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The psychology of retail sustainability

By MarketDial / Aug 29, 2022

The first installation of MarketDial’s three-part series exploring the necessity of retail sustainability: here we discuss the psychological importance of sustainability efforts. Stay tuned for upcoming news on where retailers can focus sustainability efforts and who’s currently leading the charge in the retail space.

Retail sustainability and Maslow’s hierarchy of needs
Impacts of unsustainable retail behavior
Where to start
Testing supports sustainability initiatives

Retail sustainability and Maslow’s hierarchy of needs

In 1943, Abraham Harold Maslow published a paper in Psychological Review detailing “A Theory of Human Motivation,” now referred to as Maslow’s Hierarchy of Needs. The theory articulates how basic needs must be met before more advanced needs can be met.

When it comes to retail sustainability and Maslow’s hierarchy, many retailers are still focused on satisfying customers’ pinnacle needs without identifying and addressing their fundamental needs. At the base of Maslow’s pyramid sits the physiological need for food, clothing, and shelter. And while it can be argued that retail is the go-to method for obtaining and maintaining these necessities, it also is becoming readily apparent that the industry is taxing global supplies in ways that will inhibit future access to these commodities.

To better understand why sustainability matters, there is value in correlating Maslow’s pyramid with sustainability models and the effects of unsustainable retail production and consumerism.

Impacts of unsustainable retail behavior

  • Environmental impacts disrupt our base physiological needs for food, clothing, and shelter. According to a report published by Consumer Goods Technology, global food production accounts for 60% of greenhouse gas emissions, 80% of water usage, and 66% of tropical forest loss. When this usage is no longer sustainable, humanity will struggle to find adequate food and water and air. While that may sound like a doomsday synopsis of the distant future, the World Wildlife Fund suggests that by 2025, two-thirds of the world’s population may be facing water shortages. And the United Nations World Water Development Report from 2018 reports that “nearly 6 billion peoples will suffer from clean water scarcity by 2050.”
  • Economic impacts disrupt our secondary needs for safety, personal security, employment, and resources. The economic impacts of unsustainable retail behavior are two-fold. First, sustainability increases profitability. A study by Deutsche Bank found “companies with high ratings for environmental, social, and governance (ESG) factors have a lower cost of debt and equity.” Gen Z and millennials increasingly are refusing to support businesses that aren’t eco-friendly, with 62% preferring to purchase sustainable brands.  Consequently, businesses that fail to adapt to this rising consumer preference may soon find their doors shuttering from sales losses, leading to job losses and further economic disruption. While many shy away from the cost of implementing sustainable options, ultimately the cost of not implementing these options will be higher.

    Secondly, excessive waste is costly and often fails to meet the demand in needful ways. The primary example of this imbalance is food waste co-occurring with world hunger. But the fashion industry also takes a financial toll when it comes to expensive waste; the World Resources Institute notes that, “The annual value of clothing discarded prematurely is more than $400 billion.”
  • Social impacts disrupt our tertiary needs for belonging and connection and can damage loyalty and respect – our higher-level esteem needs.
    Social sustainability promotes all aspects of interpersonal wellbeing, supporting cultural life, diversity, inclusion, and community. It seeks to develop systems that meet the needs of current members as well as those of future generations.

When we unify around sustainability goals, we experience greater connection in supporting the human condition, whereas there is a disconnect and dissonance when sustainability problems go unchecked. Ensuring we act in ways that preserve the planet and its resources is essential to human longevity. Disregarding this responsibility can damage consumer trust and detract from brand loyalty.

Where to start

The opportunities to be more sustainable are so vast that knowing where to begin can be psychologically overwhelming. Efforts to become more sustainable require significant time, energy, and funding to achieve. Sustainability isn’t something that can be achieved overnight. Knowing how to get started can feel daunting, but following these steps can help guide you to creating and implementing a productive sustainability plan:

  1. Establish a sustainability committee.
  2. Develop sustainability goals. Consider including waste reduction, carbon reduction, product packaging, land protection, product reuse, and recycling.
  3. Break the goals down into bite-size, compounding initiatives.
  4. Prioritize goals, keeping in mind environmental, economic, and social factors
  5. Starting with the highest priority goal, A/B test all initiatives to obtain reliable data before implementation.
  6. Market internally with change management.
  7. Market externally to educate consumers about your commitment to – and their opportunity to – support sustainable options.
  8. Rollout the initiatives.
  9. Repeat steps 5-8 for the remaining goals.

Testing supports retail sustainability initiatives

Do you need to know how new refrigerators will affect sales? Or EV chargers? Or recycling programs? Or second-hand sales? Or switching from plastic to paper? Then A/B testing is your solution. Maintaining a balance between environmental, economic, and social needs is challenging but not impossible. By testing your initiatives, you can find the best solutions to empower you to improve the environment without compromising profitability.

If you’d like to learn more about how testing can support your ideas, read here:

Testing to thrive in today’s retail landscape
Unlock the value of your data with A/B testing
How to create a statistically valid test