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Pandemic's legacy ushers in an era of 'woke capitalism'

Business

Consumers have changed their attitude to products since the Covid-19 pandemic. If they are going to spend their cash, retailers and producers are going to have to have a soul.

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That’s according to an Insight report from the Commonwealth Bank, which states social purpose is now something that can give a product a premium of as much as 10 per cent.

While value for money remains the primary driver for 41 per cent of consumers, the bank found about 20 per cent were willing to pay more than 10 per cent extra for a product or service that had a strong social purpose.

Not surprisingly, it’s younger consumers who are more likely to feel this way before the crushing weight of mortgages and family costs changed attitudes.

The pandemic has played a major role in the shift because about a third of people were reassessing their priorities and were making deliberate choices on where they shopped and what they bought, the bank said.

“The value of purpose varies by category and is highest for food and beverage service, recreational goods and personal care services and products,” the report states.

The changes were probably obvious for anyone who looked at what cafes and restaurants were serving now in terms of ethical coffee and vegetarian and vegan foods, but even the chain stores had sniffed the mood of change and were promoting their push to net zero retailing and ending single-use plastics and sustainable clothing.

The finance sector has had ethical funds for many years but ESG (environmental, social, governance) has also become a significant factor for businesses.

The word “woke” has loaded meanings now, but it is essentially a descriptor of what is happening in retail.

“Despite the trend emerging from the pandemic, the focus on instilling a social purpose will likely continue for the long term,” CBA said.

“Consumers have made it clear they are looking for an authentic, all-encompassing approach that is embraced throughout the organisation.

“Purpose-led businesses benefit in a number of ways with consumers saying they are more forgiving of a brand with an authentic purpose (38 per cent) and will actively seek them out.

“They are also more likely to regularly shop (35 per cent) at or invest in (31 per cent) purpose-led brands.”

CBA’s executive manager of consumer and diversified industries Jerry Macey said purpose was important but it had to be authentic to add value.

“Today’s consumers are well informed and can quickly determine whether a brand is genuine about the causes they support,” he said.

“Their connections with brands are often personal and so they are likely to feel personally let down if brands fail with inauthentic, short-term campaigns.”

This article first appeared in our sister publication InQueensland.

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