Consumers Put Sustainability First, With Retailers Lagging Behind

By Greg Petro, CEO, First Insight

Are consumers and retailers on the same page when it comes to sustainable shopping? A recent report indicates that the answer to this question is no.

First Insight and the Baker Retailing Center at the Wharton School of the University of Pennsylvania surveyed consumers and senior retail executives to compare their perceptions of consumer shopping habits, purchase behavior and influences driving sustainable purchase decisions. The data identified a significant disconnect between senior retail leaders and consumers when it comes to sustainability.

It should come as no surprise the concept of sustainability has been driven primarily by the consumer.Yes, retailers such as Aldi and Whole Foods have been pioneers in this field and should get the credit they deserve for giving conscious consumerism a bigger platform. Yet it’s the consumer — specifically the Generation Z consumer — who has taken the sustainability conversation to the next level.

The Gen Z consumer has outsized influence on not only their Generation X parents, but even their boomer grandparents, when it comes to sustainable shopping. In the two years since First Insight’s first report on Gen Z and sustainability was published, Gen X consumers’ 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.

Gen Z’s influence will continue to increase as the younger members of this cohort grow into adulthood. By 2030, Gen Z will represent 27% of the world’s income, surpassing millennials by 2031, according to Insider. Since this generation also patronizes brands that support their own values and causes, it’s imperative that brands and retailers align with these consumers before it’s too late.


One of the most significant data points the study uncovered is that consumers across all generations are willing to pay more for sustainable products than retailers expect. 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 goods.

Another interesting deviation was discovered around the importance sustainability plays when consumers choose to make purchases. Almost 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. Likewise, 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.

A desire to help the environment was found to be the primary reason consumers purchase sustainable products and brands. Almost 30% said they want to improve the environment, with 23% wishing to reduce production waste, 22% wishing to reduce their carbon footprint, and 17% concerned with animal welfare. Only 7% agree that they prefer to shop sustainably due to social signaling; in other words, to be recognized as being a good citizen. Retail executives ranked social signaling nearly equal to improving the environment when asked why they believe consumers shop sustainably.

The good news is that almost 100% of the senior retail executives agree that consumers expect them to operate in a more sustainable way. We know from previous studies that the older generations — millennials through boomers — define sustainability primarily by the materials used to create a product. These include organic, naturally harvested fibers or products made from recycled materials.

Sustainability to Gen Z, on the other hand, means sustainable manufacturing. Using predictive analytics, testing 3D digital samples prior to production, and refining ESG policies are winning tactics that can improve sustainability targets for many companies.

Consumers are giving retailers and brands the benefit of the doubt, with 60% agreeing that retailers are sufficiently transparent around their efforts to become more sustainable. It’s ironic to note that 100% of the senior retail executives think consumers assume the retailers are not transparent with their sustainability efforts.

Overall, retailers must listen more closely to the voice of the customer on issues as critical as sustainability. These data reveal that consumers clearly want more than performative measures from retailers and brands when it comes to ESG priorities, which will only increase in importance as Gen Z grows in influence. Furthermore, it shows that aligning with consumers on sustainability topics is better for business. Acting on consumers’ sustainable shopping preferences will guide retailers with both product selection and pricing. Transparency around sustainability efforts will help brands and retailers differentiate themselves in the market, while testing consumer-validated merchandise can improve retailers’ sustainable product assortments and bottom lines.

First Insight, the world leader in Next-Gen Experience Management (XM), is transforming how companies make better decisions leading to a sustainable future. Customers include 200+ of the world’s leading vertically integrated brands, department stores, consumer products companies, CPG, mass merchant retailers and wholesalers. For further information, please visit

Scanner Data Tells More About Behavior Than Meets The Eye

By Jim Prevor, Editor-in-Chief

This is really an important piece because it speaks to the aspiration of consumers. Yet it is one thing to know what consumers are saying; it is quite another thing entirely to know why they said it.

The single best assessment of then-candidate Donald Trump was a piece by Salena Zito in The Atlantic in which she wrote, “the press takes him literally, but not seriously; his supporters take him seriously, but not literally.” It is unclear how literal and how seriously consumer expression of aspirations should be taken.

One is reminded of Georges Clemenceau, then Prime Minister of France, who never challenged the popular saw that the “voice of the people was the voice of God.” Clemenceau did, however, explain that the task of a leader was to “follow that voice shrewdly.”

And into that word ‘shrewdly’ was packed a lifetime of political understanding.

The problem with words such as sustainability is that they are not morally neutral. They are especially not morally neutral among those cohorts, say by age, that have come to invest certain words and ideas with meaning and imbue them with moral weight.

There are two sides to this. First, it causes a kind of ‘group think’ that generally affects people’s personal feelings. Most people are not so bold as to want to be seen as thinking outside the norm. Second, even if people don’t actually concur with the consensus, it leads to a desire to not be seen as an outlier.

So, when retailers interpret a situation differently than consumer survey data indicates, what it really means is you want to pay closer attention to sales data.

As a practical matter, many things consumers say are unlikely to be done, and if they were done, that would bring all kinds of secondary effects. If consumers really would pay significantly more for more sustainable products, well where would they get that extra money? Would they eat less? Would they rent less expense homes? Go on fewer vacations? Who knows?

And, in any case, how much time are people prepared to invest in learning about the products they buy? OK, maybe they will invest more time on a house or a car – some major expenditures. But when buying a piece of fruit or a jar of jam, what percentage of consumers will actually ever know that predictive analytics and 3D Digital samples were used in producing this product or that the company did a good job refining its ESG policies – policies related to environmental, social and governance factors? The answer is, probably not many.

Sure, some consumers will be willing to pay more because they think a retailer or the producers whose products the retailer is selling are going to be more in-line from certain values. Whole Foods traditionally caught this kind of customer and, in the old days, Whole Foods used indicators such as educational level as an important factor in deciding where to locate a store. But the biggest retailer in America is Walmart, and the income levels are way below Amazon shoppers or Target shoppers, for example. Now these shoppers can be affected by the zeitgeist as well as the next. They may even tell interviewers that they are willing to pay more for more sustainable products. And that is a kind of voice that retailers and product marketers need to consider in manufacturing and marketing.

But…and it is a big but … if you want to know how people actually assess different values – like staying true to a narrative about sustainability versus having enough food for everyone to eat – you need to look at sales data. If you want to know how shoppers make decisions when they have a limited budget but are trying to sock away money in the hope that the family can go to Disney World, you have to look at sales data.

So, something such as organics, for many years has been a trend in the building. Well, as of February 21, 2021, the USDA’s Economic Research Service reports that organic accounts for just over 4% of food sales at retail in America.

Note that this is not 4% of the food sold… because organic brings higher prices, it is probably 2 or 3% of the food sold. Note also that it is not all intentional choices. In produce, for example, some retailers don’t want to carry two versions of lower volume perishable items. So because the conventional shopper mostly doesn’t care, and an organic shopper might, some retailers only carry organic options of some low volume items.

The aspirations of consumers are no small deal, and if being socially or environmentally conscious is a key factor, then retailers and producers of products need to consider this. One suspects, however, that the kind of consideration is mostly marketing. Despite getting those photos of farmers up in the aisle, when it actually comes to purchasing behavior, for large segments of the population price really, really matters. It is kind of déclassé to say it, so most aren’t going to tell interviewers that they buy fish caught by a neighbor because their kids like the fresh fish, the nutrition is good and they’re helping the neighbor.

Sure, there is a sector of the population willing to spend money to either act in accordance with their values or to be seen as acting in accordance with high values. But, for many, for much of the dollars spent, well, it’s just lunch.