How businesses can rise to the challenge of increasingly demanding customers

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How businesses can rise to the challenge of increasingly demanding customers
Half of Australians are now making a conscious effort to purchase locally sourced or produced items.
Photo by JJ Ying on Unsplash

The resurgence of ethical consumption

Prior to the pandemic, Australia witnessed a shift towards ethical consumption. According to a report from Baptist World Aid, The Australian Ethical Consumer Report, three in five Australian consumers were becoming more conscious of the impact of their purchase decisions, while an additional 40 per cent planned to change their consumption habits to align with more ethical values. However, the pandemic put a spanner in the works by limiting consumer choice and giving them little option but to retreat from their ethical values in favour of convenience and availability.

While e-commerce soared by 57 per cent in 2020 compared with the year before the pandemic broke, it highlighted the reality of shopping’s environmental impact, including sustainable packaging and delivery mileage, causing many Australians to consider their waste, carbon, and social footprints.

In fact, as revealed in OpenText’s Ethical Supply Chain research, half of Australians are now making a conscious effort to purchase locally sourced or produced items to reduce their carbon footprint and to support local businesses. The research also discovered nearly two thirds of Australian consumers believe businesses have a responsibility to ensure their suppliers abide by an ethical code.

As the country emerges from yet another lockdown, supply chain leaders and businesses need to be mindful of these new customer demands and stay ahead of the ethical shopping trend.

Ethical shopping trends amongst Australians

The drive towards ethical purchasing has seen a rapid increase, as revealed in the aforementioned OpenText research, with almost four fifths of Australians now preferring to buy ethically sourced products compared to just 17 per cent of consumers who had said they always prioritised buying from businesses with ethical sourcing strategies in place before the pandemic.

The government lockdowns and restrictions meant consumers were constrained in their shopping habits once the pandemic hit, resulting in two fifths of consumers being unable to prioritise ethical purchasing. A significantly higher number of home deliveries of goods ordered online however meant half of the consumers polled became more aware of their waste impact during the pandemic.

I’m sure you noticed this on your own front doorstep, with the number of deliveries and therefore, cardboard boxes, literally piling up. While the shift to online shopping had already been underway, the pandemic served as a catalyst in the acceleration of the trend resulting in three in five saying COVID has made them more mindful of the environmental and social impact of where they buy from.

The ethical consumer’s expectations

Interestingly, consumers have varying motivations for the kinds of ethical practices they value most. Even on a simple demographic like age, we found significant differences in motivation and outlook.

Younger Australian shoppers are more likely to focus on their carbon footprint by aiming to shop locally where possible, while older shoppers are particularly concerned about working conditions in product manufacturing, saying they would stop shopping at a brand that was found to be using child or slave labour.

Regardless of the specific priority, once businesses understand what kinds of ethical drivers influence their audiences and their buying decisions, they must be transparent and proactive about meeting those needs.

Meeting the ethical consumer’s expectations

With the aftereffects of NSW and Victoria’s ‘Freedom Days’ continuing to support the Australian economy’s rebound, ethical shopping won’t just recover, it will surpass previous highs to become a central concern for many Australians. In fact, half of Australians consider it important to know where their purchases are sourced from. With consumer sentiment clearly shifting, now is the time for businesses to drive progress on ethical sourcing and gain a competitive advantage in their markets.

If business leaders and supply chain executives do not pay attention to this, they face two key threats.

  1. They risk losing customers who seek ethical and sustainable products. In the age of social media, a company that falls short of expectations is quickly called to account, which can cause significant reputational and brand damage.

  2. They risk weakened relationships with partners who seek to improve their ethical standards, and other key stakeholders, including investors, governments, and regulators.

Australians have made it clear that the days when supply chain leaders could concentrate on simply driving costs, efficiencies and timelines from their suppliers are gone. Over half of consumers want businesses to rethink their supply chain now to build ethical controls if they currently are unable to monitor where goods come from.

In short, consumers are demanding high levels of transparency and end-to-end visibility into a business’s activities as well as the operations of its suppliers. To respond to consumers’ expectations, businesses should clearly mark whether products are ethically sourced. To do so, businesses must invest in the right technology to support an end-to-end digital supply chain that compels all supply chain partners to prove their ethical credentials and meet the demands of ethical consumption.

George Harb is Regional Vice President, Business Ecosystems, APAC at OpenText.

Copyright © BIT (Business IT). All rights reserved.

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