Consumer demand for sustainability is at an all-time high and isn’t going anywhere anytime soon. A recent survey of American consumers by Boston Consulting Group found that 75 percent view sustainability as “important” or “very important” with more than one-third reporting they have at some point switched from their preferred brand to a more environmentally friendly alternative. And far from diminishing amid the pandemic, environmental concern is actually on the rise. Seventy percent of respondents are now more aware that our climate is affected by human activity than they were before the crisis began.
But if shoppers are increasingly cognisant of the ecological costs of their purchases, rising to the challenge is easier said than done for the brands targeting them.
Despite growing consumer demand for sustainable goods, it’s not always clear what consumers are actually demanding. Sustainability remains a nebulous concept that means different things to different people and continues to shift as a priority over time. Many consumers struggle to identify what makes a brand or product sustainable to begin with. Some are unwilling to pay a higher price.
Sustainability matters to consumers, but not at a premium.
Fashion companies have their work cut out for them. They must address an increasing (albeit uneven) demand for sustainability, while also delivering products their customers want to buy. In order to be successful, brands will have to better understand what matters most to consumers, and just as importantly, empower and incentivise them to shop sustainably.
What Is Sustainability Anyway?
This is a seemingly simple but rather complex question whose answer lies in the eyes of the consumer, whose own interpretation might differ from her peers and will likely evolve over time.
Mounting fears of global warming — and, more recently, the pandemic — are contributing to the growing demand for sustainable products. For example, the past few years have brought an increased public interest in water conservation and climate impact. These concerns now receive as much attention as recycling and waste reduction, long-time hallmarks in the broader conversation on safeguarding the environment.
And though consumers worldwide most commonly define sustainability in terms of materials usage and production processes, from there, the disparity in their views is striking. Definitions vary across product categories and market segments, particularly by age and nationality.
The under-35 population, for example, factors labour practices and the use of animal products into the equation, placing additional hurdles for brands to clear in order to meet customer expectations. While younger cohorts place greater emphasis on animal-free and vegan-made products, as well as ethical trade and durability, senior cohorts remain focused on recycled goods and waste reduction.
Such variation makes it harder for brands to meet the full range of expectations. The challenge is even greater for global luxury goods companies, for whose consumers the concept of sustainability varies by nationality.
Our research suggests a wide disparity in what matters most to consumers when shopping for luxury goods, with shoppers from China and Russia placing greater value on green fabrics, for instance, and those from Italy and Germany caring more about the use of fur. Compared with the rest of the population, South Koreans are more concerned with material transparency and the French with fair labour conditions. Ultimately, luxury consumers around the globe are demanding sustainability, but they do not always agree on what it looks like.
Sustainability Matters, But…
Just because sustainability is important to consumers doesn’t mean they feel sufficiently empowered — or even willing — to shop sustainably. Our research shows that a lack of clarity and awareness, as well as perceived higher price points, are the main factors preventing consumers from purchasing sustainable goods. Other barriers include a lack of availability of preferred styles and brands, perceived inconvenience and the belief that a product isn’t truly sustainable.
The challenge for brands is compounded by the fact that overcoming these obstacles doesn’t guarantee more sales. Despite their demand for sustainability, the average consumer still places emphasis on other factors — such as value, quality, durability and style — when deciding to pull out their wallets. This is true across the market; consumers obviously weigh criteria differently when shopping for socks than for a new watch, but as it turns out, sustainability doesn’t rank as highly as other factors in either case.
The lesson for brands is clear: sustainability matters to consumers, but not at a premium, and certainly less than other functional, immediately felt concerns.
Nevertheless, in the wake of the current crisis, each of us has become increasingly aware of the impact our choices have on the world around us, both immediately and in the longer term.
In addition to sparking increased environmental concern among consumers, the pandemic has also forced many businesses to expand their commitment to sustainability, specifically with regards to their production processes and supply chains. We’ve also seen an uptick in the hiring of chief sustainability officers and in eco-friendly initiatives.
Brands should capitalise on this momentum to help bring about a more sustainable future and because we believe that companies who do not invest in sustainability will find themselves at a cost disadvantage in the long term.
How Brands Can Rise To the Challenge
Consumer demand for sustainability poses a tough but surmountable obstacle for fashion. The good news for brands is that they can continue to pave the way for more sustainable practices within and beyond the industry. To remain competitive in the years ahead, companies should embark on the following four steps — and learn from those already leading the charge:
- Understand what consumers really want. Knowing what matters most to target consumers is key; brands should not take it for granted that quality, price and style remain paramount. To address each of these needs, companies have adopted multi-dimensional value propositions, indicating that they are committed to sustainability without sacrificing quality. Since its infancy, Patagonia was clear that it would take sustainability seriously and has built its reputation around that promise. Over the years, the brand has launched consumer-friendly initiatives to promote reduced consumption while also signalling the strength and quality of its products.
- Inspire and inform. Despite good progress, the fashion industry lags behind other sectors in how it communicates its sustainability efforts to customers. Brands can make it easier for shoppers to measure the impact of their purchases by shedding light on their processes and products through clearer measurements and communication. Allbirds explains the sustainable materials used in its shoes, often in plain English, for example: “One recycled plastic bottle equals one pair of Allbirds laces.”
- Build and maintain trust. Increased environmental and emissions reporting and sustainability-performance methodologies are a step in the right direction, but they are generally designed with businesses and investors in mind. Broadly used and understood certifications comparable to those seen in the food industry, such as the “certified organic” designation, are missing in fashion. While some standards are gaining traction, they are not yet widespread. Individual brands will have to make it easier for consumers to hold them accountable, and the industry will eventually have to work with regulatory bodies and trade associations to standardise impact metrics and make consumer-friendly labels.
- Continue to innovate and invest. Companies should continue to experiment with alternative, eco-friendly materials and manufacturing processes that use less water, reduce waste and don’t rely on toxins or animals to make a great product. Achieving greater sustainability will not come easily or cheaply and will for many industry players require large upfront investments in equipment and strategy. For those willing to put in the work, the long-term rewards and returns will be well worth the effort.
Sarah Willersdorf is a Partner & Managing Director in Boston Consulting Group’s New York office and Global Head of Luxury. Robbin Mitchell is a Managing Director & Partner in Boston Consulting Group’s New York office.
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