Retailers should listen more closely to their customers about their sustainable shopping preferences, according to a new report based on data collected from the nation’s top retail executives and thousands of consumers. It discovered that a profound sustainability knowledge gap exists between these two cohorts, which presents opportunities for retailers not only to bolster their reputations and enhance consumer loyalty but also to increase profits.

Retailers were surprised to learn that consumers are willing to spend more for sustainable brands. 

While two-thirds of consumers say that they would pay more for sustainable products, two-thirds of retailers believe that consumers would not be willing to spend more for sustainable brands.

Equally revealing was the discovery that nearly three-quarters of the consumer respondents value product sustainability over brand name; nearly all—94 percent – of the retailers believe the opposite, saying that brand name would be more important to consumers than sustainability.

Moreover, retail executives rank brand-operated resale/recommerce programs lowest when asked what type of sustainable shopping formats consumers would utilize the most. However, 41 percent of consumers say they already shop at brand resale/recommerce programs, such as those offered by Patagonia, Lululemon, or Levi’s. 

Greg Petro, CEO of First Insight, said, “This report clearly demonstrates that retailers are leaving money on the table. Brands and retailers must listen to the voice of the customer on issues as critical as sustainability. Consumers want more than performative measures from retailers and brands when it comes to ESG priorities, which will only become more important as Gen Z grows in influence.”

First Insight partnered on this report with the Baker Retailing Center at the Wharton School of the University of Pennsylvania as part of the company’s ongoing commitment to providing actionable consumer insights to the retail industry. Since 2007, First Insight has been helping retailers and brands to operate more sustainably and make better decisions by using the Voice of the Customer and predictive analytics to refine buys and eliminate poor performing offerings before costly development and inventory investments are made.

“It’s imperative for retailers to understand their customers’ values so that they can adapt for the future,” said Professor Thomas Robertson, Academic Director of Wharton’s Baker Retailing Center. “For example, half of retail executives believe that price is the primary reason consumers shop across recommerce formats. In fact, only 27% of consumers agree that price is their motivation, while a combined 54% say that they shop resale because they care for the environment and prefer sustainable or circular shopping. Brands such as Vestiaire Collective and Farfetch Second Life know that there is a big future in resale, even at luxury price points.”

An earlier First Insight Wharton Baker Retailing Center report demonstrated that Gen Z leads the way in sustainability and has outsize impact on older generations, especially their Generation X parents. Gen Z’s influence extends to shopping behaviors, including in resale, with sustainable-first purchase decisions becoming more prevalent among all generations.

Other key findings include disparities on how consumers wish to be compensated for resale items, how much and how often consumers actually use recommerce, and price targets for resale items.

Ironically, all of the executives in the data set —fully 100%—assume that consumers would rate retailers low on transparency around their sustainability efforts. Yet consumers give retailers more credit, with 59% indicating that they feel retailers are being sufficiently transparent.