Future of Australian Retail: 2024 and Beyond – Trend 14 (Value-Driven Consumer)

By Retail Doctor Group Anastasia Lloyd-wallis Brian Walker , in association with Ebeltoft Group

In today’s rapidly evolving retail landscape, a seismic shift is underway, driven by an increasingly conscious and discerning consumer base. This burgeoning cohort, dubbed the “value-driven consumer,” is redefining the rules of engagement, demanding more than just a transactional relationship with the brands they patronise. They seek authentic connections, ethical practices, and a profound sense of purpose that resonates with their personal values.?

As consumer confidence is at a low, coupled with increased interest rates and cost-of-living expenses, consumers are more considered in their purchases. 43% of consumers say they are now more conscious of their budget than ever before, while more than 90% of consumers are doing their own research before making a purchase decision.?

Given the ease with which prices can be compared these days, these educated consumers are hesitant to spend, actively searching for a discount, and taking longer to make their final decision.?

TABLE OF CONTENTS

• What’s Behind the Rise of the Value-Driven Consumer?
• Why Should Retailers Embrace Ethics and Sustainable Practices?
• Best Value-Driven Practices for Retailers
• Challenges, Opportunities, and Recommended Strategies for the Australian Retailer
• Training Retail Staff for the Value-Driven Consumer Era
• How Retailers Can Foster a Values-Driven Culture
• The Global Context: Transcending Borders
• The Future of Retail: Embracing Purpose and Authenticity

However this does not necessarily mean the lowest prices; consumers are looking for value and what they’ll get out of the purchase. Aspects such as trust in the brand, and a fun in-store experience carries more value to the consumer who uses retail shopping as a way to spend time, too.?

Consumers are using purchases not only for necessity but to fulfil other emotional needs. For example, we’ve seen a resurgence in the “Shoptimism” trend, which was especially high during the pandemic. This is where consumers purchase low-value products to feel good – actively on the lookout for a “dopamine hit” or wanting reassurance that their shopping behaviours have led to a value-over-price decision.?

What’s Behind the Rise of the Value-Driven Consumer??

The genesis of this movement can be traced back to the late 20th century when globalisation and the advent of the Internet catalysed an unprecedented flow of information. Consumers, armed with heightened awareness and access to a wealth of knowledge, began questioning the opaque practices that had long been the norm in various industries, including retail.?

Simultaneously, the rise of social media and influencer culture amplified the voices of activists, thought leaders, and consumer advocacy groups, further fueling the demand for transparency and accountability. As the world grappled with pressing issues like climate change, human rights violations, and unethical labour practices, a collective consciousness emerged, prompting consumers to reevaluate their purchasing decisions.?

This growing consciousness has given birth to the value-driven consumer, a demographic that transcends traditional segmentation based on age, gender, or socioeconomic status. Instead, it is united by a shared desire to align their consumption habits with their deeply held beliefs and values.?

Why Should Retailers Embrace Ethics and Sustainable Practices??

In Australia, the retail sector has witnessed a profound shift as consumers increasingly prioritise ethical and sustainable practices. In a recent McKinsey survey , the vast majority of consumers indicated a preference for brands that prioritise these values.?

This trend is particularly pronounced among younger generations, with Millennials and Gen Zs at the forefront of the value-driven consumer movement. However, its influence extends across all age groups, as consumers become increasingly conscious of the ripple effects their purchasing decisions can have on society and the environment.?

For Australian retailers, embracing the value-driven consumer is no longer just another trend; it’s a strategic imperative. Retailers that fail to adapt risk becoming obsolete in an increasingly conscious market. Conversely, those that authentically embody the values their consumers stand for will reap the proverbial rewards, fostering loyalty, advocacy, and long-term growth in their businesses.?

Best Value-Driven Practices for Retailers?

To effectively cater to the value-driven consumer, retailers must embrace a holistic approach that permeates every aspect of their operations. From supply chain management to product development, marketing, and customer engagement, a fundamental shift in mindset is required.?

Here are some best practices for retailers to consider:?

