Effect of economic downturn on green products sale

The economic downturn is already having an effect on consumer spending, and ‘green’ products are among the early casualties. There had been a marked shift in purchasing behavior from premium to value or economy products since last September.
After soaring 70% since 2002 to reach a value of £1.5 billion last year, sales of organic food have slowed as consumers defect to discount grocers. In addition, 52% of voters thought the environment should be the government’s top priority, compared with 44% who believed it should be the economy. However, just 19% said they would choose to pay more for a more expensive environmentally-friendly product, compared with 58% who would opt for a cheaper alternative even if it were less good for the environment.
It is seen very clearly that the mainstream consumers are not willing to pay to be green. The implications for the way companies market their green credentials are considerable.
Climate change is now a mainstream concern and the growth in recycling and energy conservation among the general public is an example of embedded behavior. Despite this, more immediate personal concerns, such as the rising prices of food, fuel, energy and mortgages, along with decreasing job security, will nudge the environment further down people’s list of priorities. The next evolution in “green” awareness and practice will be about value as well as ethics. Brands that appeal to both sides of that equation will be very well placed. Two categories of green advertisers – ‘green chic’ and ‘green washers’ – will be hit hard.
Products such as handbag designer Anya Hindmarch’s “I’m not a plastic bag’ as an example of the first type. The simple bag has become a symbol of ethical intent, and a very fashionable one at that. It is bought by the kind of people who like wearing their green credentials on their sleeves to show how right-thinking they are. It’s an example, if you like, of conspicuous abstinence.
The market for luxury green goods will shrink dramatically. Brands that flaunt their green credentials in advertising, with no substance to back them up, will be even harder hit. The worse the downturn gets, the more the genuinely environmentally responsible companies will be sorted from those who never really got it.
The number of complaints to the Advertising Standards Authority (ASA) about misleading or exaggerated environmental claims rose from 117 in 2006 to 561 in 2007, and many of these focused on energy and car companies.
Brands indulge in green washing at their peril. Consumers are interrogating green ads much more carefully and get very upset when they have made a commitment to deal with a “green” company and found out they have been misled.
Engagement with green issues is a very emotional thing, which is one of the reasons companies incorporate it into their strategies. It is a good new platform for engaging in dialogue with consumers and building brand loyalty.
Despite its commitment to reducing its impact on the environment (encapsulated in its ‘Tread Lightly’ initiative), Eurostar claims it does not advertise its green credentials at all. Other brands spout about their carbon footprint or how many tons of CO2 they are saving, but that is pretty meaningless to most consumers.
Eurostar’s long-term commitment to the environment is a key aspect of its corporate reputation Eurostar turned their backs on their core proposition, but are using their green commitment to open up another line of communication with the consumers.
The short-term economic downturn will not change that at all, but it should force other companies to question how well their green advertising is working.
Companies have an unprecedented opportunity to switch the focus of their marketing from ‘spending green’ to ‘saving green’. There are very few instances where saving money and saving energy are not compatible, and, in that sense, reducing the impact on the environment is the only silver lining in the recessionary clouds.
Grant believes that, rather than flaunting eco credentials as an end in themselves and trying to gain green brand image points as a result, the way for brands to engage with consumers is to help them make the life-style choices that will make a difference to their pockets and the environment, such as setting the washing machine to a lower temperature of 30Â, insulating the loft or buying a smaller car.