Consumer Behavior Change Circular Economy

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Are Consumers Really Ready for a Circular Shopping Economy?

In GlobeScan’s 2020 survey of global consumers, 74% said they agree that they need to consume less to preserve the environment for future generations, vs 66% in 2019. But opinions are mixed when it comes to shopping secondhand, renting or leasing items — pointing to the persistence of that pesky intention-action gap.

Sponsored Content | / This article is sponsored by GlobeScan | By Tom Idle | Published 3 years ago | About a 7 minute read

Image: cottonbro/Pexels

A perfect storm is emerging that points to a growing need for a more circular economy.

Increasingly scarce resources, ongoing deforestation and a global problem with plastics use and disposal are helping to build a consensus — at least within the business community — that keeping materials and products in circulation for much longer makes sense, both environmentally and economically.

Evidence suggests such a consensus has spilled over into the general public, too — with rising levels of acceptance for new models of consumption, such as buying secondhand items. National COVID-19 lockdowns have forced consumers to stay at home, fundamentally changing how people spend their money. While many have switched to online browsing to fulfill their buying habits, some have resisted altogether — keeping money in their pockets and their purchases to a minimum.

As economies recover and lockdowns ease around the world, businesses are busy trying to anticipate what type of consumer will emerge. But, as many of the findings of GlobeScan’s latest consumer insights research shows, they ought to have a keen eye on the circularity of their products and services if they are to compete in the new economy. While the 2020 GlobeScan Healthy & Sustainable Living report doesn’t offer a clear picture of the impact of COVID, it does indicate a significant increase in people wanting to reduce their environmental footprint and consume differently.

“Two of the most important elements of circularity for consumers all relate to ‘stuff’,” says Chris Coulter, GlobeScan’s CEO. “People are most interested in durability – products that endure are innately positive for people. They are also interested in choosing products with limited packaging, and avoiding items that lead to more waste.”

In the 2020 survey of consumers across 27 markets, 74 percent of people said they either ‘strongly agree’ or ‘somewhat agree’ that they need to consume less to preserve the environment for future generations. That figure was 66 percent the year before, noting a dramatic increase in these attitudes.

The data also suggest a strong desire from people to live more sustainable lifestyles. Among the most common things people say they are doing to make a change are reducing their use of plastics, including bags and bottles; avoiding waste from packaging and disposable products by recycling and reusing more, and using ‘environmentally friendly’ products.

Of course, consumer activity is interconnected to progress being made by the businesses delivering the products and services being consumed. Consumers currently think circular consumption is difficult, Coulter says.

“Brands must make it easy and affordable. Price is a real barrier for much of the world on anything sustainable. They also have to make it cool. Getting younger, urban and hip generations hooked on innovative and novel approaches to consumption via hot brands will make this stick and also trickle down to other consumers.

“But what’s most exciting is that younger consumers — Gen Z — do see consumption differently, and are open to more radical approaches to consumption based on circular principles.”

This is one reason why a number of brands have been piloting and testing new ‘sales’ models.

Outdoor apparel company Patagonia has long been a leader in encouraging more circular consumption. It is focused on creating long-lasting and durable products, and even urges its customers not to buy anything from its stores if they don’t really need it. Meanwhile, its repairs, returns and resale offer — imitated by the likes of Levi’s, The North Face, Arc’teryx and others in recent years — continues to improve the lifespan of fashion products.

PepsiCo-owned SodaStream — which invites users to simply refill gas canisters to keep producing their own fizzy drinks at home — is another good example of a new business model that gives power to consumers to address waste, while retaining ownership over the product. PepsiCo bought SodaStream for $3.2 billion back in 2018 to help boost its plastic-waste reduction efforts. PepsiCo projects that circular innovations such as SodaStream could avoid the production of around 67 billion single-use plastic bottles by 2025.

“The Beer Store in Ontario, Canada has a long-standing model of putting a small price on a beer bottle, and that has extraordinarily high return rates,” Coulter adds. “You go to the store, buy your beer, pay a small deposit of ten cents on each bottle; and then when you go back, you bring your empties and get your money back. It’s simple, elegant and effective.”

Swedish furniture and homewares giant IKEA — a brand partner in GlobeScan’s upcoming 2021 Healthy and Sustainable Living Study — is probably further along the journey towards creating a circular offer than most companies. It has an ambition to transform into a circular business by 2030 and has spent years implementing a range of in-store initiatives to engage its customers, including recycling, remanufacturing and reusing products. Most recently, the company launched a furniture buy-back and resale scheme across its UK stores to reduce the number of its products going to landfill. Customers get vouchers to spend in-store if items they no longer need are returned in good condition.

“Resourcefulness has always been part of our DNA,” says the company’s communications manager for all things circular, Dominique Fularski. Through its own consumer research, IKEA learned there is a growing awareness of the impact humanity has on the planet.

“No one wants to be wasteful; but people struggle with how to maintain, repair and eventually pass on things they believe still have value — and many can’t afford what they need for everyday living,” she says.

IKEA stores have long operated so-called ‘recovery departments’ that sell discounted display and returned items that might need some repairs. It also offers spare parts to customers so they can make repairs at home. In 2019, it gave 14 million spare parts to customers.

So, what did “sufficient appetite” look like for IKEA? What proportion of its customer base had to show an interest in circular models in order for the business to step up and invest in initiatives such as its take-back services? It has always been about testing and developing new business models and concepts, Fularski says.

“We understood very early on that new, circular business models are a key element of enabling product and material flows, giving us the opportunity to have a more significant impact on lowering our climate footprint. [It is also about] developing long-term relationships with our customers, connecting where it adds value, and making us an even more relevant and affordable choice.”

While IKEA says it sees “clear evidence” that its circular solutions are desirable for its customers, it is still early days. One of the most surprising findings from the GlobeScan research is that consumers are really not at all interested in the concept of renting or leasing items: “There was great excitement in sustainability circles for many years on the idea of shifting the business model to one of service rather than product, but this currently has only limited traction among consumers,” Coulter says.

Government intervention, such as extended producer responsibility legislation and new taxes on waste and packaging, will be crucial in scaling up action on circularity. As Fularski points out, IKEA has spent the last 75 years optimizing a linear value chain. Turning that on its head will take time because it means making adjustments to everything — from product design and financial models to cost analysis, logistics capabilities and customer communication: “A systemic shift is needed; and the global infrastructure through which products and materials flow also needs to adapt to fully realize the potential of a circular economy,” she adds.

But achieving an economy where circularity rules and wasteful design is a thing of the past is inevitable, Coulter concludes.

“The solutions exist; they are just not effectively distributed or scaled. Consumers want this and science tells us we have to do it.”

Tom Idle

Content creator extraordinaire.

Tom is founder of storytelling strategy firm Narrative Matters — which helps organizations develop content that truly engages audiences around issues of global social, environmental and economic importance. He also provides strategic editorial insight and support to help organisations – from large corporates, to NGOs – build content strategies that focus on editorial that is accessible, shareable, intelligent and conversation-driving.

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