Local Response | Creating Resilience
Trends in sustainable consumption present opportunities for UK retailers
March 29, 2023 5 Minute Read
The results of CBRE’s Global Live Work Shop Survey revealed that consumers in the UK, and across the world, are increasingly aware of sustainability issues. In this article we explore some of the ways consumers are taking action, and how this may affect the retail sector.
Respondents say they are consuming less, partly driven by sustainability concerns. This poses a challenge for the UK retail sector. However, changing consumer preferences present an opportunity for adaptive retailers.
Evidence of falling consumption
UK respondents report having already taken steps to reduce consumption; the majority stated that they are consuming less compared to the previous six months. Figure 1 shows that as well as those who have already reduced their consumption, a considerable number of additional respondents plan to reduce their consumption in the future. If they do, 85% of respondents will try to consume less. In addition, consumers report a switch to buying second hand products. 75% will buy second hand, and 39% will rent instead of buy certain products. This trend of reduced consumption presents a risk to retailers, who stand to lose sales.
Figure 1: Respondents who have already, and plan to, change the way they consume, UK
Source: CBRE Research
Opportunities for retailers
Figure 2 shows that respondents are already looking for more sustainable options. When consumers do shop, they are shopping in a different way.
Figure 2: Respondents who have already taken action to be more sustainable when they shop
Source: CBRE Research
In an environment where consumers report shopping less, there are opportunities for retailers who align with sustainability preferences. They stand to attract more consumers, and even increase the average consumer spend. Overall, 44% of respondents stated that they are willing to spend more if they are satisfied with a product’s sustainable credentials, rising to 55% in City Centres. This trend is supported by recent research from Simon Kucher, revealing almost a third of UK consumers are willing to pay more for sustainable products or services.
As shown in Figure 2, City Centre residents are more likely to have already changed their consumption habits towards more sustainable options across all four behaviours. This is likely due to greater choice in city centres and residents earning, on average, more than survey respondents from other locations. Therefore, city centre retailers could benefit the most from accommodating consumers’ sustainable preferences.
Both landlords and occupiers are at risk if they do not adapt to more sustainable consumption habits. If they do adapt, the benefits could be big.
Landlords should seek tenants with strong ESG credentials. The evidence suggests greener tenants will be most resilient to the trend of falling consumption. They stand to attract more consumers, as well as consumers willing to spend more. Having successful tenants protects income and helps retain asset value.
There are several ways that occupiers can appeal to sustainability conscious consumers. These could be in-store features (which landlords can also implement) such as water-bottle refilling or packaging recycling points to reduce waste, or strategic changes such as selling more local products or offering a rental service to consumers. Survey evidence suggests these approaches could be most effective in city centre settings.
Whatever steps occupiers take, they should be aware that while the above changes could have benefits, they are no substitute for a robust net zero transition plan and corporate social responsibility strategy. The majority or retailers appear to be lacking this. According to our 2022 Global ESG survey, only 42% of Retail sector decision makers have signed up to and follow a science based target for emission reductions. initiatives, potentially leaving them vulnerable to accusations of greenwashing.
Read our Global Live-Work-Shop report for more.
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