The price barrier to sustainable shopping

Posted by Daniel Palmer on 15th October 2009

Financial constraints are restricting ‘green and ethical living’, according to the British-based division of market researchers Mintel.

Indeed, one in five consumers are not in a financial position to think about green or ethical issues. Even before the recession, price premiums were a barrier to more widespread take-up of green and ethical products and the evidence of altered priorities is that 12% of adults stated that they could no longer afford price premiums for green or ethical products.

However, the new report also shows a strong commitment to ethical and environmental issues, as those rating them as ‘very important’ were actually up marginally on 2008. Today, some 97% of adults have adopted at least one of the greener behaviours included in the survey, implying that there is a strong basis of support for further green initiatives, such as energy-saving ideas, if retailers and manufacturers were to provide positive leadership.

Indeed, in terms of low cost greener actions such as using re-usable bags and switching to low energy light bulbs behaviour has been unaffected by the recession.

Australian research released this year by IBISWorld has highlighted the cost of shopping with a conscience, while a study by Unilever showed that 51% of Australians were more concerned by sustainability this year than last.

“Our research shows that in the recession fewer people are prepared to pay more for environmentally friendly products, suggesting that for most people being greener is a ‘nice to do’ rather than a ‘need to do’ aspect of their lifestyles,” Richard Caines, Senior Retail analyst at Mintel, said. “The impact of the recession is forcing people to cut costs and trade down, so it is no surprise that one in five say they are not in a financial position to think about ethical or environmental issues or that 12% can no longer afford the price premiums for green or ethical products.”

Mr Caines said industry players needed to take a look at exactly what they could offer consumers beyond just being ‘greener’ to ensure they can capture a wider market.

“To overcome the ‘many concerned, but fewer buying’ scenario, retailers and manufacturers need to give people more reasons to buy, such as value-added benefits (like) superior taste or health benefits,” he advised. “However, there is an element of people being greener by default because as people look to save money they are consuming less, using less energy and reducing their carbon footprint.”

The research also revealed that shoppers have a strong opinion about current packaging use – some 74% think retailers should do more to reduce the amount of packaging they use. However, although it is an issue consumers feel strongly about, packaging is not a point of difference that is likely to influence the choice of store or choice of product because the focus for the time being (if not for most people always) is firmly on saving money and looking for the best value.

“These figures show that so long as actions are low cost and do not inconvenience people they are easily assimilated into their lifestyles. Green activities such as recycling that cost nothing are widely supported and there is widespread support for more action on reducing waste, such as retailers making more use of recyclable materials or the use of re-usable containers,” Mr Caines concluded.