We’ll share the sustainability factors consumers want to help inform your product design and production strategy to meet their new demands.
*With contribution by Agnes Teh Stubbs
Should your small retail business be making everything locally? Will your customers pay more for sustainable goods? Is sustainability actually important to consumers?
The answers to these questions are not necessarily, most likely, and absolutely. But how do we know this?
In our Consumer Preferences for Sustainable Products* survey, we asked 1,234 consumers about their expectations and preferences for sustainable products. In this report, we’ll provide you with insights based on their responses and share recommendations from our supply chain and retail analysts. This will help you gain more market share by prioritizing the sustainability factors that matter to consumers the most.
We’ve also included some stats and insights from our survey of 564 supply chain leaders, Sustainability in Small Business Supply Chains**, to provide even more insight for you. (You can check out the full report for supply chain leaders here.)
Small business retailers, such as yourself, should use this report to inform your product development and materials procurement strategy as you work to meet consumer demand for sustainability.
Consumers are largely making judgements on the sustainability of a product based on the aspects tangible to them: the packaging, recyclability, and materials. Before making a purchase decision, consumers say that they check the product packaging (43%), product material (42%), ingredients (40%), and if the product is recyclable (35%).
The intangible aspects of sustainability, such as ethical treatment and fair wages paid to workers, are valued by consumers but are not as easy for them to check up on. For example, 65% of consumers think the ethical treatment of workers is moderately to very important, but only 9% actually check for this prior to their purchase decision.
In our Sustainability in Small Business Supply Chains survey, we found that 36% of small to midsize businesses (SMBs) prioritize working with ethical partners (e.g., ones that pay fair wages to workers). So if you’re one of the businesses focused on ethical treatment of workers, be sure to share your commitment with customers in marketing campaigns since you’re ahead in a growing trend.
Sustainability has proven to be the most valuable to consumers in products that are readily consumable and relatively quickly discarded, such as food, clothing, and household products. Each of these types of products made the top of the list of what consumers most value to be sustainable (at 41%, 39%, and 32% respectively). This is opposed to more non-consumable things, such as home improvements (e.g., windows or appliances) or a new home, that ranked near the bottom (17% and 8% respectively).
Even though sustainability isn’t a top consideration for products such as electronics (28%) and beauty (21%), consumers are comfortable with their prices when they are sustainable. When asked about the costs of sustainable goods in general, 59% of consumers agree or strongly agree that the purchase price is reasonable.
And in fact, in each of the product categories surveyed, 75% to 80% of consumers say that they’re willing to pay higher prices, ranging from a little more to significantly more, for sustainable products in comparison to unsustainable products.
To help you design your sustainability strategy, we’ve identified three aspects of sustainability that we think are important to prioritize now based on importance to consumers and cost efficiency.
1. Ensure your workers and your partners’ workers receive fair pay and ethical treatment.
- Sixty-five percent of consumers say that workers being treated ethically is moderately to very important to them.
- Sixty-four percent of consumers say that workers being paid fair wages is moderately to very important to them.
- In our Sustainability in Small Business Supply Chains Survey, only 36% of SMB supply chain leaders report working with ethical partners who pay fair wages to their employees.
2. Design your product to be recyclable and the packaging to be sustainable.
- Sixty-five percent of consumers say that a product being recyclable is moderately to very important to them.
- The top four sustainability factors that are checked by consumers before purchase is the packaging, the material, the ingredients, and whether the product is recyclable.
- Forty-nine percent of SMB supply chain leaders report already designing their products to be sustainable, but only 15% are using the right-size packaging (from our Sustainability in Small Business Supply Chains Survey).
3. Source materials and products sustainably.
- Sixty-two percent of consumers report that a product sourced sustainably (e.g., new trees are planted to replace the ones cut down for wood-based products) is moderately to very important to them.
- Forty-two percent of consumers check a product’s materials, 40% check the ingredients, and 35% check a product’s origin for sustainability prior to purchase.
- Fifty-four percent of SMB supply chain leaders report sourcing from sustainable manufacturers, and 53% work with environmentally-friendly partners (from our Sustainability in Small Business Supply Chains Survey).
We don’t believe in trying to make everything a priority and wouldn’t advise that you try to do so either. And based on the survey results, there are a few aspects of sustainability that you can sideline for now without much fear of losing out. Here are three aspects of sustainability you don’t need to focus an abundance of resources on for at least the next 12 to 18 months:
Made in America
Forty-four percent of those surveyed have no opinion or don’t care if a product they’re looking to buy is made in America. This means if your current sourcing model is internationally-based, the return on investment (ROI) for a product and sourcing overhaul to have your product offering fully made in the States likely isn’t enough to justify it.
Locally made products
Even more consumers (48%) don’t consider if a product is made locally or not as important in their purchasing decision. And while this doesn’t apply to all food products, the majority of consumables and non-consumables can be sourced from the locations with the best selection and price with little regard for how local it is.
Community outreach efforts
Forty-eight percent of respondents say that a company engaged in community outreach efforts has little to no importance in their decision to purchase a product or not. Now, this is not to say that you should stop any community-enhancing efforts you’re currently making. But the facts show that now is perhaps not the time to go full force with a new community-outreach program in order to gain new customers. Instead, focus on the aspects we discussed earlier.
Not everyone is on board with prioritizing sustainably made products. Forty-seven percent of respondents said a company’s sustainable actions have no or minimal influence on their selection of a product. Price is the main reason (39%), with the desire to not have to limit their options of products to purchase coming in second (32%).
The next reasons each have a root cause of a general sense of skepticism around sustainability. Twelve percent of respondents report not understanding the difference between sustainably-made products and ones that aren’t. Nine percent of consumers report not believing that the product is actually sustainable, while 5% of respondents say that sustainability doesn’t align with their ideology or beliefs.
Skepticism as to the value of sustainable products is still prevalent among consumers and will continue to be a challenge for years to come. Much of this is driven by the many corporations that are continuously found to be untruthful about their sustainability practices as discussed earlier. But with the global push for more clean energy production, and the desire for workers to be treated fairly, this skepticism will continue to decline.
This is all to say that as a small business owner you can only help with public perception in a limited fashion, but you can work to inform your customers and attract new customers by sharing your sustainability efforts in marketing materials.
Now that you’re armed with the knowledge of what sustainability means and how it is valued by consumers, you can design a sustainability strategy that fits your small business. But don’t try to tackle every aspect at once. To help you get started with a focused approach, we made a quick takeaway graphic for you to share with your team as you work together toward not only giving your customers what they want but also making the world a little better.
*Software Advice conducted the Consumer Preferences for Sustainable Products survey in October 2021 of 1,234 U.S.-based consumers who are shopping/planning to shop for products for the 2021 holiday season. The goal of this survey is to understand consumers’ expectations and desires for products being made and shipped sustainably.
**Software Advice conducted the Sustainability in Small Business Supply Chains Survey in August 2021 of 564 U.S.-based professionals in the supply chain field in order to learn more about how their company is investing in supply chain sustainability. Respondents were screened for employment status (full-time) at a small business (two to 500 employees), with a supply chain job function (logistics, inventory/warehouse management, manufacturing, or procurement).