Our conscience increasingly influences our consumption. Now consumer packaged goods (CPG) brands and retailers need to adapt to conscious consumers whose core values draw them to purpose-led brands. Conscious consumers take an intentional, informed, and empowered approach to shopping. They mindfully choose products from companies that ‘do the right thing’ to protect consumers’ social, environmental, and financial well-being.

Let’s see why more retail companies are focusing on three key areas of conscious consumerism (which align with 2021’s top CPG trends): supplier diversity, sustainability, and value. 

Supplier diversity

Consumers want retail companies to collaborate with diverse suppliers to give underrepresented groups greater visibility and prosperity and spark meaningful social change.

Supplier diversity programs connect retailers to brands that serve increasingly diverse consumers. Retailers seek supply chain partners that offer an assortment of relevant products to help more consumers feel welcome, valued, and understood. Diverse suppliers are businesses that are at least 51% owned and operated by people from a traditionally underrepresented or underserved group.1Bateman, Alexis, Ashley Barrington and Katie Date. Why You Need a Supplier Diversity Program. Harvard Business Review. August 17, 2020.

For instance, women own 40% of all businesses in the U.S. and ethnic minorities own nearly 30%. Supplier diversity will increase in influence, as minority population growth will account for up to 70% of the growth in purchasing power from 2020 to 2045.2Mummalaneni, Simha and Jonathan Z. Zhang. Maximizing the Benefits of B2B Supplier Diversification. MIT Sloan Management Review. June 30, 2020.

Supplier diversity programs are an important way to combat social injustice in the United States.

 Harvard Business Review3Bateman, Alexis, Ashley Barrington and Katie Date. Why You Need a Supplier Diversity Program. Harvard Business Review. August 17, 2020.

Retailers are taking this trend seriously. Last year the following companies ran supplier diversity sourcing campaigns in partnership with RangeMe and its parent company ECRM.

  • Dollar General hosted the 2020 Supplier and Diversity Innovation Summit to connect with diverse suppliers to discover innovative products.4Wilson, Marianne. Dollar General goes virtual with effort to increase supplier diversity. Chain Store Age. July 23, 2020.
  • Lowe’s partnered with Daymond John, star of ABC’s “Shark Tank” to give diverse small business owners an opportunity to pitch their products as the home category booms.5Sahadi, Jeanne. This Shark Tank star is partnering with Lowe’s to help minority-owned businesses. CNN Business. September 16, 2020.
  • Walmart’s annual Open Call competition invited small businesses to pitch their products and 56% of the suppliers that advanced to the next stage self-report as diverse.6Berthiaume, Dan. Walmart says ‘yes’ to almost 200 Open Call finalists. Chain Store Age. October 2, 2020.

Meanwhile, beauty brands are celebrating a rainbow of complexions. Sephora was the first retailer to commit to the 15 Percent Pledge to make Black-owned products on store shelves proportional to America’s Black population.7McEvoy, Jemima. Sephora First To Accept ‘15% Pledge’, Dedicating Shelf-Space To Black-Owned Businesses. Forbes. June 10, 2020. Ulta Beauty will double the number of Black-owned brands on its shelves and feature Black women in its marketing campaigns.8Ulta Beauty to double Black-owned brands in its stores, feature more Black women in ads. CNBC. February 2, 2021. To help diverse suppliers get discovered, retailers are also tagging brands as “Black-owned” on their physical and digital shelves.

Diverse CPG brands can stand out and capture retail buyers’ attention with certifications like Women-owned Small Business (WOSB), Ethnic Minority-Owned – NMSDC Certified, State Certified Minority Owned and Minority Business Enterprise (MBW).

Sustainability

Consumers care about the planet and the COVID-19 pandemic has made sustainability an even more urgent retail priority.

A recent study found nearly 70% of consumers in the U.S. and Canada say it’s important that a brand is sustainable or eco-friendly.9Bekmagambetova, Dinara. Two-Thirds of North Americans Prefer Eco-Friendly Brands, Study Finds. Barron’s. January 10, 2020. Consumers around the world demand alternatives to plastic waste due to its harmful ecological effects and sales of plant-based meats have grown as consumers shift to sustainable eating habits.

That’s why Bain & Company recommends that brands rethink product development by producing goods with lower carbon emissions and less waste.10Gadiesh, Orit and Jenny Davis-Peccoud. Why Sustainability Is the New Digital. Bain & Company. January 13, 2021.

Like the digital revolution before it, the sustainability revolution promises to change everything.

Bain & Company11Gadiesh, Orit and Jenny Davis-Peccoud. Why Sustainability Is the New Digital. Bain & Company. January 13, 2021.

To differentiate their companies as sustainability leaders:

  • Ahold Delhaize USA committed to a more sustainable food supply chain, including product transparency, waste reduction, and climate change efforts. The grocer’s research found 43% of consumers say sustainability is “extremely important,” up from 28% before the pandemic.12Redman, Russell. Ahold Delhaize USA updates health, sustainability goal. Supermarket News. February 11, 2021.
  • Amazon’s Climate Pledge Initiative, which has attracted companies like Unilever and Best Buy, aims to inspire new innovations that help to achieve net-zero annual carbon emissions by 2040.13 Sandler, Rachel. Microsoft, Unilever Join Amazon’s Climate Pledge. Forbes. December 9, 2020.
  • IKEA is phasing out non-rechargeable alkaline batteries from its home furnishings, encouraging customers to reuse and recycle items, and will no longer print its iconic catalog.14Lombardo, Christopher. IKEA inspires little acts that have a big environmental impact. Strategy. October 1, 2020.

Value

Big box stores, dollar store chains, and hard discounters have grown in popularity as consumers strive to stretch every dollar amid job losses and economic uncertainty. As a result, more shoppers now strive to find the best value for their money. McKinsey & Company recommends that brands convey value, as 30% of consumers switched to a new brand due to better prices, while 25% cited better value.15 Charm, Tamara, Becca Coggins, Kelsey Robinson and Jamie Wilkie. The great consumer shift: Ten charts that show how US shopping behavior is changing. McKinsey & Company. August 4, 2020.

Retailers are adapting their service to value shoppers’ needs:

  • Aldi will open 100 new U.S. stores this year and extend its curbside pickup service to 500 additional stores.16 Tsai, Katie. Aldi plans to add 100 new stores in the U.S. and expand curbside pickup. CNBC. February 10, 2021.
  • Dollar General launched a new banner, popshelf, to segment the booming value market with affordable staples offering elevated quality. 17 Anderson, George. Dollar General’s Upmarket Move Makes ‘Good Strategic Sense.’ Forbes. October 16, 2020.
  • Target gained market share in its five core merchandise categories, including home and furniture, due in part to aggressively discounted prices during the 2020 holiday season.18D’Innocenzio, Anne. Target continues to thrive in whirlwind retail environment. ABC News. January 13, 2021.

Overall, retail companies can endear conscious consumers by adapting to socioeconomic trends and demand for social good by offering CPG products and retail practices that protect people and the planet.

Hi there 👋
Want the inside scoop on all things CPG?

Get the latest CPG and retail insights, trends, and business best practices sent directly to your inbox, every week.

[+]