In a highly competitive and evolving consumer environment, how to create the ideal customer journey while keeping up with growing demands in ESG?
After the traditional festive shopping frenzy, it's time for retailers to take stock and review their strategies. Against the backdrop of another year impacted by the pandemic and growing public awareness of climate change, both online and traditional retailers have a lot on their plates.
To help e-commerce retailers better understand the changing expectations of consumers, KPMG conducted a survey on the factors that influence online shopping decisions. More than 3,000 people from Germany, Austria and Switzerland were asked about their online shopping preferences and behavior. According to the survey, consumers are increasingly leaning towards sustainable shopping. Indeed, being able to find out about the sustainability of a product has become 'very important' for 21% of the respondents and 'important' for 42% of them, ahead of the importance of 'express' delivery options or access to an customer advisor during the purchasing process.
Transparency in demand
However, consumers still struggle to identify whether a product is really sustainable or not, and sometimes it comes down to gut feeling. According to the survey, consumers regard traditional high street shops as more sustainable than their online counterparts, yet believe they are better informed about the sustainability of their online purchases.
Aside from the sustainability of the product itself, there is a growing consumer demand for transparency surrounding other aspects such as CO2 emissions, child labor, pay inequalities, safety, waste disposal, biodiversity, deforestation and supply chains.
Turning risk into opportunity
How can retailers get ahead and create commercial opportunities in an ESG-heavy environment? For every new brand or product launch, it is straightforward: By showcasing the sustainability of the product from the outset and hiking up the price accordingly. But for existing products that are already household names, the costs involved in making the product or product range compliant with ESG references cannot simply be borne by the customer.
Digitalization and data can be game-changers and help retailers better identify consumers who are more susceptible to the sustainability of a product or brand. For example, for a large beverage firm, KPMG introduced image recognition technology in recycling centers to spot any of the brand's empty drink containers that may have been recycled. The system was used to identify different regions where their customers were already avid recyclers and other regions where they could try to increase awareness surrounding recycling. The solution also revealed other interesting information regarding where their drinks were actually consumed – surprisingly often far from the original purchase location.
Another approach could be to use digital tools to measure which foods in a store are nearing their sell-by date. In-store tracking tools for these products already exist, but digitization can automate product promotion by alerting consumers located near the point of sale of opportunities in real time. This not only helps reduce food waste but also represents a commercial advantage by increasing traffic to the store.
Consumers are obviously increasingly demanding when it comes to sustainable shopping, but the retailers themselves can get ahead of the game if they help customers understand their role in the circular economy. There is however a fine line between educating and preaching. Simple instructions or ideas about how to reuse, repair or recycle the products can go a long way here. Retailers can also help consumers make informed sustainable choices. Faced with two similar articles, the consumer is likely to choose the cheaper of the two. However, if the more expensive article was made or designed locally or made out of recycled material, then showing this off clearly could convince those who want to shop sustainable to spend more on the article, despite the higher price. The more consumers make this informed choice, the more economies of scale would be created, and ultimately reduce the price. The more sustainable product would then be accessible to a larger customer profile. This win/win situation is an opportunity for both retailers and consumers – and also our planet.