Ethical businesses such as organic, natural, sustainable, local and fair trade – have moved from boutique to a huge growth sector in Europe’s grocery industry.
We look at this mega trend in retail and at how Australia is responding.
Socially responsible = sales
The Boston Consulting Group’s 2015 comprehensive study on the factors driving growth in the fast-moving consumer goods space found the majority of growth came from products with “socially responsible overlays”, and it says companies should be taking note.
A good example of this is German supermarket chain Aldi’s commitment to organic foods, which has given them a competitive advantage in a very tight market.
Carbon neutral department stores
And it’s not just grocery: UK department store Marks & Spencer, achieved its “Plan A” goal of making its business carbon neutral and has now introduced Plan A 2020.
The new plan consists of 100 new, revised and existing commitments such as sourcing sustainable cotton, exploring alternatives such as hemp and using recycled plastic.
Being an ethical brand is not just great for the planet; it means a bigger bottom line, because it resonates with conscious consumers.
Simon Mainwaring, Chief Executive of brand consultancy We First, explains why it’s increasingly important for customers to buy responsibly.
“Consumers are voting with their hard-earned dollars for companies authentically investing in making our world a better place socially and environmentally,” he says.
“Brands are realising that to maintain their relevancy they must shift towards making positive change.
Further, the competitive landscape is nudging these efforts forward and, in the future, we will see a shift towards brands competing to be the most purposeful.”
While business sectors in the US and the UK are rapidly going after ethical consumers, Australia is slower on the uptake.
Notable exceptions are David Jones, who has an ethical sourcing programme to ensure the products it sells are environmentally friendly and child labour free.
Other companies, such as Cue have a commitment to their clothes mostly being made onshore and Harvey Norman with its new ranges of Australian made furniture.
Walking the talk
According to a 2016 survey of over 4.5K Choice members, there’s a high level of interest from Australian consumers to buy socially and environmentally responsible products from businesses that champion these values.
The responses showed that:
- 73% agreed or strongly agreed with the phrase, "It's important to buy environmentally friendly whenever I can".
- 87% believed quality is more important than price.
- 70% were interested in ethical products and claims.
- 85% were interested in misleading product and marketing claims.
However, despite the enthusiasm for sustainability, Australian consumers also want competitive prices and convenience when it comes to service and products, and will often choose saving dollars over saving the planet.
That, plus our smaller population and distance from bigger markets means that there's still some way to go to catch up with the eco retail mega-trends that are happening overseas.
Making a difference
If you are interested in buying sustainably, get Ethical Consumers Australia’s Good on You app.
The app helps consumers to choose brands that have a positive impact on people, the planet and animals while avoiding brands that don’t stack up.
If you’re looking to do a green business start-up, there are government grants available to help.