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Peak Stuff: Companies embracing a more socially aware generation

Peak Stuff: Companies embracing a more socially aware generation

Summary

In January 2016, Steve Howard, the head of sustainability at Ikea, declared that the West had probably hit peak stuff. This case study explores the validity of the statement, why businesses should engage in sustainability drives, and a few companies leading the way.

Key Findings

Analysis of what micro and macro level factors are driving companies embracing sustainability across a variety of industries.
Highlighting examples of companies successfully approaching sustainability.

Reasons To Buy

What is meant by peak stuff?
Why are companies embracing sustainability?

Which companies are embracing a sustainability drive?

Key Highlights

There have been some signs of slowing consumption. As credit and real wages have stagnated, technological innovation has also curbed demand for physical products via digitization. For a generation of people, economic malaise has led to preferences for experiences rather than products, and rising living costs have forced adaptation of the sharing economy. The younger generation is much more concerned with health so some industries with public health consequences will suffer beyond peak stuff. That is not to say all industries are moving towards declining consumption; both automotive and apparel continue to grow strongly.
It may seem paradoxical that companies seek to grow while also preparing for a slowing in volumes, crisis can also be opportunity. Adopting early can give the brand some traction among consumers, and if they are industry leaders, may set the tone. Depending on how they combat declining sales (whether through marketing or value added), it may contribute to a unique selling point which differentiates the company's offering. However, environmentally aware consumers are also more aware of green washing, so companies must take care to also take more than piecemeal action. In industries which attract ire due to negative externalities, taking a lead in sustainable consumption may be seen as an attempt to ward off regulation before it happens.
Some companies are already trying to position themselves for the coming consumption decline across a variety of industries- some altruistic, some self-motivated. IKEA's sustainability director was the one to bring the concept of peak stuff into public discourse, and it's no surprise the company is planning long term, aiming to double its sustainable product sales by 2020 and involving itself in the longer product life cycle and planning longer term.


>Overview
Catalyst
Summary
Peak stuff a result of economic conditions
Raw material consumption has fallen significantly in the UK
A shift towards low paid-services economy is a factor
Manufacturing decline reduces industrial consumption
UK employment relatively stable, but zero hours contracts increasing
Technological advances have opened up the sharing economy
Digital products have led to a decline in physical demand
Tech innovators reducing promoting the sharing economy
Trends are shifting towards experiences rather than goods
Concern other industries could soon be peaking
Many consumer products continue to grow
Automotive continues to grow
Apparel retail continues to grow due to Fast Fashion
Peak stuff offers innovation opportunities
Engaging consumers on sustainability improves sales
Sustainable business helps improve supply side margins
Being pioneers in sustainability improves brand reputation
Heineken's moderate drinkers wanted campaign attracted huge interest
Adopting early avoids regulation
Mars Foods Health and Wellbeing warns against pasta sauces
Companies are also attempting to tackle consumer habits
Ikea and Heineken invest in sustainability
Heineken trying to make moderation aspirational
Moderating millennials main reason for Heineken's new campaign
Expanding the non-alcoholic range for improved consumer choice
Heineken also promoting sustainable supply
Ikea hoping to achieve sustainability while doubling sales
Ikea affected by generation rent
Trends in living also increasing demand for self-assembly furniture
Ikea wants to grow sustainable range revenues fourfold
Ikea brings hydroponics to the mainstream
Ikea trialing buyback policy in Denmark
Ikea's future designs have sustainability in mind
Ikea championing sustainable living through its employees and customers
Ikea's supply chain also improving in sustainability
Conclusions
Sustainable business can win over younger demographic
Appendix
Definitions
Sources
Further Reading
Ikea Group- Marketline Company Profile
Unilever: Proving that sustainability and profitability can coexist- Marketline Case Study
Ask the analyst
About MarketLine
Disclaimer
List of Tables
Table 1: Mars Food products (per serving) against recommended daily total intake, grams
List of Figures
Figure 1: Raw material consumption per person and per person excluding fossil energy materials, 2000-2013
Figure 2: UK music & video market value 2010-2014, USDm and YoY Growth
Figure 3: Heineken's moderate drinkers wanted ad campaign
Figure 4: Unilever's carbon footprint 2014-2015
Figure 5: UK Furniture and Floor coverings market value $m, 2010-2019 (2015 onwards forecasted)
Figure 6: Ikea's indoor gardening range

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