Green Products Market
Part 1 - Grove Collaborative - SWOT Analysis
- In recent times, ESG (environment, social and governance) strategies have been shown to create value for and positively impact businesses. With one of the Grove Collaborative's unique selling points and core focuses being sustainability, the company is well-placed to benefit from increasing global trends towards the tackling of environmental issues and demand for sustainable products and items.
- E-commerce and online retail have seen significant growth, which has been helped by the effects of the COVID-19 pandemic. With many cities experiencing restrictions and non-essential businesses being closed, Grove Collaborative remain in a strong position by offering their products and services via means of delivery service and digital online engagement.
- By selling products directly, Grove Collaborative are able to take more control over the end-to-end customer experience. This holds significant advantages, such as the ability to develop and build customer relationships, run promotions, and facilitate the collecting of information for marketing purposes. There are also opportunities to access and build platforms to leverage significant amounts of customer data, which can then be used for re-targeting, or promoting loyalty through the use of reward programs.
- In the wake of the COVID-19 pandemic, general perceptions on the importance of and standards of cleanliness have increased. Hygiene is now top of the agenda for many people, and sales of cleaning products have increased significantly as a result. Grove Collaborative's range of products mean they are well-placed to benefit from increased revenue due to these changes in attitudes from consumers.
- There is evidence that some consumers find shopping for cleaning products as something of a chore, and cleaning items were often forgotten during shopping trips. Grove Collaborative's auto-delivery service helps remove this inconvenience, and provides customers the ability to receive these essential products with less effort, improving the customer experience.
- The general perception of the brand is that they have very strong customer service. Not only do they have dedicated customer service messaging capabilities, but VIP members are also assigned their own personal customer service rep. Customers report good communication from the company, such as being reminded of important information such as upcoming deliveries, along with reminders to confirm their scheduled orders, resulting in reduced likelihood of being sent incorrect or default items. They have also been known to replace damaged items promptly, and their process for delaying or canceling orders is very straight forward and simple. Their price match guarantees, free offers and promotions are also a bit hit with their customers.
- Minimum order values of $25 (for recurring orders) and $39 (for 'ship now' orders) act as barriers preventing customers from making smaller purchases or 'trying out' certain items. In addition to this, membership ($19.99 per year) is required for free delivery.
- Some customers have noted that some of their items can be considered costly. Grove Collaborative are noted their extensive product range of creative and high quality products, but some of these products are seen as being more expensive than comparable products from other competitors.
- A couple other common complaints about the company are that sometimes they do not have stock availability, which customers find negatively impacts their experience. There was also mention that the delivery times were not always the fastest, and shipped items took generally longer than other competitors, such as Amazon.
- An online feature where Grove automatically place items in online shopping carts that they think customers will like based on previous shopping experiences has been criticized and is not very popular with certain customers.
- The global green products market is currently thriving. In 2019, green cleaning products accounted for $3.9 billion globally and this was anticipated to reach $11.6 billion by 2029, registering CAGR of 11.8%
- There is significant forecast growth in sustainable products. The Harvard Business Review produced a study in 2019 that suggested products marked as 'sustainable' grew up to 5.6 times faster than their conventional counterparts.
- The COVID-19 pandemic has brought a renewed focus on sustainability. The impact of having strong environmental, social and governance strategies has been shown to add value to businesses, and this is predicted to become more pronounced in the post COVID-19 period. This provides significant growth opportunities for companies with a focus on sustainability.
- Grove Collaborative faces significant competition within the sustainable cleaning products market. Competitors such as Cleancult, Blueland, and Branch Basics are amongst a few of the expanding number of brands who are providing environmentally friendly and sustainable home and cleaning products, often alongside e-commerce delivery platforms.
- Despite global trends and shifts in attitudes towards sustainable products, there are reports that in some categories of sustainable products, there is still significantly lower levels of customers actually purchasing. The Harvard Business Review recently reported that only a fraction of consumers who report positive attitudes toward eco-friendly products actually purchase these types of products. A recent survey found 65% of respondents claimed they wanted to buy purpose-driven brands that advocate sustainability, but only about 26% actually did buy them.
