Putting the green back in greenbacks
How eco-consumerism will survive the recession.
Mon, May 18, 2009 at 05:56 AM
COUNTING PENNIES: Study shows that the recession shouldn't stop people from buying eco-friendly products. (Photo: iStockphoto)
Does the recession mean consumers will back away from green products and services? During periods of economic distress, purchases deemed "unnecessary" are often the first to go — people tighten their belts and put more of their discretionary income into savings accounts.
But a new survey suggests that green products and services will show resilience despite the economic downturn. The 2009 National Green Buying Survey by Green Seal and EnviroMedia Social Marketing found that about half of all consumers are still buying as many eco-friendly products as they did before the recession began, and an additional 19 percent are buying more products than before. Just 14 percent have cut back spending on green products.
At least for the foreseeable future, there's one segment of the population that will almost certainly continue buying green even if it means paying more money. LOHAS consumers — that is, consumers concerned with living a Lifestyle of Health and Sustainability — make up about 16 percent of the population and don't always factor price into purchasing decisions. They're willing to cut back in other areas so they can still purchase green goods and services, according to Environmental Leader.
LOHAS consumers are early adopters of green products, very brand-loyal, and shop based on their values. They're generally willing to pay up to 20 percent more for green products, even during a recession. Shopping by conscience, LOHAS consumers pay attention to detail and demand the best, fostering competition among eco-friendly businesses and serving as their core consumer base.
But for much of the remaining population, green issues aren't on their radar so much as saving money. Despite the common perception that all green products and services come at a premium, many people are beginning to realize that going green can actually increase their bank-account balance. Products and services that allow consumers to save money on utilities, transportation, food, household goods and other expenses will continue to gain popularity as people seek ways to save money in the long term.
"On the one hand, consumers will be more resistant than ever to buy premium-priced products, especially if they are dubious to begin with about a product's green value proposition — that is, whether it really will help address the planet's environmental challenges," says Joel Makower, executive editor of GreenBiz.com and author of Strategies for the Green Economy.
"On the other hand, many greener products, like energy-efficient light bulbs and appliances, can save consumers money over their useful lives and may cost only a little more to purchase initially. So consumers may be more interested in products that will reduce their monthly energy bills, assuming the initial investment — the additional price over the less efficient version — is minimal."
Business owners especially continue to be drawn toward sustainability because of the effect it has on their bottom line. Chris Mines, an analyst for Forrester Research in Cambridge, Mass., predicts that spending on green IT initiatives in particular will increase, not decrease, in the year to come.
"Companies are starting to recognize that green means green," he says. "The motivation for these projects is foremost cost savings, and the environmental benefits are an added 'nice to have'."
And, during times of uncertainty and negativity, 'green' may be the silver lining consumers are searching for. Another recent report, Sustainability: The Rise of Consumer Responsibility, found that more than three-fourths of consumers consider sustainability when shopping because they feel an increased need to be responsible and ensure a brighter future. Alison Worthingham, Hartman Group Managing director of sustainability, confirms that being green makes consumers feel more positive, tempering the negative outlook held by so many about the current global economic situation.
"During these tough economic times, sustainable products create that sweet spot that makes consumers more optimistic about the choices they are making. In many ways, the term 'sustainability' has become synonymous with responsibility for consumers or just 'doing the right thing.'"