Nudging our way towards more sustainable consumption
Sustainability appears to be the hot topic of the moment. Its far-fetching tentacles deeply permeate society on all levels; and now has a firm squeeze on the retail industry. The question is: are consumers really that concerned? Our research found that almost two-thirds of consumers would choose a brand with a proven sustainability record over others; and over 50% of consumers claim to be living more sustainable lifestyles.
Great! Obviously, retailers and brands will frenziedly grasp this glaring opportunity, shift towards more sustainable practices and ethical sourcing, thereby securing a ‘green-tinted’ competitive advantage over their ‘grey-polluting’ competitors. And in a world of no market failure, we’ll all sail towards a brighter and greener future.
Well, not quite.
Pragmatists, realists (and good retail economists) know that life, especially consumer behaviour, is not so simple. After all, sustainability issues have reverberated around political corridors and streets for decades. My Gen X cohort grew up terrified of the ever-expanding hole in the ozone layer, not to mention acid rain with a pH levels stronger than vinegar! There’s no doubt that the ‘Blue Planet effect’ will etch itself into the minds of today’s Gen Zs.
Having covertly glanced at a young chap (must be a Gen Z) prising open an organic beetroot salad packaged in plastic, I’m wondering whether consumers really care about the planet as they solemnly proclaim? And if they do, why don’t their good intentions align with their (not so good) behaviour? Especially when it comes to what they consume.
I can already feel my inner behavioural economist’s pandora’s box spring open.
As consumers, we all make countless decisions all day, every day. Admittedly, not all of mine are environmentally friendly. I don’t drive an electric car, I love my long-haul holidays, and yes, I eat meat… almost every day. With such a crucial goal like saving the planet, why do so many of us still overlook fundamental right actions?
In reality, consumers’ environmental (or ethical) concerns do not always manifest in correct purchasing behaviour. The irritating chasm between attitudes and corresponding action still remains a key area of retail research. The phenomenon is labelled the ‘intention-behaviour gap’. It helps explain why we intend to do more exercise, conserve more energy, or buy sustainable products – but don’t (well, not always).
This is where we as consumers need help. And retailers can play a crucial role – if not drive change.
Behavioural economics helps develop our understanding of how to nudge our way towards more sustainable consumption. Numerous studies demonstrate why consumers don’t act in a wholly rational manner: we smoke; we drink too much; we sometimes develop painful addictions. There are underlying principles retailers can adopt (and already are) which not only help save the planet, but also provide key points of differentiation so desperately needed in today’s fiercely competitive market.
Choice architecture: When facing decisions, consumers often seek the simplest solution requiring the least effort. Hence, the default option frequently proves to be the most popular. While consumers have choice, they don’t always want to exert effort to bring about change. In a recent academic study in ‘Business Ethics: The impact of Choice Architecture on Sustainable Behaviour’, it was found that default ‘opt-out’ policies are more effective than ‘opt-in’ alternatives. This is because it increases anticipated guilt. In other words, when ‘greener’ services and options were automatically selected, this has a much stronger impact than giving consumers the choice of opting in for the greener choice. The study also found that the effect of greener action was stronger if consumers felt there was reciprocal cooperation from the firm – e.g. they demonstrated sustainable credentials.
Role models, peers and social norms: People’s consumption habits are often influenced by role models, social norms and the habits of their peers. Academic research has shown that sustainable attitudes mediate the relationship between the level of pragmatism of a respondent's nation and sustainable behaviours.
Promoting sustainable and environmentally-friendly behaviours are somehow related to making certain sustainability social norms salient in the minds of consumers.
Social media is ‘crushing it’ when it comes to ‘awareness’ – that first vital step in the customer journey. Here, retailers have a lush opportunity to engage with green influencers when pushing their sustainable and ethical credentials. And to be honest, it’s still relatively unexploited. Data from MuseFind shows that 92% of consumers trust an influencer more than an advertisement or traditional celebrity endorsement – trust and a company values being inextricably linked.
The role of sustainability influencers could dovetail with retail brands to promote core sustainable consumption and ethical values – offering unique branding opportunities if authentically executed.
With the ‘Blue Planet effect’ gaining traction and generating waves of consumer awareness on sustainability issues, I’d say that the opportunity for retailers to gain a competitive advantage, to put forward a point of differentiation and actually do ‘the right thing’ (while delivering on commercial goals) has truly emerged.
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