- One of the main threats to the global sustainability industry is greenwashing. Reports suggest that greenwashing has evolved into a much more subtle process, and as demand and trends for sustainable and environmentally friendly products increase, the process can reduce trust in the industry and encourage unsustainable behaviors. This poses a threat to the sustainability industry as a whole.
Part 2 — U.S. Sustainability and Green Products Market Trends
- There was some difficulty identifying any new and upcoming trends which could be seen as directly related to and involving a product, or consumers etc. Most 'trends' or current hot topics are ideas that are formed from well-known or previously discussed ideas.
- There are lists of current sustainability trends and topics, but these tended to discuss more the direction of the industry as a whole, such as corporate companies attitudes to client change, global green investment strategies, renewable energy, carbon zero targets etc. These did not really relate to any specific products or consumer groups.
- There are several available lists of the top or best sustainable products, but these typically contain products from already well-known ideas, such as reusable food packaging, environmentally friendly cleaning products, recycled items etc. There were few items which were genuinely new and innovative trending ideas.
- Below two innovative new products were identified which potentially could have a significant impact on sustainability. Just Add Water products reduce manufacturing, shipping and packaging constraints with so-called 'active ingredients', and the veganbottle is a replacement for the plastic bottle, of which significant numbers are consumed daily around the globe.
i) Just Add Water Products
- Most household liquid items, such as shampoos, cleaning products skin care treatments etc. require strong (often plastic) packaging and can be very bulky to transport. This by nature, leads to them not being very environmentally friendly. As the main ingredient (sometimes up to 90-95%) of these products is usually water, something which is readily available in most homes, a new trend amongst brands seeking to create innovative sustainable alternatives is to remove the water from these products, selling and shipping them in dried or powdered form. Consumers add the water to these products in order to use them, bringing to life the phrase 'Just Add Water' products.
- Blueland is a company that has leveraged this idea with an innovative line of 'waterless' products. Their flagship product The Cleanup Kit is described as "an intuitive, all-in-one set for cleaning up almost every area of the home". The kit consists of three color-coded 20-ounce "Forever Bottles", along with three "light-as-air" water-soluble cleaning tablets. The colors denote different cleaning areas, yellow being for multi-surface cleaning, pink for bathroom and blue for glass and mirrors. One of the tablets is plastic into the full bottle of water and after it fully dissolves, the cleaning product is ready to be used.
- These practices have led to much wider adoption of this technology within the sustainability industry, and it is now estimated that 20% or more of global disposable packaging by weight could be replaced by reusable packaging if only so-called 'active ingredients' were shipped.
- Humanco, Prima, Forgo, Kencko, Bite and Susteau are a few of the brands creating similar Just Add Water products.
- Made from an all-natural bio-plastic, the vegan bottle is an alternative to plastic bottles which environmentalists hope could become a long-term replacement.
- Every part of the veganbottle including the cap and the wrapper is made from 100% biodegradable materials. The bottle is made from sugar cane, which requires far less water than other crops, and therefore manufacturing of the bottle uses less energy than conventional processes.
- Vegan bottles are flexible and can be produced to match up with whichever liquids they contain.
Part3 — U.S. Consumer Perceptions of Sustainable and Green Products (Especially during the COVID/Post COVID Era)
i) CGS’s 2019 Retail and Sustainability Survey — CGS surveyed over 1000 individuals in the U.S. aged 18-65, on how sustainable products and business practices are driving their buying preferences. The survey found that despite price still being a key factor in purchasing decisions, consumers more routinely were putting an increasing emphasis on sustainability, and also a focus on shopping with brands whose mission is in line with their beliefs. Key findings were as follows;
- Consumers desire more sustainable products, and over a third of buyers would pay more for them.
- Brands can increase customer loyalty by switching to and promoting strong environmental, social and governance strategies.
