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Inflation vs. Sustainability: How are Consumers Adapting?

With inflation currently at a 40-year high and set to reach double-digits before the end of the year, consumers are understandably reassessing their purchasing habits. With this in mind, brands are weighing up whether to continue pursuing purpose-led initiatives (e.g. sustainability), when they know their customers’ priorities are likely to be elsewhere. So, how should brands respond?

the7stars’ latest whitepaper (in partnership with Kantar), A People First Response in a Crisis, offers answers to this conundrum.

The rising cost of living is already having a profound effect on Britons’ spending habits. With 41% of the population feeling less comfortable with their income compared to one year ago (May QT), two-thirds of consumers agree that they are already making compromises on what they buy. For many, this manifests itself in trading down to lower-cost alternatives, with discount retailers and own-label brands the benefactors. As cheaper products typically use less sustainable ingredients and materials, this may suggest consumers are less carbon-conscious in a crisis.

However, evidence shows consumers are still keen to buy environmentally-friendly products – but only if this does not result in a larger dent in their wallets. Globally, 66% maintain such a stance (WARC, 2022), while our own whitepaper reveals that 64% expect brands to be more socially responsible during a crisis. This may seem an impossible dilemma to overcome, but brands who navigate it carefully will be more successful in the long-term.

Some brands will inevitably be required to make tough decisions on sustainable action in order to maintain affordability for customers. But those who do must communicate honestly that this will be a temporary compromise, in order to avoid future damage to brand health and sales. Such best practice was recently exhibited by Iceland, a climate leader within the retail sector, when transparently announcing the “last resort” decision to temporarily re-introduce palm oil to some products.

Furthermore, while price concerns will undoubtedly trump sustainability in the minds of many households during the current crisis, those with the means to invest in greener resources now may ultimately save money in the long run. With gas prices spiralling, one in five have considered installing solar panels in their homes (Kantar, 2022), while Google Trends data for the last 12 months shows a 400% spike in searches for “heat pumps”, after the Government encouraged households to make the sustainable switch by offering installation grants.

The parallel crises of rising inflation and climate change present an arduous tightrope for brands to walk in the coming months. As struggling Brits will ‘keep calm and carry on’ to aid them at a challenging time, brands who demonstrate they are offering a helping hand will be viewed favourably. For many, this may necessitate difficult decisions on sustainable priorities. But such choices must be communicated with honesty and integrity – to avoid a backlash from a population who still endeavours to act sustainably.