more sustainable life overall. Moreover, wherever a more sustainable alternative should be available, one-in-three would be willing to purchase it over its traditional, less environmentally friendly counterpart. Retailers can step up and fill a gap that is quickly gaining more market share by following in the footsteps of luxury brand Farfetch’s steps, which launched a pre-owned category on their online store, and UAE startup Shift Eco, which offers curated ranges of eco-friendly products such as bamboo, recycled, natural, and organic ones.

Sustainability will not cease to be a primary purchase driver anytime soon, particularly as markets will continue to open towards Millennials and Gen Z. These two age brackets are more likely to buy from sustainable ranges, and even more willing to pay a sustainability premium, than previous generations: over twice as much compared to Baby Boomers, and a third more than Gen X. Adding to this analysis the fact Gen Z are still so young as to not have that much disposable income, and it follows that this trend is likely to not only hold in future years, but potentially disrupt the world of retail as we know it.

As the speed of change shows no sign of slowing down, retailers must transform their businesses and practices now if they want a shot at remaining relevant in the future. When it comes to the way we live and shop, we should account for sustainability to become the expectation, not the exception.

Farah Thalji is a Director at Simon-Kucher & Partners.


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