Low-income shoppers are most likely to be willing to pay a premium for ‘green’ products, according to a new study from retail design and strategy firm Miller Zell.
The food industry has been under increasing pressure to offer sustainably produced products – and has faced increasing scrutiny of its supply chain and production methods – as consumers have become more aware of issues regarding humane food production and responsible care of the environment.
The study, a survey of 999 US shoppers, found that the majority of participants across all income groups were happy to pay a ten-cent premium for green products, but those on lower incomes were more likely to be willing to pay extra than those on middle to high-level incomes.
But the firm noted that this increased willingness to pay more for sustainably produced items among low-income shoppers could be tied to youth.
“This may be heavily influenced by the number of greenminded Millennials who may make up a disproportionate percentage of the lower income bracket because of their recent entry into the workforce,” wrote the authors.
Women and younger adults are most likely to seek out environmentally friendly products, and are also least likely to be satisfied with the level of communication available regarding a product’s eco-credentials. The problem is that the definition of ‘green’ is so broad, said Miller Zell, and therefore consumers actively look for more detailed information regarding companies’ eco-claims.
Although the study found a ten-cent premium to generally pose no barrier to sales, it said: “The desire to pay a premium significantly dipped when the premium reached 28 percent of the base price of the product. This implies that there is a price sensitivity associated with paying for green.”
Even so, 62 percent of shoppers surveyed said that green product claims were likely to influence their unplanned purchases.
The study concluded that the key for manufacturers is to define the green elements of their product in a clear way both on-shelf and in promotional materials.
"Offering green products and executing related promotions could potentially create an additional positive dimension of brand perception - which ultimately impacts frequency and purchase behavior."