But why are consumers losing trust in brands? And better yet, how can brands regain this trust and build lasting customer relationships?
Online scams. Data breaches. Fake news.
In this world where we're always connected and overloaded with information, it can be tough to figure out what's real and what isn't. That's why 86% of Americans say that transparency from businesses is more important than ever before. Companies that are vocal about their values, honest about their products, and provide accurate information will increase consumer trust.
Many brands are on the right track when it comes to building trust through transparency. In fact, 45% of business leaders have implemented transparent ESG reporting—but this isn't exactly what consumers want. Only 19% of consumers listed it as a top five driver of trust.
So, what do customers want?
Affordable and effective products
Accurate and relevant information
Respectful and fair treatment of customers
And when a brand isn't entirely transparent about its practices?
It will quickly lose customers and their trust.
Oatly—Overstated Sustainability
Oatly, a plant-based milk alternative, is one brand that has built its success by focusing on transparency and sustainability practices. But it turns out that even some "healthy" brands aren't always upfront about the true values of their products—and that can make for a recipe for disaster with consumer trust.
Recently, Oatly was called out for bold claims in its advertising related to the benefits of a vegan diet and the harms of CO2 gas emissions. When a U.K. advertising watchdog looked further into the claims, they found that Oatly had overstated its sustainability credentials and failed to mention certain relevant information.
Misleading customers is a big no-no for brands, and it can quickly erode any trust built over time. So, what's been the fallout for Oatly?
While correlation is not always causation, Oatly's stock shares are in decline. Plus, consumer trust in the brand is declining too, with Planet Oat overtaking Oatly as the best-selling oat milk brand in the U.S.
The takeaway?
Overall, the retail world is constantly evolving, and it's up to brands to keep up with the latest trends to stay relevant and trustworthy. Whether it's through transparency, honesty, ethical practices, or simply providing quality products at affordable prices, the retail consumer trends of the future will be shaped by what brands do today.
02—Self-care and caring for others are significant themes among consumers.
The year 2022 brought a shift back to normalcy for consumers. But, the lessons of two years of COVID-19 and its economic, political, and social uncertainty have driven people to focus on themselves—and each other.
Social justice, sustainability, and local community efforts are more important now than pre-pandemic. People are more comfortable talking openly about mental health and self-care and seek retail brands that align with their values.
Consumers want to buy from brands that care about the world and companies that try to demonstrate their commitment to caring about others.
Publix—A Company That Cares
For years, the Publix grocery store chain has been recognized for its great culture. For the 25th consecutive year, Publix has been recognized as Fortune’s 100 Best Companies to Work and Great Place To Work Certified. This grocery chain, with over 1,316 stores and $48 billion in sales, has an excellent reputation with customers because it prioritizes the needs of its customers and staff. The culture of Publix is defined by its philosophy of treating all team members with dignity and respect. Employees are offered development programs, tuition reimbursement, and excellent benefits (including stock ownership in the company). On top of that, the brand is known for welcoming diversity, promoting from within, and supporting community outreach.
By caring for people first, Publix has garnered the love and loyalty of customers, who continue to support the brand. In the age of Amazon and online transactions, the physical retail business is about people—not just products—and Publix is winning with caring.
03—ESG and social factors continue to have a strong influence on consumer purchase decisions.
Today's consumers expect brands to be good corporate world citizens, and environmental, social, and governance (ESG) factors continue to affect consumer shopping behaviors. Seventy-eight percent of people agreed companies had a responsibility to be good citizens.
And while there's a higher ticket price for retail products that promote sustainability and social responsibility, consumers are willing to pay more for these goods. For example, recent research shows that 46% of customers say they'd be ok with spending more on products from companies committed to better ESG performance.
What of the brands that aren't on board with ESG?
Brands that ignore ESG factors risk losing customers to competitors that prioritize social responsibility and sustainability. Recent studies show that 1 in 4 consumers in the U.S., U.K., and Australia switched or stopped using a brand due to sustainability or social responsibility concerns.
Younger generations drive ESG.
Generation Y and Millennials are the driving force behind the growing importance of purpose-driven and environmental factors in retail. Over 89% of Millennials and 90% of Gen Zs report that they're making at least some effort to reduce their own impact on the environment.
Gone are the days of trusting brands to make the right choices—younger generations are more skeptical. Less than half of Millennials (47%) and Gen Z (48%) think business is having a positive impact on society. To break through this suspicion, brands need to take a more active, outward-facing role in promoting and demonstrating their values.
This cohort of consumers is more aware and active than ever before when it comes to issues like climate change, sustainability, and fair labor practices—and they want retail brands to reflect these values through their products, messaging, and actions. They'll put their money where their mouth is, with many Gen Zers and Millennials reporting that they're willing to pay more to purchase environmentally sustainable products. Combined, Millennials and Gen Z account for more than 43% of the U.S. population, so retail brands ignoring ESG risk losing a huge customer base.
REI dominates values-based purchasing.
One retail brand that has risen to the top of the pile of values-based brands is REI. The outdoor clothing brand and co-op is dedicated to its commitment to environmental causes and is vocal about its stewardship of sustainability. REI reinvests more than 70% of its profits into philanthropic causes they support––and they're not shy to talk about it. REI has a whole section of its website devoted to its views on bipartisan issues like public lands, equality, and climate change. Their mission and vision guide them, and their customers respect them for it so much so that they hit record-breaking revenue of $3.7 billion.
Perhaps it's good karma—or maybe it's an example of how a business that focuses on values can be both giving and thriving.
