What: The fact that modern consumers have the desire to purchase ethically is undebatable. Whether they can currently afford to put the money and time into conscious consumerism, however, is a more contentious topic.

Why it is important: For consumers that are still recovering from the pandemic, affordable goods are seen as more important than sustainable goods, thus diminishing retailers’ ability to roll out sustainable initiatives. This has led to huge physical expansions of discounters such as Dollar General and Big Lots.  To win big with new-age customers, retailers will need to find the right balance between affordability and sustainability.

Companies like Dollar General and Amazon – brands that compete based on convenience and put sustainability as an afterthought – have seen a lot of success. But this seems counterintuitive to the ethos of shoppers today who claim to be more socially and environmentally conscious.

A recent Forrester survey found that 2/3 of e-commerce shoppers in China, France, and the UK were concerned about the impact of climate change, yet only a little over half of US e-commerce consumers shared the same sentiment. The same study found that 2/3 of US online consumers want online retailers to be more transparent about their business practices, but many retailers are still in the dark about the full impact of their supply chain.

But as the US economy is still rebounding from Covid, many consumers have a gap between what they want to buy and what they can afford, thus making discount retailers more interesting. As consumers are expecting low prices, there is an added barrier to retailers’ ability to roll out sustainability initiatives.

The grey economy (informal economy) refers to any transaction that takes place outside of traditional retail sales. The advantages of the grey economy are that customers get direct insight into where goods are created, and they are able to directly interface with the individual providing services. Traditional retailers need to provide a bit of revolutionary energy that eco-minded consumers crave to find that perfect mix of affordability and sustainability.

Discounting, sustainability, and the grey economy: A reconciliation