Are Businesses Listening?  GenZs Leading the Way

While most Americans care about the effects of climate change, especially as it relates to their children and grandchildren, many are doing what they can on a personal level to combat it.  But many feel their own actions can make only a small difference. About 64% say they want businesses, and the government, to lead the way.

Study upon study show how Americans are changing, and more and more of them are making their intentions clear. One example that illustrates how consumers and retailers differ in opinion regarding sustainable shopping is a report by First Insight and the Baker Retailing Center at the Wharton School at the University of Pennsylvania.[1]

According to the report, “Consumers and senior retail executives were surveyed in tandem to compare perceptions and preferences for sustainable products, shopping formats, and the influences driving sustainable purchase decisions.  The survey found that a significant disconnect between senior retail leaders and consumers exists when it comes to sustainability.”

Seemingly without businesses taking note, the importance of sustainability has been steered forward by the consumer.  There have been only a few retailers that have been on this mission, such as Patagonia and Levi’s, and customers continue to reward them for their focus on sustainability and the environment.

In terms of the consumer, while early adopters have been pushing this agenda for quite a while, it has been primarily the Gen Z consumer that has brought the issue to the forefront.  The First Insight study shows that Gen Zs consider the importance of sustainability far more than any other generation.

Also of interest, Gen X’s preference to shop sustainable brands increased by nearly 25% and their willingness to pay more for sustainable products increased by 42%.” In fact, consumers across all generations—from Baby Boomers to Gen Z—are now willing to spend more for sustainable products. Just two years ago, only 58% of consumers across all generations were willing to spend more for sustainable options. Today, nearly 90% of Gen X consumers said that they would be willing to spend an extra 10% or more for sustainable products, compared to just over 34% two years ago.”

By 2030, Gen Z will stand for 27% of the world’s income, exceeding Millennials by 2031. And because Gen Zs refuse to support brands that don’t reflect their own values and causes, it is vital that brands understand this and change the way they relate to consumers, or suffer the financial consequences.

A Serious Disconnect

Despite the plethora of studies regarding Gen Z and their preferences, senior executives of B2C companies still seem not to realize what this and other generations are now demanding regarding sustainable shopping.

One of the most important conclusions from the study shows a disconnect between what the consumer is saying and what the retailer is hearing.  “Two-thirds of consumers say they will pay more for sustainable products, with equally two-thirds of retailers believing that consumers will not pay more for sustainable products.”  This divide could be narrowed if the retailers took the time to review these studies and listen to what consumers are saying regarding how to market and price sustainable products.

Almost as surprising is a similar disconnect whereby nearly “100% of the retailers surveyed believe that consumers rank brand name higher than product sustainability, when, in fact, a much lower percentage – 56% – of consumers rank brand name as somewhat or very important.”

In a related question, “only half of the senior retailer executives believe that sustainability is an important purchase consideration for consumers despite three-quarters of all consumers saying that it is somewhat or very important to them.”

Wanting to help the environment was the main reason consumers chose sustainable products.  Nearly 30% indicate they want to help the environment recover, with 23% wanting to reduce production waste, 22% looking to reduce their carbon footprint, and 17% worried about animal welfare. Only 7% say they prefer to shop sustainably due to social signaling, or being recognized as a good citizen. However, “retail executives rank social signaling nearly equal to improving the environment when asked why they believe consumers shop sustainably.”

Along the same lines, in a recent article published by GreenBuzz entitled “When engaging with today’s youth, be ready to be uncomfortable,” Joel Makower stresses that “companies may be too quick to ply youth activists with a litany of corporate commitments and achievements understandably boastful, perhaps, but likely tone-deaf to a generation that may have bigger fish to fry.”[2]

In describing a conversation with two Gen Zers at the recent VERGE conference, Makower states that they “represent millions of their peers who seek to grasp the wheel of a world they perceive to be hurtling off a cliff. And while only a relative handful of these individuals have yet entered the work world, they already are looking to have an outsized impact on how companies operate.”

Smart companies should take this info as a wake-up call.  If they continue to do business as usual, and treat the consumer as a casual part of their overall business process, they will soon be surprised that they are left with shrinking revenue, fewer customers and smaller market share.


[2] GreenBuzz, October 31, 2022