Sustainability in Retail and Consumer Goods: Added cost or source of value?

Report
July 13, 2022

Many retail and consumer goods businesses often focus on the added costs and overlook value opportunities from the growing consumer demand for sustainability. In this report, we tap into consumer data from PwC’s Global Consumer Insights Survey to highlight consumer segments with the highest value potential, explore their desires around sustainability and the obstacles that keep them from making sustainable choices. Building on these insights we suggest targeted initiatives businesses can undertake to make sustainability a true source of value.

The COVID-19 pandemic has influenced consumer behaviour in many ways. One of the most notable is the desire to lead a more sustainable life. While not a new trend, our survey shows that sustainability has risen sharply and consumers now expect more from retail and consumer goods businesses.

44%

of Australian respondents stated that they have become more sustainability-focused than they were before the pandemic

48%

preferred to purchase from businesses with strong company values and commitments to doing the right thing (32% in 2019)

47%

preferred products with traceable production and transparent origin (32% in 2019)

46%

preferred biodegradable / eco-friendly products (34% in 2019)

The Sustainable Consumer

Only the young?

Sustainability is often associated with young city dwellers. However, while motivations differ, our survey shows the desire to lead sustainable lives is present across all generations.

Only the affluent?

It is not uncommon for sustainable products to have higher price tags and it is easy to conclude that sustainability is a luxury for the affluent. However, the desire to live sustainably in lower income bands is higher today than the overall average before the pandemic.

Obstacles & willingness to pay

An intention to purchase more sustainably across generations and income bands does not always translate into actual shopping behaviour. It is important to consider the limits to sustainable shopping, including too high prices and lack of sustainable options.

Value opportunities for businesses

Retail and consumer goods businesses that can help consumers support their desires to live more sustainable lives and help them overcome the perceived obstacles are in a good position to unlock the value of sustainability.

Our survey results show that Australian consumers have the desire to purchase from businesses with strong values, seek offerings with traceable production and transparent origin and products that are biodegradable and eco-friendly.

By fulfilling these desires, businesses can expect to benefit from an increase in sales. In the longer run, sustainable businesses can also benefit from significant indirect value, including benefits from an increase in consumer and employee satisfaction, avoided future costs (e.g. carbon emission tax) and improved access to capital from investors.

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Sustainability in retail: Added cost or source of value?

Initiatives business can take unlock value

Here are two case examples where companies in Australia and New Zealand are acting on consumer desires and obstacles. Our report explores these further and provides actionable initiatives your organisation can take.

Desire - Traceable production and transparent origin

Consistent with company values and associated business models, businesses should look to implement business practices that allow them to ensure traceability of production and transparency of origin.

Obstacle - High price of sustainable product

The most critical obstacle overcome is the perceived high prices of sustainable products.