• Transparency and traceability: Value-driven consumers demand transparency regarding a product’s origins, manufacturing processes, and ethical labor practices. Retailers must be willing to lift the veil and provide detailed information about their supply chains, ensuring that every step adheres to rigorous ethical and sustainable standards.?
• Sustainable sourcing and eco-friendly practices: Environmental consciousness is a core tenet of the value-driven consumer movement. Retailers should prioritise sustainable sourcing, minimise their carbon footprint, and embrace eco-friendly practices throughout their operations. This includes utilising renewable energy sources, reducing waste, and promoting circular economy principles.?
• Ethical labour and fair trade: Human rights violations and exploitative labor practices are major concerns for value-driven consumers. Retailers must ensure that their suppliers adhere to fair labor standards, provide safe working conditions, and offer equitable compensation to workers throughout their supply chains.?
• Inclusive and diverse representation: The value-driven consumer values inclusivity and diversity. Retailers should strive to create an inclusive environment that celebrates different cultures, identities, and perspectives. This extends to their product offerings, marketing campaigns, and workforce composition.?
• Authenticity and purpose-driven branding: Value-driven consumers are adept at spotting inauthenticity and greenwashing. Retailers must embody their values authentically, infusing purpose into their brand narratives. This requires a genuine commitment to social and environmental causes that resonate with their target audience.?
• Community engagement and advocacy: Forming meaningful connections with local communities and aligning with relevant social or environmental causes can foster a sense of shared purpose with value-driven consumers. Retailers should explore opportunities for community engagement, advocacy, and partnerships that amplify their impact.?

• Innovative and sustainable product offerings: Value-driven consumers seek products and services that align with their values while also meeting their functional needs. Retailers should invest in research and development, exploring innovative and sustainable materials, production methods, and product designs that cater to this discerning demographic.?

Challenges, Opportunities, and Recommended Strategies for the Australian Retailer?

While embracing the value-driven consumer presents numerous opportunities, it also poses significant challenges for Australian retailers. Examining real-world case studies can provide valuable insights into the strategies employed, obstacles encountered, and potential opportunities that lie ahead.?

Here we break down those retailers embracing the values-driven movement, highlighting some of the key implementation challenges and opportunities, as well as recommendations for other retailers who would like to follow suit.?

1. Woolworths?

As one of Australia’s largest retail chains, Woolworths has been at the forefront of the sustainability movement in the Australian retail landscape. However, their journey has not been without challenges.?

Challenges??

• Implementing sustainable practices across an extensive supply chain and numerous product categories.?
• Navigating complex regulatory frameworks and varying standards across different regions.?
• Overcoming consumer scepticism and greenwashing accusations.?

Opportunities?

• Leveraging sustainability efforts to build brand loyalty and advocacy among value-driven consumers.?
• Exploring circular economy models and closed-loop systems to further reduce environmental footprint.?
• Expanding sustainability initiatives to encompass social and ethical aspects, such as fair trade practices and inclusive representation.?

RDG Recommendations for Strategic Implementation?

As an Australian retailer, establishing clear sustainability targets and publicly reporting on your progress is a crucial first step. This demonstrates your commitment to environmental responsibility and allows your customers to hold you accountable. By transparently sharing your sustainability goals and achievements, you build trust and credibility with your stakeholders.?

Equally important is collaborating with your suppliers, relevant NGOs, and industry bodies. Working together, you can drive positive change across your entire supply chain. Leverage the expertise and resources of these external partners to develop and implement meaningful sustainability initiatives. This collaborative approach will yield more impactful and long-lasting results than working in isolation.?

Furthermore, investing in renewable energy sources and implementing robust waste reduction programs should be priorities. Transitioning to clean energy solutions reduces your carbon footprint, while waste management initiatives minimise the environmental impact of your operations. These practical steps show your customers that you’re taking tangible action to minimise your business’s environmental toll.?

Finally, launching innovative product lines that embrace sustainability can differentiate your brand and appeal to eco-conscious consumers. The “Odd Bunch” range, which utilises imperfect produce and reduces food waste, is an excellent example of this. Such creative offerings demonstrate a commitment to sustainability and circular economy principles, setting you apart in the competitive retail landscape.?

2. Outland Denim?

Founded in 2011, Outland Denim is an Australian fashion brand that exemplifies the values championed by the value-driven consumer. Their mission is to create stylish denim products while providing sustainable employment opportunities for vulnerable communities.?

