Values-based buying — consumers consciously selecting products and companies that support environmental sustainability, social justice movements and a range of other causes — was already a growing force in retail before this year’s unique combination of COVID-19 and Black Lives Matter protests.
A few brands, notably Nike with its Colin Kaepernick ad in September 2018, have gained media attention and even increased sales based on their public stands on controversial issues. Sustainability has become a key factor in retailers’ decision-making, in large part because of rising consumer consciousness about the precarious state of the world’s resources.
But as it has with many other retail trends, COVID-19 evidently has accelerated the adoption and impact of values-based buying. For example, nearly half (48%) of consumers are more concerned about the environment since the pandemic’s onset, and 55% say it will make them more likely to purchase environmentally friendly products, according to the April 2020 Kearney Earth Day Consumer Sentiments Survey.
“While there’s a lag in data from the past four to six months, my sense and the sense of my colleagues in academia and consulting is that, beginning with COVID-19, this whole landscape started looking very different,” said Mark Lipton, Graduate Professor of Management at Parsons School of Design and The New School in an interview with Retail TouchPoints. “The population is becoming aware, and vocal, around equity and fairness with regard to health care and benefits in general, including the discussions around who has the privilege to work at home and continue getting paid versus the frontline workers.”
These fairness issues also are aligned with those around race, Lipton added, since many of the frontline workers are people of color. “Race became a bigger issue, so it’s no surprise that the killing of George Floyd created fertile ground for [the resurgence of] Black Lives Matter,” he said.
Benefits Of Becoming An ‘Indispensable’ Brand
Beyond the specifics of the current moment, companies have long benefited from aligning themselves with their community of customers. “I know from research and the work that I’ve done with clients that companies that connect with their customers in an authentic way generate higher growth,” said Hilding Anderson, Head of Retail Strategy at Publicis Sapient in an interview with Retail TouchPoints.
However, the benefits of customer-centric connections don’t apply equally to all brands. In terms of consumers’ relationships with brands, “there’s a spectrum ranging from functional, to valuable, to indispensable, where the brand becomes an extension of who I am,” said Anderson. “People who enjoy hiking, for example, will often wear a Patagonia or an REI shirt. For many women, Sephora would be in this ‘indispensable’ category. And for some of the home improvement players like The Home Depot, there’s a sense that they are your right arm, that they know you so well. In the automotive arena, Tesla is probably the best example, as is Apple in technology.
“When you get to that level from a brand strategy standpoint, there are significant benefits,” Anderson added. “Brands are 140% more likely to earn a higher NPS score, and consumers are 150% more likely to purchase from them. These consumers are 6X more likely to try a new product from that brand, and as a share of wallet, 9% to 10% is likely to go to the ‘indispensable’ brands versus the ‘functional’ brands.”
Avoiding Costly Mistakes
Even brands that have not yet made it to the “indispensable” end of the spectrum need to pay attention to values-based buying. “It’s table stakes for maintaining the business and loyalty they have from their customer base,” said Corey Chafin, a Principal in the Consumer Practice at Kearney in an interview with Retail TouchPoints.
However, “if you’re looking for incremental sales as a result of supporting social issues, it’s more about not losing sales by making a misstep,” Chafin added. “The moment a company steps out of bounds and makes a move that’s inconsistent with [customers’] values, there can be an immediate and visceral reaction from consumers, of either short or long duration.”
In the case of LGBTQ consumers and their allies, for example, homophobic actions made by executives at companies like Chik-fil-A and Hobby Lobby have led to boycotts and lost sales, Chafin noted. These consumers also are expecting more from the companies they support. A Kearney survey of LGBTQ individuals regarding 2020’s Pride month revealed that 65% want companies to sponsor Pride through advocacy, including donating to LGBTQ causes. The remaining 35% want companies to support Pride via display, including 11% who want companies to release Pride-themed products.
A Value-Based Generation Gap? Perhaps Not
It’s long been assumed that Millennial and Gen Z consumers are more likely to let factors like diversity, sustainability and social justice guide their buying decisions. Some data backs this up: a June 2020 study by Resonate reveals that just 5% of Baby Boomers prefer companies that reduce energy use, compared to 11% of Millennials and 12% of Gen Z. And while only 8% of Boomers will pay more for a product based on an important issue, 13% of Millennials and 12% of Gen Z say they will do the same.
But the notion that older shoppers are more value-based than values-based may be a stereotype. “We’ve been quite surprised that older generations, 65+ and 45 to 64 years old, express a severe degree of concern about sustainability,” said Chafin. “They may be wondering more about the world they are leaving behind, and they also have greater access to income, which can give them access to premium products that are made with sustainability in mind.”
Additionally, the intensity of the current moment is affecting people of all ages, according to Professor Lipton, author of Mean Men, The Perversion of America’s Self-Made Man. In his consulting work, he’s hearing from top executives who are “thinking about stuff like systemic racism in a much more serious way,” he explained. While he’s used to seeing strong support for social justice from students and those in their 20s and 30s, “these are guys in their solid 50s,” he noted.
“It’s not inconsequential that the reaction to the George Floyd killing and the social unrest after that, in the midst of COVID, is a time when we’re all upside-down, vulnerable and raw,” said Lipton. “I have clients all over the country telling me they are thinking about issues of race and systemic racism within their organization. The glitch is that while they know they need to take action, they’re not exactly sure what to do, but they know words are not enough.”