What the green movement will mean for retailers

With publicity surrounding the threat of global warming on the rise, environmental consciousness is at an all time high. Jeff Rogut, executive director of The Australian Centre for Retail Studies, explains what this means for the retail sector.

Despite being somewhat displaced by the current global financial crisis, in 2008 the environment was rated as the most important problem facing the world, according to research by Roy Morgan International. The green industry is estimated to be worth, on average, more than AUD$500 billion on a global scale annually and British WWP Group estimates that global consumer spending on green products will reach £340 billion in 2008. In Australia, the Mobium Group has revealed that Australian consumers currently spend AUD$12 billion on environmentally-friendly goods and services and an overall growth rate of 20 percent is expected to continue, with current trends projecting the market to reach AUD$21 billion by 2010.

The major environmental concerns include climate change, carbon emissions, renewable energy, eco homes and buildings, global water supply, genetically modified (GM) foods, food miles and increased amounts of pollution. The green movement has created a new niche market of consumers who are highly concerned about the environment and are willing to do and spend more to be environmentally friendly. Also described as socially responsible, ethical, cultural creatives, and/or environmentally responsible, green consumers are those who consistently and primarily discriminate product purchases in favour of the environment.

As green becomes mainstream and increasing numbers of consumers embrace environmentally responsible practices, green consumers are becoming a sizeable and lucrative target market. Lifestyles of Health and Sustainability, or LOHAS, refers to the green consumer and represents the marketplace for the goods and services sought by these consumers. Although LOHAS is still gaining currency in Australia, the green consumer market has become a larger and trendier demographic over the past several years, with nearly 4 million Australians (26 percent of the adult population) LOHAS aligned.

Despite the push for large corporations to take responsibility for environmental issues, the Australian retail industry is lagging considerably regarding the emerging challenges of climate change and water scarcity. However this gap is set to narrow as Australian retailers are acknowledging their impact on the environment, devising policies to reduce energy, the use of plastic bags and the amount of waste going to landfill. There is no doubt that green issues will increasingly impact the lives of consumers and the business world for some time to come. They will also specifically recalibrate every point of retailing: cultural behaviours, the organisational model, merchandise strategy and planning, promotion, access, selling environment and dollars.

There are challenges of course, but the successful retailers are going to be those that have robust strategies in place to deal with the rising cost of oil and commodities, that support suppliers in water-scarce areas, that actively become involved in fair trade and ethical sourcing of products, and that work to make the sustainable options more available and affordable for their customers.

* Jeff Rogut is executive director of The Australian Centre for Retail Studies.
For more information or to buy a copy of the detailed report, Environmentally Friendly Retailing, please contact The Australian Centre for Retail Studies on 03 9903 2455 or go to www.buseco.monash.edu.au/centres/acrs

This article was first seen in the March/April 09 issue of Giftrap, the official magazine of Gift and Homewares Australia (GHA).

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