By and  on July 22, 2009

Will more consumers buy expensive green products even though the economics of retailing have fundamentally changed?


Stella McCartney, a fashion pioneer in the sustainable movement, isn’t so sure.

“I…worry that the recession makes people care less and focus on lower prices, with less concern on where and how things are made,” she said. “The eco-fashion subject — or any subject in general — is always in danger of becoming a trend and a one-off. Everyone on this planet needs to keep an interest in it, and there is a vested interest.”

The movement received what many analysts said was a significant boost when Wal-Mart Stores Inc. said last week it will create an environmental labeling program to measure the social and ecological impact of products. The world’s largest retailer will require all 100,000 suppliers, who will have to absorb costs of the initiative, to answer a 15-item questionnaire focusing on energy and climate, material efficiency and natural resources to create a comprehensive sustainability index. The effort, which might produce efficiencies that eventually lower costs, could take five years or more.

Mike Duke, president and chief executive officer, said the initiative makes business sense because customers “want to know the materials in the product are safe, and that it was produced in a responsible way.”

There’s no question that, from apparel to foods, sustainable products are big business.

Although economic hardship might stunt the short-term sales growth of sustainable and organic items, retail analysts said green merchandise has traction, especially for a core group of shoppers that will pay for it regardless of costs.

Brands have a vested interest in making sure their products and operations — from more energy-efficient lighting to renewable power systems — are environmentally friendly, experts said.

Global sales of green merchandise increased to an estimated $654 billion in 2008 from $438 billion in 2003, but are forecast to be flat this year, according to a study by Mintel International Group Ltd. If the global economy begins to recover, sales could rise 2.4 percent to $669 billion next year and reach $780 billion by 2013.

The Mintel survey of 2,500 adults found that 54 percent said they would buy more green products, but consider them too expensive. Consumers 35 years old and younger were most receptive to them, but seniors were less likely to pay the higher costs.

The report concluded that, even in a period of reduced consumer spending, competitively priced green merchandise may do well because it stands out. “Green products that offer extra value…are better positioned to weather tough economic times,” the study said.

Mintel defined green products as those that minimize impact to the environment through recycled materials; have no harmful chemicals or solvents; are made with organic and pesticide-free farming; reduce energy and water consumption; are made of sustainable woods, and are produced in ways that create lower waste and pollution.

The recession notwithstanding, Wal-Mart’s decision shows ecological issues are relevant, said Marshal Cohen, chief industry analyst for research firm The NPD Group.

“While many people may have believed green was gone due to the economic downturn, by no means is that true,” he said. “The consumer is looking for reasons to spend again, and green and philanthropy are going to be the things that help propel them out of the malaise they are in.”

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