The Great Reckoning - why purpose-driven customers rule the retail world

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Several decades ago, it would have been unthinkable for a brand to take a position on a hot cultural issue. But expectations today have changed this – if companies are not speaking up, their customers are willing to walk away if they feel a brand’s value system is not aligned with their own values.

It used to be that brands could rely upon product loyalty to drive revenue. And retailers could stay quiet about social issues and just go about business as usual. But all of that has changed with the rise of a new kind of consumer, driven by purpose rather than price. Shoppers are no longer as willing to shop with brands that don’t align with their values.

For the first time, purpose-driven consumers have edged out value-driven consumers as the largest consumer segment. It’s part of a consumer mindset shift – shoppers are thinking about their environmental impact, how companies treat their employees, and where their money is going when they make purchases. Half of consumers say they’re willing to pay more for sustainable brands, and 82% would choose an environmentally friendly shipping option, even if it costs more.

What does this look like in practice? Levi’s made a commitment to sourcing sustainably to reduce the environmental impact of textile production. Ulta Beauty pledged $50 million to support Black-owned brands, including mentorships and ad campaigns for entrepreneurs of color.

And the tech industry spoke up in the wake of the US Supreme Court decision overturning Roe v. Wade, which established the constitutional right to abortion in 1973. More than 100 companies including Uber and Zendesk have committed to cover costs for employees seeking abortion care out of state. These companies swiftly and publicly made statements in support of reproductive freedom – a move that was certain to be polarizing to some of their customers.

Just as there is reward, there are risks when taking a strong position on a social issue. While you stand to gain loyal supporters, you also stand to alienate customers who don’t agree with you. But companies are finding they can’t walk the middle anymore.

Speak out on social issues

It’s no longer enough to build a brand on good products alone. When a brand takes a stand on social issues, the whole company needs to be behind the idea. That’s because speaking up sometimes brings headlines and backlash – your company needs to be willing and ready to weather both.

Patagonia is one company that is known to be unapologetic about their beliefs. As Patagonia Chief Executive Ryan Gellert said in an interview with the Los Angeles Times: 

People often ask, ‘Are you a for-profit business or are you an NGO?’. And the answer in my mind is yes; I think we’re some weird mashup of those two things. What we really are is a for-profit business, and we use the business to try to influence larger, more systemic issues.

Jerry O’Brien, Director, University of Wisconsin-Madison Kohl’s Center for Retailing and Board Member, National Retail Federation has this advice: 

Decide who you want to be and have the courage to be it. Twenty years ago, you wanted to cast the widest net possible. Now, doing that will actually hurt you more than showing a strong corporate commitment to a cause.

Then follow promises with practice

It’s not enough to say it – you have to do it. Zendesk made a commitment to creating a diverse and inclusive workplace through technology, and wove these ideas into the company culture. We worked to improve accessibility features across all of our products, and we’re proud to have been named a 2022 “Best Place to Work for Disability Inclusion” by the Disability Equality Index where Zendesk is top-ranked according to the benchmark. As shared by my fellow colleague Dave Kim, VP of Global Diversity, Equity and Inclusion at Zendesk:

The customer service industry is a source of jobs for millions of people, and if people can’t use our technology, they can’t access those jobs.   As a company that provides the essential technology powering billions of customer conversations for many industries, Zendesk has an opportunity — and responsibility — to drive accessibility and inclusion for those with disabilities at scale.

Consumers are more likely to buy from brands that align with their values. But social advocacy — whether you’re a new brand or an established icon — takes more than a random tweet. Here are questions to ask before you speak up:

• What steps are you taking to encourage inclusivity from the top down?
• What benefits do you offer for parental leave? 
• Do you have childcare benefits?
• Does your health insurance cover abortion and birth control? 
• Do you allow time off to vote? 
• Do you have policies that promote leadership opportunities for women? 
• Do you create an inclusive workplace and how?
• Do you have employee resource groups to hear what your employees want from you?

Be ready to answer these questions publicly. Consumers demand transparency, and they want to see corporate responsibility that aligns with what your brand says.

It’s time for brands to stop being afraid of having a point of view

Today’s customers expect top-notch service, but they want more – they expect your brand to stand for something. Brands have a chance to grow customer loyalty when they lean into social issues they care about. Companies that steer away from dealing with social issues are at risk of losing customers and talent.

Consumers are raising their collective voices, and leading retail companies are taking action.