New research from First Insight and the Wharton Baker Retailing Center reveals a disconnect between retail executives and consumers in regard to shopping preferences — especially sustainably produced goods.
The survey found that a “profound sustainability knowledge gap exists between these two cohorts, which presents opportunities for retailers not only to bolster their reputations and enhance consumer loyalty but also to increase profits.” The crux of the findings is that retailers “were surprised to learn that consumers are willing to spend more for sustainable brands.”
The report follows another survey from First Insight and the Wharton Baker Retailing Center demonstrating “that Gen Z leads the way in sustainability and has an outsize impact on older generations, especially their Generation X parents.” That prior research found that Gen Z’s influence extends to shopping behaviors, “including in resale, with sustainable-first purchase decisions becoming more prevalent among all generations.”
The most recent report showed while two-thirds of consumers say they would pay more for sustainable products, “two-thirds of retailers believe that consumers would not be willing to spend more for sustainable brands.” Of the consumers polled, the authors of the report said “nearly three-quarters of the consumer respondents value product sustainability over brand name” and nearly all (94 percent) of the retailers surveyed “believe the opposite, saying that brand name would be more important to consumers than sustainability.”
In a statement, First Insight also said retail executives “rank brand-operated resale/re-commerce programs lowest when asked what type of sustainable shopping formats consumers would utilize the most.” Still, of consumers polled, 41 percent of respondents said they “already shop at brand resale/re-commerce programs, such as those offered by Patagonia, Lululemon or Levi’s.”
Greg Petro, chief executive officer of First Insight, said the report “clearly demonstrates 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.”
The survey also showed disparities in regard to “how consumers wish to be compensated for resale items, how much and how often consumers actually use re-commerce and price targets for resale items,” First Insight said.
Additional findings include that while all of the retail executives polled “assume that consumers would rate retailers low on transparency around their sustainability efforts,” consumers polled give retailers more credit as 59 percent of respondents said they feel retailers are being sufficiently transparent.
“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,” Petro added.
First Insight partnered on this report with the Baker Retailing Center at the Wharton School of the University of Pennsylvania as part of its “ongoing commitment to providing actionable consumer insights to the retail industry.”
Thomas Robertson, academic director of Wharton’s Baker Retailing Center, said it is “imperative for retailers to understand their customers’ values so that they can adapt for the future.”
“For example, half of retail executives believe that price is the primary reason consumers shop across re-commerce formats,” Robertson said. “In fact, only 27 percent of consumers agree that price is their motivation, while a combined 54 percent say that they shop resale because they care for the environment and prefer sustainable or circular shopping. Brands such as Vestiaire Collective and Farfetch Second Life know that there is a big future in resale, even at luxury price points.”