What’s your raison d’etre? And more importantly, how does that line up with the values of your core customers?
The importance of a brand purpose is more important than cost and convenience for today’s shoppers, concludes a new study on global consumer trends from IBM. That means retailers now must go beyond simply offering convenient or quicker services to gain a customer’s trust, the study, “Purpose and Provenance Drive Bigger Profits for Consumer Goods in 2020,” found.
“One-third of all consumers today will stop buying their preferred products if they lost trust in the brand, and one-third of consumers have already stopped purchasing their longtime, favorite brands in 2019,” the IBM study found. That’s because consumers are prioritizing the sustainable, transparent brands that are aligned with their core values when making decisions on what to buy. And, more important, they’re even willing to pay more, not to mention change their buying habits, for brands that get it right.
On average, 70 percent of purpose-driven shoppers pay an added premium of 35 percent more per upfront cost for sustainable purchases, such as recycled goods. And 57 percent said they are willing to change their purchasing habits to help the environment. Another 79 percent said it’s important for brands to provide guaranteed authenticity, like certifications, when they are buying goods. And within this group, 71 percent are willing to pay an added premium of 37 percent more when a brand provides full transparency and traceability.
“Transparency constitutes proof that an organization and its offerings are what the company claims to be–a way to earn consumers’ trust,” Luq Niazi, global managing director at IBM Consumer Industries, said. “The modern-day marketplace has created a new generation of customers that come with higher demands and bigger challenges that retailers must face in 2020.”
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And brands that wish to succeed will also have to pay closer attention to how to meet the needs of core customers. The new set of consumer wants translates to higher demands and bigger challenges for the retail industry.
“The study’s findings show that today’s retailers need to be proactive in evaluating and understanding what drives current and future core buyers, while still boosting margins for their business,” Mark Mathews, National Retail Federation’s vice president for research development and industry analysis, said.
Consumers have changed in other ways as they shop whenever and wherever the mood strikes, even if it’s when they are doing something else. Impulse buying, once the norm, is about impulse shopping because of the ability to shop in “micro-moments.”
Having a smartphone in their pockets that can access sites has pushed these micro-moments to the forefront because that new technology has also rewired how consumers now shop in their daily lives. Easy accessibility also requires brands to offer convenient and quicker access to detailed information, such as how products are manufactured, what is the quality of ingredients and whether the item is sustainable or ethically sourced, as well as under what conditions. This change means the broader challenge for retailers will be how to balance the need for sustainability with the increasing need of people buying in the moment.
And as sustainability and preserving the environment becomes more important, brands also need to help build a sustainable, circular economy for future generations. “In order to preserve resources and eliminate waste in today’s commerce-driven landscape, sustainability must be integrated and measured end-to-end and across the entire supply chain for [consumer packaged goods] manufacturers,” the study said.
IBM’s research, developed in partnership with NRF, polled nearly 19,000 consumers from 28 countries, across all demographics and generations to understand how individual purchasing decisions are evolving.