RISE OF THE VALUES-BASED CONSUMER
In CRISIS OF CHARACTER, whose official publication date is today, I wrote about the rise of the socially-conscious consumer who wants to know whether a product he or she may buy harms the environment, or whether foreign workers—perhaps even children—have been abused in its manufacture. I wrote that people are beginning to choose companies with whom to do business as they do their politicians—for their values.
Experience in the year or so since that line was written has done nothing but add to the impression that consumers are realigning their relationships with companies in accordance with their opinions of how those companies should behave. In the book I suggest that the public in general wants to see an end to the “corporate exception”—the notion inside many companies that different standards of conduct apply there in society at large.
In a recent speech, John Gerzema, whose title at Young & Rubicam is “Chief Insights Officer,” referred to a new style of responsibility he perceives among consumers in the use of their own money. Like corporations, he says, people are unwinding their debt. Visa, inc., reports that more people are now using debit cards than credit cards. Companies, therefore, can no longer rely on debt-fueled consumption to float revenues. And with this new spirit of personal responsibility, Gerzema says, consumers are demanding “not just value, but values.”
People are keeping cars longer than ever. More people than ever carry library cards. Volunteerism is up. The construction of an increasing number of homes includes work by the hands of those who will live there. And conspicuous consumption has become déclassé. Some luxury retailers are offering unmarked shopping bags in which customers can carry away their goods without advertising the products they’ve bought—a stark reversal from the flashy psychology in vogue only a couple of years ago.
As a consequence investors, whom one can naturally expect to respond to such trends, have begun to see a company’s reputation as a risk factor. They are realizing that customers communicate virally by Internet, and once a negative buzz about a company gets started among people who deeply care about specific issues, there’s no telling what the damage will be. The negative effects can linger for years.
That’s why Walmart—not known for a fear of community opposition—has converted its truck fleet to reduce carbon emissions and has begun to tag products so that customers can judge the environmental impact of their manufacture. Walmart has not changed its profit-oriented culture. It’s not “nicer” than it’s been before. But its management realizes that preservation of the company’s franchise will require policies that recognize its customers’ personal values.
The number of companies demonstrating a consciousness of their social profile is growing. Apple, Pacific Gas and Electric (PG&E) and others recently resigned their memberships in the U.S. Chamber of Commerce in protest against the Chamber’s staunch opposition to climate change legislation. They understood that companies who fail to take overt steps to align themselves with their customers will lose ground to competitors who do. And investors won’t take long to notice.
