One of the most frequently discussed topics in the sustainability industry is sustainable consumption. How can we shift people away from frequently buying new things and toward reuse and alternatives to ownership, like borrowing or swapping?
There’s no question that we’re a nation “wired” for consumption. The American dream is built upon economic success and acquisition.
A 2012 Federal Reserve Report on consumer spending indicated that for 25 years, personal consumption expenditures (PCE) had been the primary economic driver for the U.S. economy, hitting an all-time high in 2007 – making up 70% of GDP.
Then, the “Great Recession” hit and consumer spending stalled due to a perfect storm of declining household wealth, job losses, weak consumer confidence, declining home values and tightened credit requirements.
Economic hardship began to force behavior change. Last year, almost a quarter (23%) of our Eco Pulse™ 2012 respondents said they most often “buy used and/or repair items rather than buying new items.”
So was this behavior simply a temporary blip, driven by economic necessity? As the economy improves, have consumers gone back to their old ways? Or are we seeing a fundamental shift in purchase habits? We decided to dig deeper in Eco Pulse™ 2013.
This year, we found that the percentage most often buying used has increased to 26 percent and that 14 percent of Americans are actively taking part in the share-it, swap-it, rent-it economy.
The primary driver? Saving money. But what’s surprising is that those most often buying used and seeking alternatives to ownership are not just lower-income consumers who can’t afford new. Rather, this behavior was found across all income brackets and seems to be a personal preference driven by fiscal conservatism, regardless of household income.
And while they weren’t more likely to buy used rather than new, Millennials were significantly more likely to be trying alternatives to ownership.
Having seen parents lose homes, struggled to find jobs after college, and generally come of age in tough economic times, the Millennials – who comprise the largest age cohort ever – seem to be re-thinking the mindless consumption that has driven the American economy since the Baby Boomers bought their first BMWs.
The Millennials – for now at least – are less worried about owning stuff and are experimenting with other models. They embrace change and require online/mobile solutions. They are used to complete access to information and online markets, which makes the collaborative economy a practical reality for them.
They value experiences, relationships and authenticity, and are particularly concerned about the environment. To reach this important age group, marketers must put aside traditional appeals to materialism, excess and glitter. Instead, they must appeal to an entirely different value structure.
Bottom line: Millennials present both an opportunity and a challenge for manufacturers and retailers. They’re questioning old purchasing habits and their behaviors are going to drive the market. It’s time to innovate and re-think distribution and product life cycle.
Millennials will ally with companies that share their values – those that facilitate reuse and alternatives to ownership, and recapture, repurpose and recycle products at the end of their lives.
This story was also one of Shelton Group’s contributions to the SustainableBrands.com Issue in Focus on behavior change.