Finding gold in green

by Erica Shaffer
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A gap exists between a latent unfulfilled demand for environmentally sustainable products and industry’s readiness to deliver them. Education — for industry and consumers — will be a key to realizing the full potential of sustainable products as a category.

For industry, the path to success begins with eliminating any preconceived notions about who is the "green" shopper. A report released in late April from the Grocery Manufacturers Association and Deloitte Consulting found green shoppers exist across demographics, defying stereotypes of the green shopper as an off-the-grid type trying to consume as little as possible. The green shopper "is a really good person to attract to stores," said Scott Bearse, director, Sustainability Line Leader, Retail, for Deloitte.

Older baby boomers had the highest demographic concentrations of green shoppers, according to the report. They had more income than average, fewer people in their household, and were better educated than the averages of the total sample population. This finding countered another of the researchers’ expectations, which was that younger shoppers would be the greenest demographic.

"The younger generation is going to have to live with all of this," Mr. Bearse said. "Why aren’t they the most worried? Their behaviors are new, they’re being established. I think in the long-run they’ll be the greenest generation of shoppers."

The Hartman Group, which has conducted several studies on sustainability issues, also found few skews among demographics. Laurie Demeritt, president of the Hartman Group, said the sustainability concept encompassed a consumer commitment to a certain lifestyle and an attempt at preventive health care for shoppers with lower incomes.

"Yes, income plays a role," Ms. Demeritt said. "But it’s certainly not the case where the only people who are participating are at very high disposable incomes, especially because so many people who are at the lower incomes see buying these products almost as a health insurance, in a way."

Contrary to the perception of the green shopper as anti-consumption, the consumers who have sustainability on their minds are very active shoppers who buy a lot and visit stores often, Mr. Bearse said. One may argue consumption is a symptom of unsustainability, but he said consumers are aware of their consumption and may be trying to find a balance.

"These folks are compensating for their consumption," he said. "So they actually are conscious of it, and they realize that they’re having an impact through the products that they buy. So when possible, they try to buy more responsible products so that they don’t feel like they’re overburdening the environment with what they purchase."

Sought-after attributes vary

The attributes consumers look for in sustainable products vary widely among product categories.

"The consumer is weighing a multitude of different attributes and functions and offerings, and sustainability is increasingly one of those — not a separate one," said Peter Capozucca, principal, Sustainability Line Leader, Consumer Products for Deloitte. "They’re looking at it in the context of all the things they’ve always worried about: price, quality, efficacy, convenience. But now sustainability is increasingly in the mix as well."

Hartman Group research found consumers were willing to buy sustainable products in some categories and not in others, Ms. Demeritt said. She recounted a shopping trip with a woman who thought absolutely nothing of paying upward of a 50% price premium for organic strawberries because she gave them to her children, and she had heard horror stories about pesticides sprayed on conventional strawberries.

"Ten seconds later, there’s broccoli," Ms. Demeritt said. "There’s organic, there’s conventional. She buys the conventional and the price premium is only 10%, and she doesn’t buy the organic. Why on earth doesn’t she buy the organic? And she said only my husband eats the broccoli, not my kids. I’m not willing to pay more."

Ms. Demeritt added that, in general, consumers are willing to pay more for produce, milk, dairy, and children’s products, because those products had sustainable attributes that appealed to consumers.

"In terms of looking at products in the dairy and meat case, it was things like no growth hormones, no antibiotics, humane treatment of animals," she said. "In a packaged good it might be no excessive packaging, no junk ingredients, pure ingredients."

Most consumers surveyed in the G.M.A.-Deloitte survey said they wanted parity in the prices they paid for sustainable and conventional items, Mr. Bearse said. Consumers also wanted product performance to be about the same.

"You have trouble explaining to a consumer why they should pay more for something that has less packaging or why they should pay more for something that was transported less distance," Mr. Bearse said. "In some cases they can understand the rationale — it’s higher technology and uses less energy therefore I need to pay more. But in a lot of cases sustainability in the consumer’s mind should mean savings for the environment and savings for them."

