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Consumers Favor Sustainable Brands, but Retailers Believe Otherwise

Sharp Disconnect Exists Between What Brands and Consumers Believe on Sustainable Shopping

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Consumers are willing to spend more on sustainable brands than retailers give them credit for, reveals a new report that largely upends traditional expectations held by the retail industry on the sustainability preferences of shoppers.

The report from First Insight, the Warrendale, Pennsylvania-based provider of a predictive analytics solution for businesses to anticipate future outcomes, also reveals major gaps in knowledge among retail executives on the sustainable preferences of consumers. Using data collected from the country’s top retail executives and thousands of consumers, the report suggests that retailers should listen more closely to their customers concerning sustainable shopping issues.

The disconnect between retailers and consumers was palpable throughout various findings in the report. For instance, while two-thirds of consumers say that they would pay more for sustainable products, the same percentage—two-thirds—of retailers believed otherwise, that consumers would not be willing to spend more for sustainable brands.

Another equally revealing discovery was that nearly three-quarters of the surveyed consumer respondents valued product sustainability over brand name. In comparison, nearly all—94%—retailers believed the opposite to be true, that brand name would be more important to consumers than sustainability.

Moreover, retail executives ranked brand-operated resale/recommerce programs lowest when asked about the type of sustainable shopping formats consumers would use the most. Yet 41% of consumers say they already shop at brand resale/recommerce programs, such as those offered by Patagonia, Lululemon, and Levi’s.

Greg Petro, CEO of First Insight, said the company’s report shows clearly that retailers are leaving money on the table. “Brands and retailers must listen to the voice of the customer on issues as critical as sustainability,” Petro said. “Consumers want more than performative measures from retailers and brands when it comes to ESG priorities, which will only become more important as Gen Z grows in influence.”

For the report, First Insight partnered with the Baker Retailing Center at the Wharton School of the University of Pennsylvania, in line with an ongoing commitment from First Insight to providing actionable consumer insights to the retail industry. Since 2007, First Insight has been helping retailers and brands operate more sustainably and make better decisions by using Voice of the Customer (VoC) mechanisms and predictive analytics to refine procurement processes and eliminate poor-performing offerings before costly development and inventory investments are made.

Thomas Robertson, academic director of Wharton’s Baker Retailing Center, said it was imperative for retailers to understand their customers’ values so that they can adapt for the future. Robertson cited the example of half of retail executives believing that price is the primary reason consumers shop across recommerce formats. In fact, only 27% of consumers agree that price is their motivation, while a combined 54% say that they shop resale because they care for the environment and prefer sustainable or circular shopping. Even luxury brands, such as Vestiaire Collective and Farfetch Second Life, Robertson said, believe that resale has a bright future.

Other key findings of the report include disparities on how consumers wish to be compensated for resale items, the frequency at which consumers use recommerce, and price targets for resale items.

In perhaps the most ironic twist demonstrating the profound split between retail expectations on consumer sustainable shopping, all the retail executives in the dataset—a full 100%—assume that consumers would rate retailers low on transparency around their own sustainability efforts. Consumers, however, were a great deal more positive and thought better of retailers, with 59% indicating that they felt retailers were being sufficiently transparent.

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