Lisa Suerken explores how millennials are making ethical purchasing decisions.
Fairtrade, sustainability, corporate social responsibility, charity shops — the list goes on and on. In today’s society, we have been seeing a shift in terms of the value placed on certain types of goods. Leading experts from all areas of trade such as food, fashion, and jewellery are currently debating how and why people are increasingly seeking out ethical choices.
A third of UK consumers claim to be very concerned about issues regarding the origin of products. A study by YouGov and the Global Poverty Project revealed that 74% of those surveyed would pay an extra 5% for their clothes if there was a guarantee that workers were being paid fairly and working in safe conditions. The average spending on ethical goods and services per household has risen from £291 in 2000 to £868 in 2010. A study by Ipsos Global Trends asked respondents to what extent they agreed to this statement: ‘I try to buy products from brands who act responsibly, even if it means spending more’. 47% of those surveyed from the UK agreed with the statement.
So, are quality and price still the sole determinants of purchasing habits? Naturally, everyone still want high-quality, well-crafted products at reasonable prices. However, there is an increasing desire to make ethical purchases, even if they are slightly more expensive; even if it is to convey a certain societal status.
As millennials grow their purchasing power and begin to make up a larger proportion of the consumer market, the trend in ethical consumption — while it applies generally to the population as a whole — is largely tied to the increasing emphasis on ethical values amongst millennials.
As more and more studies on millennial traits continue to emerge, millennials have come to be known as a generation with interesting new characteristics. While they are said to have the most spending power of any generation to date — expected to reach $3.8tr by 2018 — they are actually more risk averse and less likely to spend money frivolously compared to previous generations. Thus, (much) more money is being spent thoughtfully, which explains the surge in ethical consumption.
Millennials like a brand they can trust — probably because they’ve grown up with Google at their fingertips and all the necessary information just a click away. Consequently, this allows all the ethical companies that flaunt their positive impact on the world to emerge on top. Authenticity is key. Millennials seem to be fed up with the disingenuous, capitalistic, money-making schemes used by firms in the past. In fact, 43% of millennials rank authenticity over content when consuming news, and 75% say it is important that a brand gives back to society rather than just making a profit.
One of their most interesting traits, though, is that they are unexpectedly not very influenced by advertising, which goes hand in hand with their value of authenticity. They have fallen out of the age of trusting brands and believe that their friends are actually the most credible source of information. 84% of millennials don’t trust traditional advertising, meaning brands have had to find new ways of getting their message across to their target audiences. The usual, disruptive, in-your-face advertising strategy is getting old and millennials are now beginning to play the role of hard to get. Fact is, this is the first generation to be fed up with the overwhelming amount of purely self-interested marketing and are demanding a new, more civil approach to advertising that splits its interests between itself and the improvement of society.
Almost no article regarding millennials goes from start to finish without at least mentioning social media. And yes, while the stereotypical digitally-obsessed millennial definitely exist, social media has become much more than a simple platform for wasting time. As it has been established, millennials listen to their social circles. They are making decisions increasingly based on their perception of its social value. And recently, it has been proven that what is authentic, transparent, and ethical is what’s trendy. Social media has become a platform for the circulation of trends and values that shape consumer behaviour, and with millennials being the most connected generation, their purchasing decisions are clearly the most influenced.
Conspicuous Consumption and its Role in Ethical Purchasing
There is no doubt that people like to show off and societal trends are now paving the way for ethical consumption to take the place of frivolous spending on luxury goods and services. Of course, the most overt reason for the rise in ethical consumption, it seems, is the fact that consumers can make a difference with their simple everyday purchases. However, if we take a deeper dive into the causes of human behaviour, we discover a slightly more inconspicuous, yet valid reason for this trend; namely, a new form of conspicuous consumption.
Because luxury goods and services have now become far more easily accessible to both the upper and middle class, the elite have taken to a new method of displaying their status — something known as cultural capital. Economist Thorstein Veblen introduced his theory of the leisure class in the context of conspicuous consumption in 1899 when he theorized that the wealthy make their purchasing decisions based on how they will be able to distinguish themselves. This means, the wealthy tend to buy products and services which are made unavailable to the middle and lower classes.
However, Veblen’s theory also suggests that when the middle classes start to gain more purchasing power, the elite must focus on distinguishing themselves in another way. This is where cultural capital and ethical consumerism comes into the picture. Arguably, there is now a new form of postmodernist conspicuous consumption, which displays a more charitable lifestyle. This is done in the hopes of signalling one’s cultural capital through displays of virtuous acts in order to maintain their personal image. By virtue signalling through ethical consumption, the elite are able to display their status in that they are more culturally and intellectually aware of social issues.
Is this new form of conspicuous consumption taking over the millennial generation? From the existing trends we have observed from the behavioural habits of millennials, it is quite clear that they are a generation consumed by social media and staying connected. They make purchases largely based on what their social circles purchase. Could this be linked to the concept of virtue signalling? In today’s connected world, the emerging millennial generation has come to a point of significant purchasing power, using social media to convey their ethical consumption habits so as to signal their cultural capital and distinguish themselves from others.