New study reveals sustainability products too have a price ceiling

As sustainability becomes a standard practice for consumers, retailers and brands need to communicate their environmental efforts or risk being left behind.

A new sustainability study by Simon Kutcher revealed that consumers see themselves as the number one actor towards bringing positive environmental change, followed by non-profit organisations and companies.

But just like everything else, sustainable consumer goods have a price ceiling too.

Despite eco-friendliness as one of their top three key drivers in purchasing decisions, consumers still have to weigh up the cost of sustainability with their household budgets.

A push towards eco 

According to Simon Kutcher, sustainable behaviour has become standard practice for many Australians and in turn so have sustainable purchases.

The key drivers motivating consumers’ sustainable purchases are; a sense of responsibility, a fear of environmental damage, feeling good about their purchase, for the benefit of younger generations, a desire to act as a role model, social pressure and social recognition.

Retailers and brands would be best positioned to market their products based on consumers’ internal motivators – leaning into their sense of responsibility, their want to feel good and their desire to act as a role model.

The most important element consumers look for when choosing an environmentally friendly product is elements of sustainability, for example, recycled packaging.

Due to the focus on recycled packaging, consumer goods have a very tangible link to environmental concerns for buyers.

The question of pricing 

Price remains a barrier even for consumers who are motivated to be sustainable and are willing – retailers and brands continue to price products in this category above what’s achievable with consumers’ constrained budgets.

Simon Kutcher identified affordability as a key issue, citing that despite 48 per cent of Australians being willing to pay a premium for sustainable alternatives, 41 per cent of Australians found that these products are too expensive.

“Consumers recognise environmentally led products and services come with a cost,” said Amelie Spaniol, Senior Manager at Simon Kucher Australia, in a statement.

Adding that, “brands that bridge the affordability gap and meet their price perceptions will realise a material commercial advantage in the market.”

The majority of Australians, 69 per cent, aspire to purchase more sustainable products as a standard component of their purchasing behaviour, however, 41 per cent view current pricing levels as prohibitive, according to Simon-Kucher’s research.

Retailers and brands need to meet consumers where they are by meeting their sustainability expectations while simultaneously offering competitive pricing – Simon Kucher suggests that this can be achieved by communicating theadded environmental value accurately.

Greenwash and get caught 

In what is maybe the greatest takeaway for retailers and brands, is the pushback that should be expected from consumers if they are suspected of greenwashing products.

Simon Kutcher’s study revealed that while the category of sustainable consumer goods has grown so has the consumer, with 66 per cent of Australians conducting their own research into brands’ sustainability claims.

Moreover, the legal and financial consequences of greenwashing can be severe if environmental claims are proven to be unsubstantiated. 

If losing customer loyalty wasn’t enough to deter greenwashing, the ACCC is empowered to fine companies up to $50 million if found guilty of misleading consumers.

The competition watchdog promised to step up its greenwashing surveillance after an analysis of 247 businesses in 2023 showed 57 per cent had promoted concerns about claims about environmental credentials.

As retailers and brands attempt to meet consumers’ demand for eco-conscious products they will need to be mindful of their marketing, price and claims.

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