Challenges?

• Overcoming the perception that ethical fashion compromises style and quality.?
• Navigating complex supply chains and ensuring ethical practices at every step.?
• Competing with fast-fashion giants on pricing and accessibility.?

Opportunities?

• Tapping into the growing demand for ethical and sustainable fashion among value-driven consumers.?
• Expanding product lines to include more sustainable materials and innovative production methods.?
• Leveraging ethical practices as a competitive advantage in the increasingly conscious Australian fashion market.?

RDG Recommendations for Strategic Implementation?

Retailers must understand the importance of ethical and sustainable practices in today’s fashion industry. Australian retailers will have to make conscious choices that not only cater to the needs of the value-driven customer, but also contribute to a better world. To do this, retailers should place an emphasis on their brand’s ethical and sustainable practices through compelling storytelling and transparent communication.?

Engaging narratives and open dialogue will also help to connect with customers on a deeper level, and foster trust that inspires them to make more mindful choices. By being transparent about your processes and values, you can educate and encourage conscious consumerism, thereby inspiring a broader audience to embrace ethical fashion, too.?

Moreover, retailers should actively be collaborating with like-minded influencers and ambassadors who share their vision for a more sustainable future. By partnering with these influential individuals, retailers can amplify their messaging, creating a movement that celebrates responsible practices and encourages positive change within the industry.?

Lastly, implementing fair trade practices throughout their supply chains means retailers can ensure that their workforce is treated with dignity and respect. This also includes providing training and support to employees, empowering them to grow both personally and professionally. Investing in employees fosters a culture of ethical responsibility and pride, driving positive change and ensuring long-term success.?

3. Koala’s Sustainable Furniture Approach?

Koala , an Australian furniture and home goods brand, has made sustainability a core pillar of its business model. Their commitment to eco-friendly practices and responsible sourcing has resonated with value-driven consumers seeking sustainable alternatives.?

Challenges:?

• Sourcing sustainable and ethically produced materials at a competitive price point.?
• Educating consumers on the benefits of sustainable furniture and overcoming preconceptions about cost and quality.?
• Managing logistics and minimising the environmental impact of shipping and distribution.?

Opportunities:?

• Expanding into new product categories while maintaining a commitment to sustainability.?
• Exploring alternative business models, such as furniture rental or subscription services, to promote a circular economy.?

RDG Recommendations for Strategic Implementation?

Retailers can reduce their environmental footprint by using innovative and sustainable materials. This could involve incorporating recycled plastics into product designs, sourcing timber from sustainable forestry operations, and proudly offering eco-friendly alternatives to value-conscious customers. Not only will this minimise waste and conserve natural resources, but can also help the customer make conscious choices that align with their values.?

Promoting a circular economy and extending the life cycle of products indicates a willingness to reduce waste. Retailers could offer buy-back or recycling programs that allow customers to return selected used pieces for refurbishment or recycling. This initiative can be marketed as a convenient way to upgrade a living space, while still maintaining an environmentally-conscious approach to consumerism.?

Harnessing the power of the Digital Dependency trend is a great way for retailers to connect with conscious consumers and share their sustainability stories through engaging content and well-documented eco-friendly practices.??

Training Retail Staff for the Value-Driven Consumer Era?

As retailers navigate the complexities of catering to the value-driven consumer, investing in comprehensive training and development programs for both shopfloor and head office staff is paramount. These employees are the face of the brand, acting as ambassadors that shape the customer experience.?

Values and ethics instil a deep understanding of the brand’s core values, so ethical principles and a commitment to sustainability is crucial. Additionally, staff should be equipped with the tools and knowledge to address tough questions about the brand’s products, practices, supply chain, and environmental footprint. Comprehensive product knowledge is essential for addressing the discerning inquiries of value-driven consumers, and transparency and accountability must be ingrained in their approach.?

Connecting with value-driven consumers requires compelling storytelling skills because these consumers often have a wealth of knowledge and strong convictions. Training staff in empathetic listening and respectful dialogue is paramount for building trust and fostering meaningful connections. Training should also focus on developing narrative techniques that resonate emotionally, allowing staff to convey the brand’s impact and inspire customers.?