Education as a vital aspect

The next piece of the puzzle is educating consumers. For the report, Deloitte conducted more than 6,000 shopper surveys at 11 of the nation’s retail chains. The study classified shoppers into five stages of development: unaware, unsure, influenced, proactive, or committed.

Two per cent of shoppers were committed in that they made most of their buying decisions based on sustainability considerations. At the next level, 18% of shoppers surveyed proactively integrated sustainability considerations into their buying decisions. Roughly 54%, the largest group, were influenced by sustainability as a purchasing consideration. The report showed a third of the shoppers surveyed were unsure or neutral to sustainability considerations, while the remaining 13% were unaware or rejected sustainability considerations. Those shoppers bought sustainable products but at a lower rate when those products met other criteria.

The report’s findings indicate that the largest market share opportunity is with shoppers who are moving from the unsure group to being influenced, and then on to proactively seeking environmentally sustainable products. The report also showed that once a consumer finds an item that they like, they tend to stay with it.

But shoppers need product information, and they are looking to retailers for greater clarity, education and awareness-building on sustainable items, said Mr. Capozucca.

"If anything, the mode by which they are really looking for (information) the most happens to be as close to the point of purchase as possible — whether it be labeling, packaging, in-store signage," he said. "That demand and desire is there."

Terminology is a significant factor in educating consumers. The concept of sustainability already encompasses so much for consumers that it’s easy for them to become confused.

"The word ‘sustainability’ itself is a little problematic, because for a lot of consumers who are wanting to engage in activities that would fit under that umbrella, that word is sort of amorphous, it can be ostracizing," Ms. Demeritt said. "It’s not one that they feel particularly comfortable with."

Mr. Capozucca said that in his experience many companies are avoiding the use of terms such as "sustainable" products and "green" products. He said a risk exists that those words may become confusing catch-all terms.

Brian Lynch, director of sales and sales promotion for the G.M.A., said focusing on the benefits, attributes and availability of sustainable products was one strategy to use against the confusion that is already present among consumers trying to navigate the sustainable category.

"I think that represents a very sizeable opportunity for our member companies to better educate, to build awareness, to communicate those benefits and let those play against other purchasing factors," Mr. Lynch said.

Collaboration as top strategy

Both G.M.A. and The Hartman Group researchers agreed collaboration between retailers and manufacturers is the best strategy to achieve the most successful mix of environmentally sustainable products to attract consumers.

"A lot of it is just about integrating and consistent messaging across all those channels, from the store level right down to the shelf level where the consumer has to make their choice," Mr. Bearse said. "If you do that and execute it well, you’ll see good results."

Manufacturers can do a lot with their products, but unless retailers are engaging with them, it’s much more difficult to reach consumers, Ms. Demeritt said. There are many "touch points" throughout a store that retailers may use to connect with shoppers, she added. The Hartman Group advises retailers to simply start the dialogue with an emphasis on the human element. Profiling producers and having employees who are able to relay those stories is always beneficial, she said.

"You can put out all sorts of brochures and scientific information and technical jargon," she said. "But consumers really get connected when they hear about the local farm or the place where it’s coming from and what’s going on there. As much as you can, make it a human story, not another brochure or pamphlet in the store."

Private label products are another way to attract consumers, Ms. Demeritt added. She said the industry is upgrading private label lines to premium from the cheapest thing in the store.

"Some of the ways to get to premium in the consumers’ minds is by having private label products that have something to do with sustainability," Ms. Demeritt said.

Finally, social value or social responsibility may not be the primary factor in a shopper’s decision to buy a product, but it remains important to consumers. In some cases the sustainability attribute is a tiebreaker between sustainable and conventional items that are substantially the same. A shopper considering two products that have relative parity in terms of price, value and quality may then decide that the sustainability characteristic wins out, said Mr. Bearse.

This article can also be found in the digital edition of Food Business News, May 26, 2009, starting on Page 62. Click here to search that archive.

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