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Why Brands Are Developing a Social Conscience

04 Oct 2019 Elizabeth Timmis
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in Retail, Strategy

The necessity for brands to be socially relevant—to stand for consumer ideals—has never been so crucial. This movement is expanding; as it does, supporting evidence is arising. In this piece, we take stock of the upswell of purpose-driven brands, offering a research-backed view of why brands are getting involved. The bottom line has a lot to do with it, and consumers hold the power.

“WE VOTE WITH OUR DOLLARS”

“We want to buy things that reflect our values…So there is a movement toward value-driven companies using their businesses to make the world a better place.” -Corrie Conrad, Sephora’s VP of Diversity and Inclusion and Sephora’s social impact strategy division

Brands that align with consumer values tap into the critically important element of emotion. In one study, 50% of respondents described having a “positive emotional connection with brands that are purpose-driven, as compared with brands that are quality-driven (30%) and cost-driven (20%).” The point about emotion proves that having a conscience—or at least appearing to have one—is a differentiator. And while consumers have been slower to tie that emotion to their wallets, that is changing. Surveys by both Deloitte and Mintel uncovered that the majority of respondents would pay more for “socially compliant” goods or with a brand that aligns with their social values. The younger consumers feel that way in particular, with 87% of Gen Zers and 75% of Millennials saying they would pay a premium for purpose-driven products. Voting “no” with dollars is an equally important indicator; 54% of Gen Zers would stop using a brand that engaged in unethical practices, while 37% would boycott companies whose practices negatively impact the environment.

“CONSUMERS ARE STARTING TO CARE”

“This is just the beginning. This is the new normal.” -Jill Standish, Senior Managing Director and Head of Accenture’s Global Retail Practice, discussing delivery options and carbon footprints

While “clean” and “organically grown” claims are becoming the new normal in CPG, beauty, and food, the need for brands to publicly demonstrate their commitment to social responsibility is spreading across category. With the majority of Millennials now married and beginning families, it’s no coincidence that major toy companies are transforming their businesses to adjust to this generation’s preferences and sensibilities. Lego will make all their famous pieces from sustainably sourced sugar cane by 2030. Hasbro plans to remove all plastic from packaging by 2022. Relatedly, Mattel has launched a gender-neutral doll, which speaks to a different kind of social relevance. The goal here is likely not so much about making a big profit on this small product entry, but on getting a halo of good press and warm feelings.

When it comes to clothing, fast fashion’s struggle has been startling; apparel is one of the world’s top polluting industries. Seeking to stay ahead of possible backlash, Inditex, owner of Zara, has committed that 100% of their cotton, linen, and polyester materials be sustainable, organic, or recycled by 2025. All of these big brands are making major changes to sway Millennials—whose purchasing power will be $1.4T by 2020—and the Gen Zers right behind them, who currently feel even more strongly about the importance of social responsibility, however they define it.

A CONTINUED ACCELERATION

While not every consumer has the same values, an increasing number of brands reflect the ones they care about…You’ll continue to see an acceleration of consumers shifting their mindset and going to brands that share their values.” -Aaron Magness, CMO of Brandless to eMarketer

In many cases, it feels as though brands are scrambling to catch up—and they need to. Regarding the 2019 holiday season, 45% of consumers said they will seek gifts from companies with social missions. Those dollars are adding up; when just looking at environmentally conscious shoppers, Nielsen reported that sustainable product sales have grown 20% in five years and, by 2021, will be a $150B market. Brands see both an opportunity—and a cost—to not aligning with consumer values. But brands are also built by people—by humans who care—and so the bottom line is not the only motivator.

As social causes become increasingly important to brands, we’ll continue to monitor the trend and how it resonates across the marketplace.

 

Additional Sources: eMarketer, “US Gen Z Internet Users’ Attitudes Toward Brands” November 2018, RetailMeNot, "The 2019 Retail Marketing Playbook,” November, 2018, Bloomberg, “Holiday Shoppers Weighing Carbon Footprint in Delivery Decisions,” October 1, 2019, eMarketer, Direct-to-Consumer Brands 2019: How Digital Natives are Disrupting Traditional Brands and Retailers,” January 14, 2019

Retail Strategy

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