Green and Clean: Emerging Demand for Sustainable Homecare Products

Shifting consumer attitudes towards sustainability are impacting the homecare industry; change is gradual but irreversible. Recent research confirms that consumers, particularly younger generations, are increasingly concerned about sustainability, although this has not yet become a key purchase criterion for homecare products and does not always translate into a willingness to pay a premium for more sustainable or eco-friendly products. 

For leading manufacturers, the challenge is to invest in furthering their sustainability strategies while maintaining product efficacy and offering ‘better value’ to consumers. For sustainability-focused challenger brands, success lies either in emphasising that sustainability also equals economy or deploying premium offers focused on ‘forward thinking’ consumers.

Shifts in consumer behaviour

L.E.K. Consulting’s Global Consumer Sustainability Survey 2024 reveals some key consumer behaviour trends in the homecare industry: 

• Growing concern for sustainability
  Consumers are showing a heightened interest in sustainability, with 93% stating that it’s at least somewhat important to them and 67% viewing it as one of their ‘core values’. 
• Price sensitivity and product efficacy
  Price remains the primary influencing factor for many consumers, with c.65% ranking it as their primary purchase criterion. Product efficacy is also crucial, ranking as the No. 2 criterion, with consumers unwilling to compromise on performance (see Figure 1).
• Decreasing loyalty to brands
  Around 40% of consumers declare that they frequently change homecare brands and products depending on price. Only c.18% of consumers claim that they’re very loyal to specific brands of homecare products.
• ‘Sustainability’ mostly means ‘health and safety’ for many consumers
  When thinking about sustainability, c.50% of consumers primarily think of the health and safety of their families rather than broader sustainability issues. 
• When it comes to sustainability, product packaging is key
  Beyond a product’s health and safety, consumers evaluate product packaging to determine whether a product is ‘sustainable’, including whether the packaging is recycled or biodegradable or can be refilled or reused. 
• Corporate reports and commitments are less important
  Only 18% of consumers appear to consider information that a manufacturer publishes, such as B corporation status or emissions reports.
• Limited willingness to pay a premium
  Consumers, particularly younger ones, declare a willingness to pay more for sustainable products, but the premium that they’re willing to pay for sustainable cleaning products versus standard versions is moderate, in the range of 6% to 22%. This is much lower than the premium that consumers are willing to pay for sustainable food products such as organic tomatoes (see Figure 2).

Implications for the homecare industry 

To navigate the shifting landscape, companies have to adopt a strategic approach that balances sustainability with consumer demands for efficacy and value for the money. They must:

• Maintain product efficacy by ensuring that sustainable products perform as well as conventional options.
• Deliver ‘good value’ to consumers, although the value equation includes components beyond the product purchase price (e.g. where products are diluted and reused).
• Effectively educate and engage consumers, recognising that while educating consumers about sustainability is important, attempts to do so are costly and often unproductive.
• Ensure clear and relevant messaging that’s straightforward and directly tied to consumer priorities, such as health and safety. Highlighting how eco-friendly products deliver good value is also key. 
• Use packaging to reinforce sustainability credentials by embracing new packaging models, such as biodegradable materials or refillables, to reinforce environmental credentials. Brands such as Ecover, Purdy & Figg and smol are leading the way with innovative solutions that resonate with eco-conscious consumers.
• Effectively leverage their brand. Established brands have the advantage of scale and consumer trust, which they can leverage to innovate while meeting the ‘value’ and ‘product efficacy’ expectations of consumers. New brands can more effectively develop a differentiated brand positioning free from the ‘baggage’ that major brands sometimes carry.

What strategies are available to manufacturers of homecare products?

The courses of action available depend on the market position of a particular manufacturer. 

For homecare majors, two strategies are potentially available:

1. Continue to prioritise efficacy and value leadership. 
   This strategy entails maintaining focus on ‘mainstream’ consumers, leveraging scale to deliver value while continuously innovating to deliver tangible consumer benefits in performance, and gradually strengthening sustainability performance to meet or exceed expected standards (e.g. driving usage of post-consumer plastic, product launches for lower-temperature washes).
2. Add new brands to their portfolio.
   This strategy entails investing in new specialist brands with stronger sustainability credentials as an offensive or a defensive play. It can include both organic investments and acquisitions (e.g. SC Johnson acquiring Ecover and Method). These brands can then either be priced at a level that promotes adoption and share gain or be positioned as premium brands to contribute to profitability.

For sustainability-focused challengers, two alternative strategies are also available:

1. Focus on value and emphasise that ‘sustainability = economy’. 
   This entails innovation around their product, packaging and business model to deliver tangible consumer economic benefits. Ultimately, it enables a brand to emphasise value while also appealing to sustainability concerns (e.g. Ecover’s refillables or smol’s plastic-free products and direct-to-consumer-led model).
2. Focus on ‘forward thinkers’ and capture premium.
   This entails focusing specifically on the minority of consumers who already profoundly care about sustainability and are willing to pay a premium for sustainable products. It requires investment in both R&D to deliver differentiated product attributes and marketing to emphasise this differentiation (e.g. Method offering premium plant-based products with attractive fragrances and packaging).

In all cases, manufacturers will need to develop and adopt thoughtful sustainability strategies, as these will have a profound impact on their customer propositions, operating models and, potentially, economics. These strategies will need to ensure that manufacturers do not ‘fall behind’ in the sustainability race while remaining economically viable and continuing to meet vital consumer expectations around pricing and efficacy. 

The bigger picture

The Global Consumer Sustainability Survey 2024 repeats and builds on the research conducted by L.E.K. in 2022, looking in detail at how consumer attitudes and behaviours have developed in a period of evolving sustainability trends. With the survey expanded to 10 geographies, the results highlight geographical differences in sustainability perspectives and behaviours, along with insights into consumers’ willingness to pay a premium for sustainability across categories. Read the full report here.

To discuss the findings in more detail, please contact us.