Consumer drive for change
The consumer drive for change leaves retailers and manufacturers struggling to remain relevant.
Consumers around the world are driving the green & organic revolution. This ever-evolving consumers group have become more knowledgeable and are holding both manufacturers and retailers to higher standards. As they become dissatisfied with the big groups green washing tactics, lack of authenticity and moral conviction to support organic & green products – these consumers are finding and encouraging a new and evolving collection of specialised retailers.
Look at the boom of new farmers markets in every major centre. Worrying for the retailers, look at how well all of these authentic
markets are being supported. We are also seeing a boom in new smaller speciality shops that are becoming specific destinations for conscious green & organic shoppers.
Where are we headed?
When we look to the future it is not a far stretch to suggest that the traditional retailers stuck in their old business model will rapidly disappear from the ecosystem, unless they evolve with their consumers. In every sector of our world it’s the consumers who are redefining notions of quality to meet their ever more exacting standards and needs. It’s almost unheard of that a major manufacturer or retailer drives this predominant market trend. These companies react to cultural change rather than spread it and the difference really does matter to the savvy consumer.
Lets look at some numbers:
As the global economy tanked this past 18 months, consumers
where expected to migrate to cheaper products. They were expected to give up green & organic in favour of
generics marketed under a private label.
When surveyed:
46% of Britons said they would pay an up-charge for green & organic products 56% of Americans said they too would pay the up-charge for green & organic 75% of Brazilians said they would pay the up-charge for green & organic 83% of Chinese said they were willing to pay the up-charge for authentic green & organic products.
What is surprising about these numbers is the fact that the emerging world cares more about the green & organic revolution than the established first world. Many people – the traditional retailers – have always seen green & organic as a nice PR spin for their high-income niche market customers.
To bring total relevance to this discussion Wal-Mart in the USA, the worlds largest retailer which arguably caters to a lower LSM consumer, launched into the green & organic space some 4 years ago. They did two trials – organic milk and organic cotton. They
dipped their proverbial toe in the water and I’m sure their hard headed business leaders were not expecting much. These products sold at a 30% up-charge over the conventional products using chemicals and they flew of the shelves.
The bottom line – today Wal-Mart is the largest seller of both organic milk and cotton in the world. I’m sure the management team of
Wal-Mart is thinking about what to do next.
When looking at the numbers Brazil and China lead the way for consumers of the future. It’s these lower income bigger markets that want change, but where are the big retailers and manufacturers? How could they be so out of step with the predominant consumer trend?
Here in South Africa the phenomenon of the green & organic revolution mirrors our counterparts worldwide. The Natural & Organic Products Exhibition was launched in 2004 and attracted a mere 2,000 visitors. This show has grown every year and in June of this year the event staged in Johannesburg attracted over 26,000 visitors. The show in Cape Town planned for 19-21 February 2010 at the International Convention Centre is expected to draw over 30,000 visitors. The reason for the growth is that every exhibitor is totally authentic – no chemicals are allowed in any of the products on the show. And this is not a small pavilion or couple of stands featuring green & organic – it’s the entire show!
This year the organisers have launched the Green Home Exhibition alongside the Natural & Organic Products Exhibition. This unique exhibition is not another business-to-business event talking about green technology. This is getting the consumers involved – it’s about selling green technologies directly to the green & organic consumer. One company at the June show took a million Rands worth of orders in the 3 show days. The reality is, with Eskom’s tariff increases consumers cannot afford to sit back – they have to commit to sustainable systems that will save them money.
There needs to be a call to action for all retailers and manufacturers to embrace the green & organic market trend. It needs a concerted commitment, and that means placing large scale growing programmes for organic products. It means committing to far bigger orders for all green technologies and, with volume, the prices will come down.
It’s not about making compromises with farmers and producers that are nearly or sort of green & organic – its about integrity and commitment. The consumers know the difference and their spending power will ultimately punish the green washers and reward the risk takers.