Ethical consumerism – the practice of making purchasing decisions based on a product’s social and ethical positioning – is on the rise as consumers look to drive change by adjusting where and what they spend their dollars on. Nielsen’s corporate social responsibility survey data revealed that more than half (55 percent) of global respondents say they are willing to pay extra for products and services from companies that are committed to positive social and environmental impact. And according to an annual benchmark study byGood.Must.Grow. (GmG), a socially responsible marketing consultancy, the percentage of Americans who have increased their socially responsible shopping has increased three years in a row, growing from 18 percent in 2012 to 30 percent in 2014.
As this practice of ethical consumerism grows, retailers are starting to take note and are adjusting their business strategies accordingly. While retailers, like Patagonia, Ben & Jerry’s, Whole Foods and TOMS, may make attracting these consumers look easy, it’s not. To appeal to the 65 percent of Americans who bought goods or services from socially responsible companies last year – a number that could possibly increase even more this year – retailers need to radically shift their mindsets, away from a 100 percent bottom-line focus, and toward promoting the following:
- Transparency: The cornerstone of selling to ethically-minded consumers is the elimination of the walls that once separated retailers from consumer oversight. For retailers to be considered transparent, “there must be an absence of hidden agendas and conditions, and a minimum degree of disclosure wherein transactions, practices, dealings and agreements are open to all for verification.” For transparency to be realized, retailers need to pull back the curtain on their inner operations, from how they treat their talent to where they source their goods. Good.Must.Grow. reported that treatment of employees is the biggest factor (45%) when people decide how responsible a company is, followed by environmental impact (40%).
By using transparency to empower consumers and place them in a position to hold businesses accountable, retailers are cultivating a stronger sense of trust. And it is this trust that helps retailers grow and diversify their consumer bases to include more of the ethically minded.
- Authenticity: For retailers to achieve an authentic reputation, they need to demonstrate “(1) How their offerings make consumers’ lives better; (2) how the brand is committed to a customer’s well-being; (3) how the brand contributes to society as a whole.” By showcasing how their company contributes to the communities in which it works, lives, plays and beyond, retailers not only build meaningful relationships with their consumers, especially the ethically minded, they can also grow their bottom lines.
As my colleague Jennifer DiGiovanni and I discussed in a recent blog post, Patagonia, for example, has embraced an “environmental ethos,” appealing to customers that also value sustainability. In a recent campaign, the retailer urged consumers to repair clothing instead of purchasing new, and it engaged with advocates and customers alike to support the sustainability movement. Throughout the year, sales reportedly increased by almost one-third to $543 million.
Through promoting transparency and authenticity, retailers can achieve more than just growing their ethical consumer base. They have the potential to acquire and develop brand loyalists who will journey with them beyond the transaction.