As consumer values and expectations evolve, ongoing training and development programs are necessary. Retailers should enable staff to stay abreast of emerging trends, best practices, and industry developments. Leveraging digital platforms and e-learning modules can ensure consistent and accessible training across geographically dispersed retail locations.?

Beyond traditional classroom-based training, retailers should explore immersive and experiential learning opportunities. This could include field trips to sustainable manufacturing facilities, workshops with subject matter experts, or simulated customer interactions to hone communication skills.?

How Retailers Can Foster a Values-Driven Culture?

While training is crucial, cultivating a values-driven culture within the organisation is equally important. This culture should permeate all levels, from senior leadership to frontline staff, fostering a shared sense of purpose and accountability.?

Retailers should consider implementing the following initiatives:?

• Aligning values from hire to retire: Values-based recruitment and onboarding integrating the brand’s values into the recruitment and onboarding processes can help attract and retain employees who resonate with the company’s mission.?
• Motivating value ambassadors: Incentives and recognition programs recognising and rewarding employees who exemplify the brand’s values through their actions and customer interactions can reinforce desired behaviors and foster a sense of pride.?
• Fostering cross-functional synergy: Cross-functional collaboration encouraging collaboration between departments, such as sustainability teams, product development, and customer service, can foster a holistic understanding of the brand’s values and their practical implementation.?
• Leading by principled example: Leadership commitment and accountability senior leadership must embody the brand’s values and hold themselves accountable for upholding ethical and sustainable practices. Their actions and decisions should serve as a model for the entire organisation.?
• Driving grassroots innovation: Employee engagement and feedback loops empowering employees to provide feedback, share ideas, and contribute to the brand’s sustainability initiatives can foster a sense of ownership and continuous improvement.?

The Global Context: Transcending Borders?

While the focus of this article has been on the Australian retail landscape, the rise of the value-driven consumer is a global phenomenon, transcending geographic boundaries and cultural nuances. In markets such as Europe and North America, consumers have long been at the forefront of demanding ethical and sustainable practices from brands. Regulations and consumer advocacy groups in these regions have played a pivotal role in shaping corporate accountability and transparency standards.?

Emerging economies, such as those in Asia and Latin America, are also witnessing a surge in conscious consumerism. As these markets experience rising affluence and access to information, consumers are increasingly prioritising values-driven purchasing decisions.?

Global brands and multinational retailers must adapt their strategies to cater to these diverse consumer segments while adhering to local regulations and cultural sensitivities. Cross-border collaboration and knowledge-sharing among industry players, NGOs, and consumer advocacy groups can also drive consistent progress and establish best practices on a global scale.?

Additionally, leveraging the power of digital platforms and social media can amplify the voices of value-driven consumers, transcending geographic barriers and fostering a global community of conscious consumers.?

The Future of Retail: Embracing Purpose and Authenticity?

As we look towards the future, it is evident that the value-driven consumer movement is not a fleeting trend but a paradigm shift that will fundamentally reshape the retail landscape.?

The path ahead is not without challenges, but the opportunities for retailers to create lasting impact, build loyalty, and contribute to a more sustainable and equitable world are immense. The value-driven consumer movement is a call to action, a demand for businesses to transcend the traditional transactional model and embrace a higher purpose.??

Retailers that embrace purpose, authenticity, and a genuine commitment to ethical and sustainable practices will be well-positioned as conscious consumers continue to wield their purchasing power as a catalyst for positive change.?

Contact the Retail Doctor Group, a retail advisory and consulting practice that builds retail channels and increases the performance of retail and FMCG businesses through our customised & transformative ‘Business Fitness?’ methodologies.

Since 2005 we have partnered with our clients to build powerful, award-winning, sustainable, and “fit” implemented retail. Ensuring our clients consistently achieve above benchmarks, build sales and margin results. We stay with our clients to ensure success.

As the Australian elected member of International?Retail Experts , Ebeltoft Group, we have more than 20 years of experience as retailers and consultants in all retail channels, segments and regions. Today, members of the Ebeltoft network advise 80 of the 100 largest retail companies in the world.

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