Millennial consumers in recent years have been charged with laying waste to significant parts of the economy, with their spending habits and social values allegedly responsible for the decline of chain restaurants like Applebee’s, cable TV, diamonds and even breakfast cereal. But a report from Credit Suisse Group puts a twist on that view, and essentially argues that businesses failing to reach those young consumers have only themselves to blame.
The key to reaching many millennials is sustainability, the paper says. A concept that gained mainstream, pop culture cachet in the 1990s—in large part through a movement to avoid seafood caught through destructive fishing methods—“sustainability,” at its most basic level, simply means avoiding economic practices that harm the environment.
“The millennials are the most sustainability-conscious generation. Millennials are most willing to pay more for products and services seen as sustainable or coming from socially and environmentally responsible companies,” Credit Suisse says in the paper, entitled, simply enough, “Millennials Drive Sustainability.”
Data from the Nielsen Global Survey of Corporate Social Responsibility and Sustainability support that point. It found that of those consumers who consider sustainability in their purchasing decisions, 51 percent were millennials—usually described as people born between 1982 and the first few years of the 2000s. That survey report also found that a majority of consumers are willing to pay higher prices for products if the brand has a “community commitment;” if the item comes with “environmentally friendly” packaging;” if the brand has a reputation for “social value” or environmental friendliness; if the item is made with “fresh, natural or organic ingredients;” and if the product is known for its “health benefits.”
There exist other ways businesses can appeal to sustainability-minded millennials. Take labeling—which, of course, is just another form of marketing, albeit one typically governed by strict regulation. “Nowadays, social marketing through the EU’s ‘Ecolabel’ and awareness campaigns are helping consumers to make informed choices, potentially contributing to the conservation of the environment. Ecolabeling is based on evaluating the production process with set environmental standards by independent third parties,” the Credit Suisse report says. “Such a label has an added benefit for the producers—the labeled goods often command premium prices.”
Companies hoping to sell more to younger consumers also cannot afford to avoid issues related to their supply chains, because millennials certainly are not willing to ignore these issues. One can find proof for that in growing consumer focus on, say, organic food sources, or the drive to avoid products sourced from destroyed rain forests. “Tata Global Beverages, for instance, first identified the need to develop a sustainable supply chain following disruptions in availability and prices of its tea supply,” the Credit Suisse report says. “It now seeks to certify an increasing part of its tea supply under the Rainforest Alliance, which sets environmental, social and economic standards.”
That attention to supply chains, not just the finished product, is spreading through the global business world and encouraging even some of the world’s most powerful companies to change their practices. “With more food needed to feed a growing population and ever-increasing environmental challenges ranging from water scarcity to herbicide resistance, the food and beverage industry, including Nestlé and Unilever, is leading the way to set standards for sustainable agriculture,” the report says. “Successfully so: Unilever, for example, reported faster growth for its brands with a sustainability purpose than for the rest of the business in 2015, and these brands accounted for nearly half of the firm’s total growth that year.”
That’s not to say all industries are following suit, or that it will be as easy for them to reform their supply chains in a way that will appeal to millennial consumers. Take clothing and fashion. The industry’s supply chains move and change with more frequency than is seen in other industries, which can make it harder—or less appealing and profitable—for clothing companies to verify the sustainability of suppliers. Nor is the industry known for any sort of excessive transparency when it comes to identifying those suppliers. But the Credit Suisse paper takes an optimistic view. “Fair cotton standards and labels have emerged and companies have developed governance standards to foster sustainability,” it says. “In the future, we are likely to see new brands emerge that will reinvent the business model, use recycled or recyclable materials or ensure better manufacturing standards.”
There is little doubt that millennials—just like previous generations—are reshaping the consumer culture. Those younger consumers might tend to share items more often with friends and neighbors than did previous generations—but that doesn’t mean they will, or can, reject retail spending entirely. Brands that fully understand the millennial mindset and make a serious, honest effort to offer a sustainable choice will certainly reap the financial rewards, at least according to the findings in this paper.
“Established industries must adapt their business models now if they want to bring millennials on board,” Credit Suisse says. “As for companies, they must deliver good social and environmental performance and engage in sustainable practices or their future growth could be at risk.”