From Observer, June 5:
The sustainability movement has spent years asking how much extra customers will pay for responsible products. The more important question is how sustainability can help create better products, lower costs and stronger customer loyalty.
For years, executives were sold a compelling idea: doing good would also mean doing well. Surveys suggested that consumers were increasingly willing to pay more for products seen (or marketed) as better for the planet. Consultants reinforced the message. Investors rewarded ambitious environmental commitments. Companies launched wave after wave of sustainable products, expecting customers to reward their efforts at the checkout counter.
The research seemed to justify the confidence. In 2020, consulting firm Kearney reported that 70 percent of consumers said they were willing to pay up to 10 percent more for sustainable products. Another consultant, Bain, surveyed more than 23,000 consumers across eleven countries in 2023 and found that 64 percent reported high levels of concern about sustainability. McKinsey went further, declaring that consumers not only cared about sustainability but were backing those concerns with their wallets.
The problem is that they weren’t. When McKinsey tested actual willingness to pay using an auction-based methodology, consumers were willing to pay an average premium of just 2.2 percent for sustainability across three everyday products: yogurt, shampoo and T-shirts. Similarly, a study by European e-commerce firm Zalando involving 2,500 consumers found that while 60 percent said sustainability transparency was important to them, only 20 percent actively sought that information during a purchase. This is what researchers call the say-do gap: the distance between what people tell pollsters and what they actually do in stores....
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