- Young buyers are more 'eco-aware', and carry stronger sentiment with environmental and sustainability issues. Generation Z for example, were found to be far more aware of the environmental effects of their purchasing decisions than older age groups.
- Sustainable apparel is beginning to become an increasing priority amongst consumers. While the environmental effects of items such as single use plastic and paper bags are well-known, there was less awareness about the environmental effects of clothing (it is estimated the average American throws away 81 pounds of clothing per year). This trend is changing however, and the subject is becoming more of a priority.
- Over a third of consumers would pay up to 25% more than the original price of a product for a sustainable alternative.
ii) 2020 Global Survey — A global survey of over 30,000+ consumers sought to understand their views on sustainability. Of the key points related to the U.S. market;
- When asked to explain how they understood sustainability, consumers in North America mostly associated the process with recycling. This differed from other regions of the world, where consumers typically tended to associate the process with fair price, energy conservation and alternative sources of energy, and the environment.
- The biggest barriers to buying sustainable products were identified as being the price premium, a lack of awareness about products, a lack of trust in corporate companies and green practices, and confusion about sustainability claims.
iii) Americans Support For Sustainability During The COVID-19 Pandemic — Survey published in July 2020 by California-based biotech company Genomatica examined American's perceptions of, and support for sustainability during the COVID-19 pandemic. Key Findings were as follows;
- 85% think sustainability will be equally important after the COVID-19 pandemic. It was suggested that for long-term success, "brands should action green initiatives that have been on the back burner during Covid-19".
- Americans have attributed the increased sustainability during to pandemic to buying fewer products, as well as lowering their carbon footprint by driving and traveling less.
- Of those consumers polled who felt they had become less socially conscious during the pandemic, over a third reported feeling guilty about it. It was suggested that making sustainability a lifestyle choice (as opposed product choices), as well as more accessible and attractive, was a reliable way to engage consumers with sustainable goods and services.
- Despite the economic pressures felt by many during the pandemic, almost 40% of Americans are still willing to pay more for sustainable products, and this rises to 43% when considering Generation Z.
- Nearly half of those living in areas hit the hardest by COVID-19 claimed they now think more about sustainability. 43% of those facing job disruption say they would still pay for more sustainable products. This demonstrates the enduring demand for these products.
iv) U.S. Consumers View of Sustainability in Packaging (Post COVID-19) — To understand how consumer thinking has changed on the subject of sustainability in packaging as a result of the COVID-19 pandemic, a survey was launched in 10 countries across the world. Key findings from respondents in the U.S. are as follows;
- In general terms consumers ranked sustainability relatively low as a buying criteria, below price, quality, brand, and convenience. When looking specifically at packaging, hygiene, shelf-life and convenience ranked higher than environmental impact. This was also common in other countries, not just the U.S.
- Over half of all U.S. consumers are highly concerned about the environmental impact of packaging generally. A wide range of reasons were given for what the were worried about, and there was not one single factor, such as marine litter or the impact on wildlife.
- Consumers are willing to pay more for sustainable and environmentally friendly products, and they would also buy products with sustainable packaging, if more of them were available and there was better labeling and awareness about them.
- Consumers almost universally indicated that in the future, they would like recyclable and recycled plastic packaging, and fiber-based substitutes.
- The COVID-19 pandemic has significantly heightened consumer interest in and sensitivity to increased hygiene and food safety standards, and both of these are now strong new preferences for packaging materials.
v) Other Information
- Research from 2020 polled 19,000 consumers in 28 countries on sustainability. North American respondents (U.S. and Canada) numbering 3,500, were shown to increasingly prefer sustainable brands, with 69% willing to pay a premium for recycled products, and over half ready and willing to change their shopping habits, in order to reduce any negative impact on the environment. Nearly 80% wanted to know the origin of the products they buy, and 69% would pay a premium for brands that provided this information.
- A 2021 Business Insider article reporting on consumer attitudes to sustainability suggested that even if being sustainable wasn't a personal priority, the idea of using a purchase to do good, or benefit the environment was still very attractive to many shoppers.