The following text is based on an extract from the GDI study "Going shopping is dead: how to restore meaning and fun in retail", which you can download free of charge.
What does "purpose" mean?
In the retail sector, purpose means that shopping is not only a necessary or pleasant activity, but also has a higher value. Many people want to express their beliefs when shopping. They attach particular importance to sustainability and sociality.
Sustainability
Customers expect not only the products themselves, but also retailers to be environmentally friendly, fair and ethical. They want to know what impact their purchases will have on the environment, society and the economy. Sustainability is increasingly measured by whether retailers act responsibly and don't just take superficial measures (e.g. greenwashing).
Sociality
Customers also like to have social interactions when shopping. They appreciate personal advice, recommendations and feedback, whether from sales staff or friends. What's more, they want to support local suppliers and regional products and look favourably on retailers who make a contribution to society.
Why is purpose relevant?
There is a growing need for an unspoilt environment and social relationships, while material possessions are becoming less important. Long-term studies show that intangible needs are becoming increasingly important in many Western countries. Post-materialist consumers expect companies to take responsibility for our society.
Economic consequences
If companies don't meet these expectations, this often has economic consequences. Many consumers now only buy products from brands that share their beliefs and values. Values-based consumers are already a constantly growing group.
Challenges and opportunities for retailers
Overconsumption is a major driver of environmental problems. Household consumption is responsible for more than 60% of global greenhouse gas emissions and 50-80% of total land, material and water use. Overconsumption has increased enormously, particularly in the clothing industry.
Many people welcome measures associated with the circular economy. They want to be able to have products repaired and to buy used goods. Retailers can provide support here by informing consumers transparently and promoting sustainable products.
Putting purpose into practice in retail
There is great variation in how companies put purpose into practice. Some only meet the minimum statutory requirements or try to present themselves as particularly sustainable through monetary donations, PR campaigns or exaggerated promises. Other companies - such as Unilever, for example - have recognised the importance of taking sustainability seriously and thus offer sustainable product alternatives.
According to Gartenberg, C., Prat, A., & Serafeim, G. (2018), organisations that put purpose at the heart of their business model perform better on the stock market and grow faster. Such companies often tie managerial pay to hitting sustainability targets, thereby gaining the trust of investors.
Social spaces and local support
Retailers can also create social spaces that serve as meeting places and promote social interaction. Concepts such as mixed-use spaces that combine retail, eating, art and culture are particularly successful in this respect. In addition, the focus on local products and regional suppliers strengthens the local economy and makes customers feel good.
The study "Going shopping is dead: how to restore meaning and fun in retail" is available to download free of charge at gdi.ch/retail-studie .
Want to learn more about the latest trends and developments in retail? Then register for the 74th International Retail Summit on 12-13 September, which will be held under the heading "Retail challenge: honouring values, embracing tech".