PERSPECTIVES

How to attract LOHAS, the $472b sustainability-conscious customer segment

2022-07-27


Is your brand underestimating, or even ignoring, the LOHAS market? If you’re not familiar with the term, then you very well could be missing out on a $472.5 billion opportunity in the US alone.

LOHAS consumers — short for Lifestyles of Health and Sustainability — represent more than one-third of American adults. A remarkably savvy segment, the LOHAS customer is both well-informed and hard to impress – which means that brands need to be ambitious in their goals and authentic in their approach to build lasting relationships with this group.

So how do consumer products brands win the hearts and minds of the LOHAS shopper? Here we look at three areas of critical importance — circularity, carbon neutrality and transparency — and how incorporating them within a comprehensive sustainability agenda can help build the trust and loyalty of the LOHAS consumer, as well as strengthen the health and resiliency of the business.

Embracing circularity, for products and packaging

To the LOHAS consumer, a sustainable product is a circular product — i.e., one that does not require virgin materials to produce and is designed with the end of life in mind, among other things.

For high-consumption sectors, like consumer goods, the issue of circularity also extends to product packaging. For example, with some single-use plastics taking centuries to decompose in landfills, brands need to be more deliberate in selecting environmentally friendly materials to attract the LOHAS customer.

Since packaging choice is often heavily influenced by cost, brands should consider how they can make changes to their materials, manufacturing processes or transportation methods so as to lessen the burden on the environment and improve the bottom line.

For example, fast-fashion brand ASOS reduced the thickness of their mailers by ten to twenty microns — a seemingly minute change that resulted in a savings of 583 tons of plastic annually.

When deployed at scale throughout the business, small changes like reducing the weight of shipping materials or rightsizing packaging can unlock significant savings. These savings can then be reinvested into more sustainable materials or supporting practices, ultimately driving down the company’s environmental impact.

Achieving carbon neutrality, within the business and the supply chain

Another big driver of loyalty among LOHAS consumers has to do with achieving carbon neutrality. 

  • Quick take

    To reach a state of net-zero carbon dioxide emissions, brands need to effectively neutralize three types of emissions:

    • Scope 1: Direct emissions from the company, such as by vehicle fleets
    • Scope 2: Indirect emissions, which includes energy use, heating and cooling, and resource consumption within the building or manufacturing plant
    • Scope 3: All other emissions, including those within the supply chain and workforce
       

    The biggest challenge for most companies is tracking and reducing Scope 3 emissions, particularly as it relates to the supply chain. Since companies don’t have direct insight into suppliers’ operations — nor the ability to control them — estimating and reducing these emissions can be especially challenging.

For the LOHAS customer, complexity is not a good reason for complacency. LOHAS customers believe major brands bear responsibility in driving sustainability among their suppliers and partners and must take steps to incentivize responsible behavior. This includes applying some of the same initiatives taken at the corporate level to the supply chain, such as insisting suppliers provide regular and formal reports on their sustainability efforts, requiring them to set clear, measurable sustainability goals, and identifying new processes and systems by which they can track metrics with their suppliers.

We’re beginning to see some progress in this area from brands like Unilever, which is leveraging blockchain technology to track supply chain sustainability and published a report on its sustainable sourcing efforts.

In time, as more large players come to demand meaningful and honest engagement from their suppliers in this area, the industry is likely to reach a critical mass, at which point sustainability will become the norm. But that will be the case only when major brands make it a requirement of doing business with their supply ecosystem. For the time being, the brands that are taking action are getting a share of the LOHAS’ customers’ dollars and loyalty, which will position them ahead of their competition.

Building trust and transparency, through words and action

With many brands making bold, but often unsubstantiated, sustainability claims, savvy LOHAS consumers may be skeptical about which brands are “walking the talk.”

To identify brands whose authenticity matches their ambition, LOHAS shoppers often rely on third-party certifications and reporting systems to see how their favorite brands stack up. One of the highest standards in this area is to be recognized as a Certified B Corporation, which is a formal certification program that verifies the performance, accountability and transparency of the business.

Digital is also providing ways for consumers to make better informed decisions. With apps like Buycott or Good On You growing in popularity, shoppers are now finding fast, reliable information at the point of purchase.

Leaders in the sustainability market will be the first to admit that consumer skepticism can actually be a positive force, in that it is driving transparency and accountability for brands — and creating new ways for companies to promote meaningful sustainability initiatives and differentiate from the competition.

Three actions consumer brands can take to attract the LOHAS shopper and create a more sustainable future

As our world continues to grapple with the urgent and widespread effects of climate change, most business leaders understand that sustainability isn’t a ploy to reach the LOHAS consumer, but rather a clear and compelling business objective.

Companies are investing in sustainability not just because consumers have become more discerning, but also because the financial health and longevity of the business depends on it. Circularity and carbon neutrality aren’t lofty future goals so much as requirements for doing business. Operating with transparency and authenticity isn’t just a way to satisfy customers, but also to attract the best and brightest talent to assure future business success. Soon, many of these concepts won’t be optional, but a matter of regulation, which means that companies that take steps to improve sustainability today will be well-prepared to operate in the landscape of tomorrow.

So, what actions can consumer brands take now to create a more sustainable future? Here we offer three recommendations for consumer products organizations to strengthen their sustainability agenda to win the hearts and minds of the LOHAS consumer, attract talent, build their brand reputation and satisfy the regulatory needs of the future:

1.    Prepare a comprehensive sustainability report.

As consumers cast a more discerning eye on brands’ sustainability metrics, it is important to document a clear and honest snapshot of the company’s goals, progress and timeline using commonly accepted standards such as GRI, SASB, TCFD and CDP. With these metrics in hand, companies can also take steps to earn coveted accreditations and accolades that will help their brand stand out as an ethical and responsible choice in the market.

2.    Build transparency and traceability across the supply chain through advanced data capabilities.

In many industries, one of the most important and elusive areas within the sustainability agenda has to do with improving visibility across the supply chain. For consumer brands, this includes tracking the cost and origin of raw materials, as well as wages paid to subcontractors, which are often cash-based transactions recorded manually by a supplier. To build transparency, leading organizations are embracing the creative and strategic application of technology to help capture and analyze data — and turn it into insights that will support the change agenda.

3.    Think about regeneration.

Looking to the future, the step beyond sustainability is regeneration. That means that if companies today are focused on neutralizing their impact, then the goal of tomorrow will be to rebuild what has been lost or damaged. Forward-thinking brands should consider how they will help replenish the resources they use in communities around the world.

With the LOHAS market growing an estimated 10% each year and the effects of climate change becoming more visible with each passing day, brands have both an opportunity and an obligation to make sustainability a central part of their business. Those that put circularity, carbon neutrality and transparency at the heart of the business today, will likely be rewarded with a brighter, more resilient tomorrow.

Have questions about how to craft a sustainability agenda that improves the health of the business and meets the needs of the LOHAS consumer? Cognizant is here to help. Reach out to our experts today.

This article was written by Anca Novacovici Lunn, Senior Principal Sustainability Advisor, in Cognizant’s North America Sustainability Services Advisory.

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