'Green' companies see holiday green from shoppers

RP news wires, Noria Corporation
Tags: energy management

Planet Earth and global manufacturing issues increasingly figure into consumers' spending decisions, with a vast majority of holiday shoppers expressing a willingness to pay more for eco-friendly gifts and taking note of the country where items were made, says the 2007 Annual National Shopping Behavior Survey by audit, tax and advisory firm KPMG LLP.

In addition, money was tighter this year. While an average of 36 percent of shoppers previously reported spending more each year during similar surveys from 2003 to 2006, just 30 percent of respondents in 2007 said they spent more than the preceding holiday season on gifts.

"When consumers had the opportunity, they purchased gifts to fit their social conscience," said John Rittenhouse, a KPMG retail partner and national leader for Operations Risk Management. "The 'green-quotient' and a product's country of origin have become important reputational concerns for shoppers, due mainly to recent publicity on the environment and manufacturing issues in emerging markets."

Some 88 percent of the survey respondents, Rittenhouse said, were very concerned about the environment, 74 percent indicated they buy environmentally friendly products, 60 percent were willing to pay more for such items, and 55 percent say they make a special effort to patronize retailers with a "green" reputation.

In addition, 40 percent of consumers said they checked the country of origin on potential gifts, with 31 percent using such information to decide against a purchase. While 79 percent of those decisions not to buy an item involved products from China, toys were involved more than half (52 percent) of the time.

Meanwhile, Mark Larson, KPMG's global leader for the retail sector, said the survey also showed that well-stocked retailers with a customer-friendly return policy continued to attract business, noting that 76 percent of shoppers said their spending decisions were influenced most when a store had the item they expected, while 58 percent cited a store's return policy as influential. By contrast, 47 percent said newspaper ads affected where they shopped, and 43 percent said a coupon figured into the decision, the survey said.

"Even though price remains the most significant driver to attract customers initially, busy shoppers told us they went to the retailer where experience told them they could get what they wanted," said Larson, underscoring reputational factors as important for boosting traffic and sales. "Shoppers will first visit stores that they know are usually well-stocked year-in and year-out. That confidence in filling a need comes from years of building customer relationships. But miss that expectation – even just once – and it easily sours an often fragile customer loyalty."

Some 28 percent of respondents who shopped in stores said they spent the most at mass retailers, (Wal-Mart, Target and other similar stores), while 14 percent said they spent more at power retailers (Toys R Us and Best Buy, etc.), 12 percent said specialty stores (such as Gap and Radio Shack), 10 percent said midline stores (such as Kohls, JC Penney and Sears), and 8 percent said department stores (such as Macy's and Dillard's).

And the KPMG survey said the internet and power retailers grabbed more of "wallet share" -- 4 points and 7 points, respectively. Wallet share denotes whether consumers are spending a larger or smaller portion of their holiday shopping budgets, where they are making purchases, and why. Other retail channels and the changes in their wallet share include: specialty stores, catalogs (such as Gap, Disney) and warehouse retailers (such as Costco, BJ's) gained 1 point each, while mass merchants dropped 2 points, and department stores and off-price (TJX, Old Navy and other similar stores) retailers each lost 1 point of wallet share.

In addition, retailers' well-documented rush to jump start the holiday season by advertising heavily and lowering prices – even before Thanksgiving – had little influence over when consumers began their shopping, the survey said. Rittenhouse said: "The KPMG survey respondents said they shopped basically at the same time they do every year, and sales or early promotions did little to change their patterns."

The survey, designed and managed by The Gordman Group, was conducted randomly by telephone with 815 shoppers. The margin of error is plus or minus 3.5 percent, at a 95 percent confidence level

KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International. KPMG International's member firms have 123,000 professionals, including more than 6,800 partners, in 145 countries.


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