The CQ: Sustainability Without the Hefty Price Tag
The CQ is Forerunner’s weekly newsletter covering the most pressing consumer trends and analysis, as well as business-building insights from our investment team. Subscribe now to get the latest edition in your inbox every Saturday.
The ongoing tension between sustainability and businesses’ bottom line turns a corner
By Priyanka Suri, Investor
When a company makes a radical move to promote sustainability, it’s often a story about nobility — sacrificing margins to use better-for-planet materials, choosing the more expensive manufacturer because it’s ESG compliant, paying for carbon offsets…the list goes on.
But, what if sustainability doesn’t have to come with such a hefty price tag?
We’ve hit a critical moment in time when brands are facing expectations to represent their customers’ values (think: sustainability) and consumers have an unprecedented level of influence over a brand’s early fate (think: cancel culture). It’s already a delicate matter, and with rising inflation and a looming recession, tight budgets for both customers and brands introduce more challenges for businesses looking to prioritize values-driven practices where ROI isn’t immediate or clear-cut. Businesses today need to be savvy, building for the consumer’s needs and values without sacrificing their bottom line.
This holiday season, we saw impressive strides on this front — companies large and small made moves to reinforce sustainability-driven values in ways that would double as strategic plays for business performance. For example, second-hand luxury fashion marketplace Vestiaire Collective banned the sale of fast fashion on their platform last week amid the throes of Black Friday. At first blush, this reinforces Vestiaire’s inherently sustainable brand philosophy of “collective change toward a circular fashion economy.” But digging beyond the surface, banning the sale of low-ticket products on the platform means Vestiaire will no longer be using their resources for products that only produce razor-thin margins relative to the luxury apparel they’re best known for.
Alohas is another brand upholding sustainable values without sacrificing their bottom line during this holiday season. The brand abandoned the traditional Black Friday sale and instead, offered generous rewards to customers who placed made-to-order purchases. With this strategy, Alohas only orders products to be manufactured based on precise demand, keeping themselves from over-estimating inventory needs and being left with stockpiles of unsold product following the holiday season.
It’s no surprise that we’re seeing many of these tactics come to life in the fashion and apparel space, as this category is often the high-visibility culprits of over-production and waste. But, there is a clear opportunity (and need) for companies of all verticals and business models to lean into these clever strategies, too — as the consumer mindset grows ever more present across all corners of business.
Now more than ever, it’s important for company leaders to ask themselves what value-adds a sustainability play can unlock for their brands beyond ESG benefits alone. The best playbook isn’t just about communicating alignment with the consumer’s values and taking on extra costs in hope that goodwill with consumers will translate to earnings down the line. It’s about reinforcing the consumer’s values in a way that’s strategic for your business both today and tomorrow.
This Week’s Top 10 Consumer Insights
By Forerunner
@ForerunnerVC
TikTok is reshaping language. Creators are coming up with their own vocabulary—say, “panoramic” in place of “pandemic” — to avoid the algorithm hiding or banning their posts.
On Black Friday, Americans spent $9.12 billion online. Electronics surged 221% on Black Friday compared to an average October day and BNPL increased 78% over a week before.
Faced with a glut of inventory, retailers are trying to capture customers’ attention by focusing on value: offering steep discounts and “pre-inflation prices.”
The man exposing the ways consumers get squeezed: shrinkflation. From water-down formulas to deceivingly downsized bottles, there’s growing awareness of how brands implement sneaky ways to charge more for less.
The amount of time people spend alone is spiking — across all demographics — a trend that started pre-COVID. American spent 38% less time with friends and family over Thanksgiving this year vs. a decade ago.
Gen Z protesters in China and Iran are wielding the power of social media to creatively circumvent their countries’ censorship and make their voices heard.
They may advertise themselves as risk-free, but if you don’t pay on time, there are hidden consequences with BNPL apps including late fees and interest that can be higher than a credit card.
The Wall Street Journal details ways tech companies can make the buying process better for consumers including a no-strings-attached free trial, straightforward pricing, a written explanation of the product instead of a video, and human tech support.
Bots are sabotaging holiday shopping. About 40% of all traffic to retail sites comes from bots, and retailers are facing disgruntled customers, sullied reputations, and missed opportunities for add-on sales because of it.
Consumers are making an effort to shop at small businesses with 41% saying they’re willing to pay more than they would at a larger retailer. Their top reason for shopping small (46%) is reliable customer support.
Forerunner Highlights
Eurie Kim joins the podcast Lunch Pail VC to discuss the expanded definition of consumer investing.
Kirsten Green talks with the Step by Step podcast about what’s next in ecommerce and the B2B industry.
KJ Sidberry is included in Business Insider as one of New York’s venture capitalists known for their personal style (along with a bonus glimpse of Kirsten Green).
Eurie Kim participated as a judge for Forbes’ 30 Under 30, helping to select the rising stars who are changing how we shop online, in stores, and in the metaverse.
Portfolio Highlights
Time Magazine recognizes Dutch and Calibrate in their Best Inventions of 2022.
Glossy lists Ari Bloom, founder and CEO of A-Frame Brands, as one of “The Authorities” in their Glossy50: the people who shaped fashion and beauty this year.
Canal’s co-founder and CPO Liam Kinney has been selected as a Forbes 30 Under 30 Honoree in Retail & Ecommerce.
AfroTech speaks with founder Ryan Mundy about his startup Alkeme Health.
Digiday details how Birdies is ramping up television ads as a strategy to become less dependent on Facebook.
Fast Company recommends Clay to keep track of contacts and learn about new acquaintances.
PureWow reports that vets choose The Farmer’s Dog as a human-grade dog food that “goes above and beyond.”
Glow Labs is highlighted by Fast Company for being the silent partner in crypto-based rewards programs.
Stacy London calls ShopShops “the future of shopping” on The Rachael Ray Show.
Yahoo!Finance covers Dutch’s launch of pet insurance in partnership with Pets Best.
The Oura ring is one of LeAnn Rimes’ items she can’t live without, telling New York Magazine she likes how it helps track her sleep.
Work at a Portfolio Company
Staff Program Manager at Oura | Oura is on a mission to empower every person to have a deeper understanding of their health, lifestyle, and sleep quality. The Staff Program Manager for the IT & Compliance programs will be responsible for driving the business transformation programs in full.
Interior Designer at Homebound | Homebound’s mission is to make it possible for anyone, anywhere to build their perfect home using technology. This role will work closely with the Head of Design and to develop and maintain design packages across developments, focusing on the Dallas and Houston markets.
Sales Coordinator at Fora | FORA is a team of entrepreneurs and technologists building the modern travel agency. This role will work directly with the Head of Advisor Sales to maintain the pipeline of inbound and outbound efforts, including the waitlist of 40k individuals who want to become Fora Advisors.
There are ~621 other openings on our jobs site. Check ‘em out.